Learning Objective 13-3

1) Managers find it useful to subdivide the flexible-budget variance for direct cost variance into a ________ variance and an efficiency variance.

A) price

B) input

C) price recovery

D) productivity

E) sales-volume

2) What is a disadvantage to managers that use actual input data from past periods to calculate price and efficiency variances?

A) Past data is typically available at low cost.

B) Past data is advantageous because it excludes inefficiencies.

C) Past data can serve as benchmarks for continuous improvement.

D) Past data can include inefficiencies and does not incorporate any changes expected for the budget period.

E) Past data represents quantities and prices that are real, rather than hypothetical.

3) Which of the following statements is an advantage to managers who use data from other companies that have similar processes?

A) Input-price data from other companies are often not available.

B) Input-quantity data from other companies are often not available.

C) Input-price data may not be comparable to a particular company’s situation.

D) Input-quantity data may not be comparable to a particular company’s situation.

E) The budget numbers represent competitive benchmarks from other companies.

4) Match the following terms with their definitions:

1.Standard priceA.A carefully determined cost of a unit of output.

2.Standard costB.A carefully determined quantity of input.

3.Standard inputC.A carefully determined price a company pays per

unit of input.

A) 1-C; 2-A; 3-B

B) 1-A; 2-B; 3-C

C) 1-B; 2-A; 3-C

D) 1-C; 2-B, 3-A

E) 1-A; 2-C; 3-B

5) Which of the following does not result in a favorable direct materials price variance?

A) The purchasing manager changed to a lower-price supplier.

B) The purchasing manager negotiated the direct materials prices more skillfully than was planned for the budget.

C) The purchasing manager ordered larger quantities than the quantities budgeted, and therefore obtained quantity discounts.

D) The price of direct materials decreased as a result of industry oversupply.

E) Budgeted purchase prices of direct materials were set too low without careful analysis of market conditions.

6) Managers use actual input data from past periods because this historical data can be analyzed for trends or patterns to obtain estimates of budgeted prices.

7) A disadvantage of using actual input data from past periods is that past data can include inefficiencies such as wastage of direct materials.

8) Standards are usually expressed on a per-unit basis.

9) In a standard costing system, managers use standards that are attainable through efficient operations but that allow for normal disruptions.

10) The price variance is also called a rate variance when managers refer price variances for direct manufacturing labor.


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