Test
CH9
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Preguntas del test (9)
1Which of the following statements is correct?
- AUnfavorable cost variances always indicate bad performance.
- BFavorable cost variances always indicate good performance.
- CBoth of the above statements are correct.
- DNeither of the above statements are correct.
2Lizzie's Riverside Grill compares monthly operating results with a static budget prepared at the beginning of the year. When actual sales are less than budget, the restaurant would usually report favorable variances on:
- Afixed supervisory salaries and variable food costs.
- Bvariable food costs but not fixed supervisory salaries.
- Cfixed supervisory salaries but not variable food costs
- Dneither fixed supervisory salaries or variable food costs
3A major weakness of static budgets is that
- Athey are geared only to a single level of activity.
- Bthey cannot be used to assess whether variable costs are under control.
- Cthey force the manager to compare actual costs at one level of activity to budgeted costs at a different level of activity.
- Dall of the above
4An activity variance is the difference between:
- Aa revenue or cost item in the static planning budget and the same item in the flexible budget.
- Bhow much the revenue should have been, given the actual level of activity, and the actual revenue for the period.
- Chow much a cost should have been, given the actual level of activity, and the actual amount of the cost.
- Dnone of the above.
5If the average selling price is greater than expected, the revenue variance is:
- Alabeled as favorable.
- Blabeled as unfavorable.
- Ccannot be labeled as favorable or unfavorable without obtaining an explanation.
- Dan activity variance.
6If the actual cost incurred is greater than what the cost should have been as set forth in the flexible budget, the variance is:
- Alabeled as favorable.
- Blabeled as unfavorable.
- Ccannot be labeled as favorable or unfavorable without obtaining an explanation.
- Dan activity variance
7Which of the following statements is not correct? X
- ATo generate a favorable variance for net operating income in a business that serves customers managers must take actions to increase client-visits.
- BTo generate a favorable overall revenue and spending variance, managers must take actions to protest selling prices.
- CFlexible budget performance reports provide useful more useful information to managers than a simple comparison of budgeted to actual results.
- DA flexible budget performance report separates the effects of how well prices were controlled and operations were managed.
8Which of the following statements is not correct?
- AA flexible budget allows managers to isolate activity variances and revenue and spending variances.
- BOne of the common errors in preparing performance reports is to implicitly assume that all costs are fixed.
- COne of the common errors in preparing performance reports is to implicitly assume that all costs are variable.
- DComparing static planning budget costs to actual costs only makes sense if the cost is variable.
9A company's static budget estimate of total overhead costs was $400,000 based on the assumption that 20,000 units would be produced and sold. The company estimates that 30% of its overhead is variable and the remainder is fixed. What would be the total overhead cost according to the flexible budget if 24,000 units were produced and sold?
- A$384,000
- B$400,000
- C$424,000
- D$464,000
Información
- Descripción
- Accounting Test sobre CH9, creado por Diocar Cruz el 11/12/2017.
- Autor
- Diocar Cruz
- Idioma
- English
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