Controlling Week 2

Which of the following is true of a budget?

Budgets help managers to revise their plans and strategies.

Budgets are used to express only the operational plans and not the strategic plans of a company.

Budgets are most useful when they are planned independent of the company's strategic plans.

Budgets do not account for nonfinancial aspects of the upcoming period.

What is the static-budget variance of variable costs?

$116,000 unfavorable

$103.000 favorable

$103.000 unfavorable

$116,000 favorable

The variable overhead flexible-budget variance can be further explained by calculating the:

Sales-volume variance and the spending variance

Price variance and the efficiency variance

Static-budget variance and sales-volume variance

Spending variance and the efficiency variance

On the 2019 budgeted income statement, what amount will be reported for sales?

$241,500

$231,000

$252,000

$220,500

If a sales-volume variance was caused by poor-quality products, then the ___ would be in the best position to explain the variance.

Production manager

Financial supervisor

Logistic manager

Sales supervisor

Budgets should ___

Only be developed for short periods of time such as quarters

Be administered rigidly

Not be so rigid that if conditions change, adjustments in spending can be made

Include only variable costs

Which of the following is a reason why top managers want lower-level managers to participate in the budgeting process?

To ensure that the budgets are administered rigidly given the changing market conditions.

To reduce the time and cost expended in the budgeting process.

To benefit from their experience with the day-to-day aspects of running the business.

To ensure that they do not introduce any budgetary slack

Which of the following is true of master budgets?

They aid in quantifying the expectations of all stakeholders.

They must be administered rigidly after they are committed to.

Includes both financial and nonfinancial aspects of management's plans.

They include only financial aspects of a plan and exclude nonfinancial aspects.

Which of the following is not true of a properly executed budgetary cycle?

Past performance and market feedback are considered in setting budget amounts

Deviations from plan are only investigated at the conclusion of the fiscal year as actual data can be finally compiled

Specific financial and nonfinancial expectations are set

During the fiscal year, managers investigate deviations from plans

The sales-volume variance is sometimes due to ___

Unexpected increase in the use of quantities of inputs of raw material

The difference between selling price and budgeted selling price

Quality problems leading to customer dissatisfaction

Unexpected increase in manufacturing labor time

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

Actual costs incurred - fixed overhead allocated for actual output

Budgeted fixed overhead - fixed overhead allocated for actual output

Flexible-budget amount - actual costs incurred

Static-budget amount - flexible-budget amount

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million, but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

The static-budget variance for operating income is $3 million favorable.

The flexible-budget variance for operating income is $3 million favorable.

The static-budget variance for operating income is $3 million unfavorable.

The flexible-budget variance for operating income is $3 million unfavorable.

An efficiency variance reflects the difference between ___

Actual input quantities used last period and current period

A standard input quantity in a company and its main competitors

An actual input quantity used in a company and its main competitors

An actual input quantity and a budgeted input quantity

An unfavorable flexible-budget variance for variable costs may be the result of ___

Selling output at a higher selling price than budgeted

Paying lower prices for inputs than were budgeted

Using more input quantities than were budgeted

Selling less quantity compared to the budgeted

A variance is ___

The difference between actual variable cost per unit and standard fixed cost per unit

The difference between actual fixed cost per unit and standard variable cost per unit

The standard units of inputs for one output

The difference between an actual result and a budgeted performance

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