Thai Connection Ltd is a travel agency. They budget monthly costs of $50,000 plus $125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and $65,000 variable costs.

The flexible budget variance for variable costs in June is:

Select one:

a. $3,750 unfavourable

b. $7,500 unfavourable

c. $3,750 favourable

d. $7,500 favourable

If a variance analysis shows that operations are better than expected, managers should:

Select one:

a. Revise standard costs to make them harder to achieve

b. Change the accounting records so that unrealistic expectations aren't imposed in future

c. Monitor quality to ensure it was maintained

d. Do nothing

The difference between the standard quantity of an input and the actual quantity of an input is a:

Select one:

a. operating variance

b. volume variance

c. efficiency variance

d. price variance

Management by exception means that managers investigate:

Select one:

a. All exceptional variances

b. All variances

c. Variances they consider important

d. All unfavourable variances

Variance analysis includes which of the following processes?

I	Calculating variances
II	Choosing variances for further investigation
III	Predicting variances in future periods

Select one:

a. I and II only

b. I, II, and III

c. II and III only

d. I and III only

Price variances analyse:

Select one:

a. sales prices of outputs

b. cost of inputs

c. use of resources

d. operating variances

In a production setting, the standard cost of a unit of output is the sum of the standard costs of:

Select one:

a. Direct material, direct labour, variable overhead, and fixed overhead

b. Direct material, direct labour, and period costs

c. Direct material, direct labour, and fixed overhead

d. Direct material, direct labour, and variable overhead

Fickle Factory Ltd produces unique large ceramic frogs. The accountant has collected the following information regarding standard costs.

Production Input	Standard Cost
Direct Materials	2 kilos of raw material Each kilo = $5
Direct Labour	1 hour Direct Labour is charged at $10 per hour
Variable Overhead	$2 per direct labour hour
Fixed Overhead	$4 per frog

Total fixed overhead for the year is estimated to be $80,000. The selling price for each frog is $45. Actual sales and production was 22,000.

The flexible budget for fixed overhead for the year is:

Select one:

a. $44,000

b. $88,000

c. $72,727

d. $80,000