Question 1

The budget procedure that requires all levels of management to start from zero in estimating sales,production,and other operating data is called zero-based budgeting.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided for Quaker Inc.What is the amount of the fixed factory overhead volume variance?

Accepted Answer

A)  $12,500 favorable
B)  $10,000 unfavorable
C)  $12,500 unfavorable
D)  $10,000 favorableE) B) and D)
F) A) and B)

Question 3

The following data relate to direct labor costs for the current period:

Accepted Answer

A)  $23,000 unfavorable
B)  $23,500 unfavorable
C)  $23,500 favorable
D)  $23,000 favorableE) B) and C)
F) None of the above

Question 4

The budgeted volume of production is normally computed as the sum of (1)the expected sales volume and (2)the desired ending inventory.

Accepted Answer

A) True 
 B)False

Question 5

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following will not affect direct materials quantity variance?

Accepted Answer

A)  Malfunctioning equipment
B)  Purchasing of inferior raw materials
C)  Material requiring rework
D)  Spoilage of materialsE) None of the above
F) A) and C)

Question 7

Refer to the information provided for Frogue Company.The total factory overhead cost variance is:

Accepted Answer

A)  $3,900 favorable.
B)  $10,400 favorable.
C)  $10,400 unfavorable.
D)  $9,900 unfavorable.E) B) and C)
F) A) and D)

Question 8

Based on the following production and sales data of Jackson Co.for March of the current year,prepare (a)a sales budget and (b)a production budget.

Accepted Answer

(a) Jackson Co. Sales Budget For Month E...

Question 9

Standards are designed to evaluate price and quantity variances separately.

Accepted Answer

A) True 
 B)False

Question 10

Planning for capital expenditures is necessary for all of the following reasons except:

Accepted Answer

A)  machinery and other fixed assets wear out.
B)  expansion may be necessary to meet increased demand.
C)  amounts spent for office equipment may be immaterial.
D)  fixed assets may fall below minimum standards of efficiency.E) None of the above
F) B) and D)

Question 11

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

Accepted Answer

A) True 
 B)False

Question 12

The cash budget summarizes future plans for acquisition of fixed assets.

Accepted Answer

A) True 
 B)False

Question 13

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17,the rate variance was $1,200 favorable.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

Accepted Answer

A)  Sales orders at a low level
B)  Machine breakdowns
C)  Employee inexperience
D)  Increase in utility costsE) A) and B)
F) All of the above

Question 15

Trapp Co.was organized on August 1 of the current year.Projected sales for the next three months are as follows:

Accepted Answer

Trapp Co. Schedule of Collections of Acc...

Question 16

Favorable volume variances may be harmful when:

Accepted Answer

A)  machine repairs cause work stoppages.
B)  supervisors fail to maintain an even flow of work.
C)  production in excess of normal capacity cannot be sold.
D)  there are insufficient sales orders to keep the factory operating at normal capacity.E) C) and D)
F) A) and D)

Question 17

Variances from standard costs are usually reported to:

Accepted Answer

A)  suppliers.
B)  stockholders.
C)  management.
D)  creditors.E) C) and D)
F) A) and D)

Question 18

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product is termed as variable factory overhead controllable variance.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following conditions normally would not indicate that standard costs should be revised?

Accepted Answer

A)  The engineering department has revised product specifications in responding to customer suggestions.
B)  The company has signed a new union contract that increases the factory wages on average by $2.00 an hour.
C)  Actual costs differed from standard costs for the preceding week.
D)  The world price of raw materials increased.E) None of the above
F) A) and B)

Question 20

Refer to the information provided for Octofic Cans Inc.Budgeted production for aluminum cans during the month is:

Accepted Answer

A)  383,000 units.
B)  508,000 units.
C)  502,000 units.
D)  532,000 units.E) B) and D)
F) None of the above

Exam 13: Budgeting and Standard Cost Systems

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

Correct AnswerverifiedShow Answer

Favorable volume variances may be harmful when:

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Standards are designed to evaluate price and quantity variances separately.

Correct AnswerverifiedShow Answer

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product is termed as variable factory overhead controllable variance.

Correct AnswerverifiedShow Answer

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

Correct AnswerverifiedShow Answer

The following data relate to direct labor costs for the current period:

Correct AnswerverifiedShow Answer

Which of the following conditions normally would not indicate that standard costs should be revised?

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Refer to the information provided for Frogue Company.The total factory overhead cost variance is:

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Refer to the information provided for Octofic Cans Inc.Budgeted production for aluminum cans during the month is:

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The budget procedure that requires all levels of management to start from zero in estimating sales,production,and other operating data is called zero-based budgeting.

Correct AnswerverifiedShow Answer

Planning for capital expenditures is necessary for all of the following reasons except:

Correct AnswerverifiedShow Answer

Trapp Co.was organized on August 1 of the current year.Projected sales for the next three months are as follows:

Correct AnswerverifiedTrapp Co. Schedule of Collections of Acc...View AnswerShow Answer

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17,the rate variance was $1,200 favorable.

Correct AnswerverifiedShow Answer

Based on the following production and sales data of Jackson Co.for March of the current year,prepare (a)a sales budget and (b)a production budget.

Correct Answerverified(a) Jackson Co. Sales Budget For Month E...View AnswerShow Answer

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

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Variances from standard costs are usually reported to:

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Which of the following will not affect direct materials quantity variance?

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Refer to the information provided for Quaker Inc.What is the amount of the fixed factory overhead volume variance?

Correct AnswerverifiedShow Answer

The budgeted volume of production is normally computed as the sum of (1)the expected sales volume and (2)the desired ending inventory.

Correct AnswerverifiedShow Answer

The cash budget summarizes future plans for acquisition of fixed assets.

Correct AnswerverifiedShow Answer

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Trapp Co. Schedule of Collections of Acc...
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(a) Jackson Co. Sales Budget For Month E...
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