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The concept that focuses on important variances and ignores trivial ones is
Management by exception
 
The difference between a revenue or cost item in the static planning budget and the same item in the flexible budget at the actual level of activity is a(n) ___________ variance
Activity
 
You would expect total ______ cost to be higher in the flexible budget if the activity level for a period is higher than expected
Variable
 
Estimates of what revenues and costs should have been based on the actual level of activity are shown on the _____ budget
Flexible
 
______ cost is the type of cost that will fluctuate depending on the level of activity for the budgeted period.
Variable
 
Commission expense is budgeted to be $16,000 at a planned sales level of 4,000 units. If only 2,900 units are sold, how much commission expense will appear on the flexible budget, and is the activity variance favorable or unfavorable?
$11,600 and favorable
 
What items would be omitted on a cost center’s performance report?
Revenue
Net operating income
 
Match the following results with the discrepancies due to 4,000 units of actual activity versus the 2,500 planned units.
Unfavorable wages:                       Increase in employee hours to manufacture additional units.
Favorable revenue:                         More units were sold than expected.
Unfavorable utilities:     Plant was in operation for an extra shift each week for increased production.
No change:                                         Mortgage payment for plant.
 
Revenue on the planning budget is expected to be $380,000 for 1,900 client visits. The revenue on the flexible budget is $410,000, showing that there were actually ______ client visits.
2,050
 
Common errors in preparing performance reports include:
assuming all costs are fixed.
assuming all costs are variable.
 
An unchanged planning budget is known as a(n) ______ planning budget.
static
 
A(n) ______ variance is the difference between what the total sales should have been, given the actual level of activity for the period, and the actual total sales.
revenue
 
Unfavorable activity variances may not indicate bad performance because:
increased activity should result in higher variable costs.
 
Not for profit organizations:
may have revenue sources that are fixed.
usually have significant funding sources other than sales.
 
Performance reports for cost centers:
do not include revenues or net income.
 
If management plans the budget based on 40 hours of operation and weather causes the business to be opened
for only 32, what needs to be adjusted on the flexible budget?
Hourly wages
 
A(n) _______ budget is prepared before the period begins and is only valid for one level of activity
Planning
 
The difference between what the total sales should have been, given the actual level of activity for the period,
and the actual total sales is a(n) _______ variance
Revenue
 
When a static planning budget is compared to actual results at a different activity level:
changes in costs are expected due to changes in activity.
increases or decreases in net income are not adequately explained.
 
Given planning budget revenue of $284,000, actual revenue of $275,000, and flexible budget revenue of $290,000, there is a(n) __________ ___________ variance.
unfavorable revenue; favorable activity
 
Comparing actual costs to static planning budget costs only makes sense if the costs are:
Fixed
 
Comparing the static planning budget to actual results only makes sense when:
all costs are fixed and the actual activity level is the same as the budgeted activity level
 
The difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost is a _________ variance.
Spending
 
The planning budget calls for total variable costs for supplies to be $6,250 based on 1,000 units with planned revenue
at $24,000. A total of 1,200 units were actually produced and sold. What amounts should appear on the flexible budget?
$28,800 Revenue and $7,500 for supplies
 
The planning budget calls for total variable costs for supplies to be $6,250 based on 1,000 units with planned revenue at
$24,000. A total of 1,200 units were actually produced and sold. What amounts should appear on the flexible budget?
$7,500 for supplies
 
Revenues and costs are adjusted as the level of activity changes on a(n) _____ budget.
Flex
 
A cost center's performance report does not include ______.
revenue
net operating income
 
Variances are more accurate when using ______.
multiple cost drivers
 
If the planned budget revenue for 5,000 units is $120,000, what is the flexible budget revenue if the actual activity is 4,500 units?
$108,000
 
Given planning budget revenue of $284,000, actual revenue of $275,000, and flexible budget revenue of $290,000,
there is a(n) _____ activity variance.
Favorable
 
Performance reports for cost centers ______.
do not include revenues or net income
 
Unfavorable activity variances may not indicate bad performance because ______.
increased activity should result in higher variable costs
 
The difference between a revenue or cost item in the planning budget and the same item in the flexible budget
at the actual level of activity is a(n) ______ variance.
activity
 
The percentage change in net income in the flexible budget is greater than the percentage change in activity due to _____ costs.
mixed
 
A favorable activity variance may not indicate good performance because a favorable activity variance ______.
for a variable cost will occur simply because the actual level of activity is less than the budgeted level of activity
 
The difference between a revenue or cost item in the planning budget and the same item in the flexible budget
at the actual level of activity is a(n) _____ variance.
activity
 
Fancy Nails cost formula for electricity is $40 per operating day plus $0.15 per client served. Calculate Fancy Nails’ electricity
budget in a month when the business is going to be open for 24 days and they expect to serve a total of 2,100 clients. ______.
$1,275
 
A(n) ____________ variance is the difference between a revenue or cost item in the static planning budget and the same item in the flexible budget at the actual level of activity.
activity
 
Variances are more accurate when using:
multiple cost drivers
 
A performance report shows that the planned revenue was $200,000, the flexible budget revenue was $225,000,
and actual revenue was $223,000. Which of the following statements are true?
The revenue variance is the difference between the flexible budget and actual results
 
Activity variance
Subtract planning budget from flexible budget
 
Revenue and spending variances
subtract flexible budget from actual results
 
The XYZ corporation expected to produce and sell 25 tractors in May but was only able to produce and sell 19.
Possible activities variances include
Less factory supplies used, lower factory utility costs, and lower revenue
 
Comparing actual costs to what the costs should have been for the actual level of activity done is on a(n) ________ budget
Flexible
 
What is the revenue variance and activity variance if the planned revenue was $200k, Flexible budget
was $225K and actual revenue was $223K.
Revenue variance is $200,000 Unfavorable
Activity variance is $25,000 Favorable
 
If the activity level for the month is 4,000 units, actual revenue is $6,000 actual variable costs are $0.20 unit
and actual fixed costs total $500 which if the following are true?
$4,700 net income, $1,300 in total costs
 
A spending variance is the:
difference between what a cost should have been at the actual level of activity and the actual amount of the cost
 
Unfavorable variance
Actual revenue is less than budgeted revenue
 
Revenue variance
is the difference between the flexible budget and actual results
 
Favorable variance
Actual revenue is more than budgeted revenue
 
What items would be omitted on a cost center's performance report?
Net operating income and revenue
 
An unchanged planning budget is known as a(n) _____ planning budget.
static
 
An estimate of what revenue and costs should have been, based on the actual level of activity is shown on a ______.
flexible budget
 
A static budget is being compared to actual activity. The variance is F for net income but U for most expenses.
This suggests that actual activity was lower than budgeted.
False
 
Because of fixed costs, net operating income does not change in proportion to changes in the level of activity
which is called the _____ effect.
leverage
 
Fancy Nails has an estimated cost for supplies of $0.75 per manicure.
June's budget was based on 2,400 manicures and a total cost for supplies of $1,800.
June's actual activity was 2,500 manicures.
Total cost of supplies in June was $2,000.
Calculate the spending variance for June.
$125 F
 
 
The variance analysis cycle ______.
begins with the preparation of performance reports
 
When preparing a flexible budget, the level of activity ______.
affects variable costs only
 
The concept that focuses on important variances and ignores trivial ones is ______.
management by exception
 
A budget that is prepared at the beginning of the period for a specific level of activity is called a ______ budget.
planning
 
A budget that takes into account how costs are affected by changes in level of activity is a(n) _____ budget.
flex
 
When comparing the static planning budget to actual activity, a problem that arises when actual activity is higher
than budgeted activity is that ______.
net income is higher than expected but all or most expense variances are unfavorable
 
A flexible budget shows ______.
what fixed costs should have been at the actual level of activity
what revenue should have been at the actual level of activity
what variable costs should have been at the actual level of activity
 
When the planned level of activity is 900 units and the actual level of activity is 1,000 units, the total variable
cost for supplies on the flexible budget:
Could be higher or lower on the actual cost of supplies, and should be higher than on the planning budget
 
Revenue on the planning budget is expected to be $380,000 for 1,900 client visits. The revenue on flexible
budget is $410,000 showing that there were actually ________ client visits.
2,050
 
The percentage change in the net income in the flexible budget is greater than the percentage change in activity due to ________ costs
Fixed
 
The difference between what the total sales should have been, given the actual level of activity for the period,
and the actual total sales is a(n) _____ variance.
revenue
 
When the activity level increases by 15%, net operating income in the flexible budget will ordinarily increase by ______ 15%.
more than
 
Companies use the ______ ________ cycle to evaluate and improve performance
Variance; Analysis
 
Variances are more accurate when using:
Multiple cost drivers
 
Nonprofit organizations:
May have revenue sources that are fixed, and usually have significant funding sources other than sales
 
A budget that is prepared at the beginning of the period for a specific level of activity is a _____ budget
Planning
 
When actual revenue ______ what the revenue should have been, the variance is labeled favorable.
exceeds
 
A revenue variance is the ______.
difference between what revenue should have been at the actual level of activity and the actual revenue
 
The difference between how much a cost should have been, given the actual level of activity, and the actual
amount of the cost is a(n) _____ variance.
spending
 
A company's cost of supplies for when 5,000 units are sold is $7,500 of fixed costs plus $1.25 variable cost per unit.
What is the increase in the total cost of supplies if 350 more units are sold than expected?
$437.50
 
When static planning budget is compared to actual results at a different activity level:
Changes in costs are expected due to changes in activity and increases or decreases in net income are not adequately explained
 
Fixed costs are often more controllable than variable costs
True
 
Options to generate a favorable revenue and spending variance include:
protecting the selling price
increase operating efficiency
reduce the price of inputs
 
Given planning budget revenue of $284,000, actual revenue of $275,000, and flexible budget revenue of $290,000,
there is a ______ variance:
Favorable
 
A performance report shows that planned revenue was $200,000, the flexible budget revenue was $225,000
and the actual revenue was $223,000. Which of the following statements are True?
The activity variance is $25,000 and the revenue variance is $2,000 unfavorable
 
Unfavorable activity variances may not indicate bad performance because:
Increased activity should result in higher variable costs
 
Fancy Nails cost formula for electricity is $40 per operating day plus $0.15 per client served. Calculate Fancy Nails' electricity
budget in a month when the business is going to be open for 24 days and they expect to serve a total of 2,100 clients
$1,275
 
Given planning budget revenue of $284,000 actual revenue of $275,000 and flexible budget revenue of $290,000 there is a(n) ___________ variance
Unfavorable revenue, and Favorable activity
 
he spending variance is labeled as favorable when the ______.
actual cost is less than what the cost should have been at the actual level of activity
 
True or false: Activity variances help managers understand why actual net income differs from what it should have been
at the actual level of activity.
False
 
If the actual cost is greater than what the cost should have been, the variance is labeled as _____.
favorable
 
A flexible budget performance report combines the ______.
activity variances with the revenue and spending variances
 
A performance report shows that the planning revenue was $240,000, the flexible budget revenue was $225,000,
and actual revenue was $230,000. The activity variance is $_____ _____.
15,000U
 
Options to generate a favorable revenue and spending variance include ______.
protecting the selling price
reduce the prices of inputs
increase operating efficiency
 
True or false: Fixed costs are often more controllable than variable costs.
True
 
Nonprofit organizations ______.
may have revenue sources that are fixed
usually have significant funding sources other than sales
 
A cost center's performance report does not include ______.
net operating income
 
The prominent difference between performance reports in nonprofit and for-profit organizations is that nonprofit organizations ______.
usually receive significant funding from sources other than sales
 
Using multiple cost drivers on a flexible budget report will generally ______.
increase accuracy
 
One option to generate a favorable ______ variance for net operating income is to increase the number of clients.
activity
 
Which of the following statements is true?
Fixed costs are often more controllable than variable costs.
 
To understand why actual net operating income differs from what it should have been at the actual level of activity,
the ______ variances should be analyzed.
revenue and spending
 
An unchanged planning budget is known as a(n) _____ planning budget.
static

Homework  1.1 1.2  2.1 2.2  3.1 3.2  4.1 4.2 5.1 5.2  6.1 6.2  7.1  7.2  8.1  8.2  9.1   9.2  10.1  10.2  11.1  11.2  12.1 12.2  13.1  13.2  14.1  14.2  15.1   15.2
Learnsmart  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15   |  Exam  1  2  3  4  5  6  7  8  9  10  11  12   13  14  15  |  Final Exam 1   2    Homework Help?