CHAPTER 1
The general functions of management in all levels of managerial
1. One of the differences in management accounting and financial
accounting is that the former focuses on precision while the latter
focuses on timeliness. FALSE
2. Controllership comprise the plan of an organization and all its coordinate
methods and measures in order to protect the assets, check the
accuracy and reliability of accounting data, promote operational
efficiency, and encourage adherence to prescribed managerial policies.
FALSE
3. Unfavorable variance always results to exceptional variance.
4. Exceptional variances are material, unusual, abnormal and are beyond
normal expectations. TRUE
5. Treasurership deals with the management of wealth. It includes
mastering the sources of funds and the exercise of prudence in using
the resources of an organization. TRUE
6. Management accounting information shouldn‟t have predicted value.
The decisions to be made must not be forward looking. FALSE
7. Lack of clarity creates noise in information system theory that further
causes miscommunication or breakdown in communication. TRUE
8. Information that arrives before the decision is already made may find no
usefulness but only to the limits of comparative analysis and long-term
control. TRUE
9. A manager should be informed of all the available information on hand
to avoid unnecessary errors which may lead to increase in costs or
damaged reputation. TRUE
10. A rational, or better intelligent decision based on quality information
would mostly likely lead to decreased shareholder‟s value. FALSE
11. Management Process covers both the intelligent and behavioral
aspects of management. FALSE
12. Managers make decisions in all levels of managerial authority and
areas of managerial functions. TRUE
13. The planning and controlling cycle sums up the pioneering areas of
management accounting. TRUE
14. Managerial Authority relates to organizational structure and may be
classified as lower management, middle management and supervisory
management. FALSE
15.
powers are planning, organizing, staffing, directing and controlling.
TRUE
1. Financial reports known as _ are representative of the company‟s
operations, changes, and conditions, and are prepared holistically.
a) Financial Statements b) Financial Accounting Information
c) Business Reports
2. Under this, the practitioners of management accounting and financial
management have a responsibility to maintain an appropriate level of
professional competence by ongoing development of their knowledge and
skills.
a) Integrity b) Objectivity c) Competence
3. It is primarily concerned with historical and estimated data
a) Management Accounting b) Financial Accounting
c) Strategic Management Accounting
4. Information that arrives after the decision is already made may find no
usefulness but only to the limits of comparative analysis and long-term
control
a) Usefulness b) Timing c) Accuracy
5. It must be established to define the purpose, directions and activities that
need to be accomplished
a) Purpose b) Agenda c) Goals
6._are organizational controls. These are developed during the formulation
of the organizational design and intended to minimize or reduce errors,
inefficiencies, irregularities, and illegal acts.
a) Application control b) General Control c) Management Control
7. What are the elements of transactional responsibilities?
a.) authorization, execution, recording, custodianship, periodic
accountability
b.) authorization, keeping, management, controllership
c.) execution, periodic accountability, custodianship, treasurership,
controllership
8. This is contributing to frameworks and practices for identifying,
measuring, managing, and reporting risks t the achievement of the
objectives of the organizations.
a.) Strategic Management b.) Performance Management
c.) Risk Management
9. _ deals with the management of wealth of organizations. It includes
mastering the sources of funds and the exercise of prudence in using the
resources of an organization. It is the fiduciary aspect of management.
a.) Treasurership b.) Controllership c.) Custodianship
10. A manager should be informed of all the available information on hand
to avoid unnecessary errors which may lead to increase in costs or
damaged reputation. What attributes of management accounting
information it is?
a.) Accuracy b.) Confidence c.) Completeness
11. Day-to-day decision making is most common to which of the following
activities managers are expected to carry on in organizations?
a) Strategy formulation. b) Directing and motivating. c) Planning.
12. Which of the following best describes the role of a staff position in an
organization?
a) It relates directly to the carrying out of the basic objectives of the
organization.
b) It is supportive in nature, providing service and assistance to other
parts of the organization.
c) It is superior in authority to a line position.
13. Which of the following are not an attributes and principles of
management accounting information?
a) Accuracy b) Channel of Communication c) Accountability
14. are material, unusual, abnormal and are beyond normal expectation.
a) Exceptional Variance b) Normal Variance c) Variance
15. It comprises the plan of an organization and all its coordinate methods
and measures in order to protect the assets, check the accuracy and
reliability of accounting data, promote operational efficiency, and
encourage and adherence to prescribed managerial policies.
a) External Control b) Internal Control c) Preventive Control
CHAPTER 2
FALSE 1. Sunk costs can be changed by a decision made now or to be
made in the future
TRUE 2. Indirect material and indirect labor are manufacturing costs that
are charged to factory overhead.
TRUE 3. A direct cost can be specifically and economically associated with
a single cost object.
TRUE 4. Both costs and expenses give benefits to the business.
TRUE 5. Sunk costs are not constant and not differential.
TRUE 6. Depreciation is considered as non-cash costs.
FALSE 7. Opportunity cost are given up while imputed costs are avoided.
FALSE 8. Marginal cost is a decrease in cost per unit.
TRUE 9. Budgeted costs are those expected to be incurred at the level of
activity used in preparing the master budget.
FALSE 10. Planned costs are future values derived from using forecasting
models such as probability, regression and causal models.
TRUE 11. Avoidable costs are those not incurred once an activity is not
performed. They normally become savings on the part of the business.
TRUE 12. Some examples of indirect departmental costs are salaries of a
department manager and salaries of personnel assigned to the
department.
FALSE 13. Total fixed costs are constant regardless of level of production
and sales.
FALSE 14. Unit fixed cost increases as the production increases and vice
versa.
TRUE 15. Total variable costs change in direct proportion to the change in
the level of production and sales.
TRUE 16. Unit variable costs are constant regardless of levels of
production and sales.
FALSE 17. As production doubles, men increase their productivity and is
translated into 40% savings in labor time.
TRUE 18. There are three popular methods in segregating fixed from
variable costs. They are high-low method, learning curve and scattergraph.
FALSE 19. Scattergraph method extends the regression line to the other
quadrants in the holistic quadrant analysis.
TRUE 20. The point of origin or point of intercept is the value of “a”
TRUE 21. There is always a variance between Y and Y', and the extent of 7. Costs that represent commitments made by the business in its previous
its variance may not be taken into consideration. decisions and cannot be avoided in the future is called?
TRUE 22. Determining the correlation of “X” and “Y” is extremely important a. OPCs b. Sunk cost c. Non-cash cost d. Marginal cost
in planning and controlling activities on account of reliability and accuracy. 8.Costs may be classified in relation to particular product or activity such
FALSE 23. The results of the sampling techniques indicate absolute as:
conformity of the predicted Y value in relation to the actual Y value. a.Opportunity cost and Imputed cost
TRUE 24. This formula, ∑( )( )∑( ) ( ) is used to compute the coefficient of b.Explicit cost and Implicit cost
determination. c. Incremental cost and Marginal cost
d. Out-of-pocket Cost and Non-cash Cost
1. Which of the following costs would be considered relevant in short-term 9. It is an expenditure already incurred and recorded in the accounting
decision making? books.
a. Production costs of goods available for sale a. Actual Cost b. Projected Cost c. Avoidable cost d. Direct Segment cost
b. Incremental fixed costs 10. Which Costs may be classified in relation to the level of activity being
c. Acquisition cost of idle asset to be used in a proposed project considered for estimation?
d. Variable costs a. Budgeted Cost and Standard Cost b. Planned Cost and Actual Cost
2.For product costing purposes, an indirect factory cost c. Controllable Cost and Uncontrollable
a.is not directly chargeable to the company d. Avoidable Cost and Unavoidable Cost
b.is chargeable to prime costs 11. Which Costs may be classified in relation to the occurrence of an
c.is chargeable to conversion costs activity?
d.is never included in the computation of product cost a. Budgeted Cost and Standard Cost
3.Product cost b. Planned Cost and Actual Cost
a.are always expensed in the same period in which they are incurred c. Controllable Cost and Uncontrollable
b. are inventoriable costs d. Avoidable Cost and Unavoidable Cost
c. vary directly with the changes in the cost driver 12. Costs may be classified in relation to its incurrence in a future
d. are always charged to an asset account in the same period in which they undertaking?
are incurred a.Budgeted Cost and Standard Cost
4.Relevant costs are b. Planned Cost and Actual Cost
a.variable past costs b.all fixed and variable costs c. Controllable Cost and Uncontrollable
c.anticipated future costs that will differ among various alternatives d. Avoidable Cost and Unavoidable Cost
d.costs incurred within the relevant range of production 13. It could either be semi variable costs, semi fixed costs or step costs.
5.All of the following are costs in an economist‟s perspective except: a.Mixed Costs b. Semi-fixed costs c. Step costs d. Semi-variable costs
a.Future cost b.Explicit cost c. Imputed cost d. Marginal cost 14. It is a band of activity where the behavior of costs, expenses and
6. Which of the following is not a theoretical cost? revenues is valid.
a. Implicit cost b. Imputed cost c. Opportunity cost d. Explicit Cost a.Learning Curve Theory b.Cost sensitivity
c. Relevant Range d. Unit Costs
15. Vary directly in proportion to the change in the level of production and d. must have a positive y intercept
sales. 24. In regression analysis, the variable that is being predicted is the
a. Mixed Costs b. Variable costs c. Fixed costs d. Semi-variable costs a. response, or dependent, variable b. independent variable
16. Those which incurrences have been committed by the business in the c. intervening variable d. is usually x
past by the reason of contract, acquisition or agreement.
a.Discretionary fixed Costs b.Variable costs CHAPTER 3
c. Fixed costs d.Committed fixed costs FALSE 1. Decentralized organization exists when decisions rest only to the
17. It is called as range analysis and resides on the assumption that any top management.
change in total costs is attributable to the change in variable costs. TRUE 2. An investment center manager decides in which strategic
a.High-low method b.Scattergraph c. Least-squares d. Learning Curve business opportunity should the company undertake.
18. It is change in costs over change in units. FALSE 3. Segment profit less minimum income is equals to residual
a.Total fixed costs b.Fixed Costs income.
c. Total variable costs d.Variable cost rate FALSE 4. Budgeting is the basic purpose of responsibility accounting.
19. The slope which depicts the increase in the value of Y depending on TRUE 5. Responsibility accounting encourages managers and other
the change in the value of “x” employees to achieve enterprise goals not just their own individual goals.
a. Value of “a” c. Values of “a” and “b” TRUE 6. In deciding how or which costs should be assigned to a
b. Value of “b” d. None of the above responsibility center is the degree of controllability.
20. It is the difference between total costs and total variable costs. TRUE 7. Profit centers measures income and relate that income to their
a. Total costs c. Fixed costs invested capital.
b. Costs rate d. Total fixed costs measures income and relate that income to their invested capital.
21. The correlation coefficient is used to determine: TRUE 8. The main difference between the profit center and an investment
a. A specific value of the y-variable given a specific value of the x-variable center is that the emphasis of is on the rate of return in the investment
b. A specific value of the x-variable given a specific value of the y- rather than an absolute profit.
variable TRUE 9. Marginal cost is the amount of cost increase caused by a unit
c. The strength of the relationship between the x and y variables increase in the output of the product.
d. None of these FALSE10. Outlay price is the price that one division of a company charges
22. The coefficient of correlation another division for goods or services provided.
a. is the square of the coefficient of determination TRUE 11. The economic value added is a measure of the management
b. is the square root of the coefficient of determination effectiveness in increasing investor's value.
c. is the same as r-square TRUE 12. The return on equity is equal to profit divided by average
d. can never be negative shareholders' equity.
23. If the coefficient of determination is a positive value, then the FALSE 13. ROI is always suitable method in evaluating the performance of
regression equation an excellent manager who is assigned to make business turnaround
a. must have a positive slope performance, say to deliver a profitable performance of a previously
b. must have a negative slope unprofitable operations.
c. could have either a positive or a negative slope TRUE 14. Return on investment is increased by increasing profit and
reducing investment.
FALSE 15. Assets turnover is equals to profit divided by net sales.
TRUE 16. A division is an investment center or a business segment having
its separately defined business and financing activities from that of the
parent or controlling company.
TRUE 17. The economic value added (EVA) represents the business unit‟s
true economic profit because a change in the cost of equity capital is
implicit in the cost of capital. the cost of equity is an opportunity cost, that
is, the return that could have been obtained with the best alternative
investment having similar risk.
TRUE 18. The difference between controllable margin and segment margin
is fixed cost and expenses controllable not by the concerned manager but
by others.
TRUE 19. This organizational design emphasizes the strength of functional
areas such as finance, production, marketing, sales, and administration.
TRUE 20. ROI model may not also be the most suitable method in
evaluating the performance of an excellent manager who is assigned to
make a business turnaround performance, say to deliver a profitable
performance of a previously unprofitable operations.
1. Which of the following sentences is NOT true?
a. Responsibility accounting is central to any effective profit planning and
control system.
b. In a budgeting program, each manager is assigned responsibility for
those items of revenues and costs in the budget that he or she is able to
control
c. The deviations between budgeted goals and actual results is outside the
responsibility and control of each manager
d. Each manager‟s performance is judged by how well he or she
manages those items under his or her control.
2.Controllable costs for responsibility accounting purposes are those costs
that are directly influenced by
a.A change in activity b.Sales volume
c. A given manager within a given period of time d. Production volume
3. It is the answerability on the consequences of what had been done,
undone, or had not been done.
a. Authority b. Accountability c. Responsibility d. Centralization
4. It is the power to do or not to do, give orders, give command, give
instructions, or make decisions.
a. Authority b. Accountability c. Responsibility d. Centralization
5. It is the duty to do or not to do an activity according to the order given.
a. Authority b. Accountability c. Responsibility d. Centralization
6.Statement 1: Controllability refers to the power of the manager to decide
or influence the incurrence or non-incurrence of an item, event or activity.
Statement 2: A division is an investment center or a business segment
having its separately defined business and financing activities from its
parent or controlling company.
a. Statement 1 is true, while statement 2 is false
b. Statement 1 is false, while statement 2 is true
c. Both statements are true
d. Both statements are false
7.Statement 1: The cost center manager report should highlight the
variances between the actual and budgeted costs.
Statement 2: There is no need to separate the controllable from the non-
controllable costs in a cost center manager report.
a. Statement 1 is true, while statement 2 is false
b. Statement 1 is false, while statement 2 is true
c. Both statements are true
d. Both statements are false
8.Statement 1: Unfavorable variances indicate savings Statement 2:
Favorable variances indicate excessive costs
a. Statement 1 is true, while statement 2 is false
b. Statement 1 is false, while statement 2 is true
c. Both statements are true
d. Both statements are false
9. It exists when decisions rest only to the top management.
a. Centralization b. Decentralization
c. Empowerment d. Answer not given
10. To make goal setting effective and worthwhile, the goals should be:
a. Just beyond what subordinates are likely to reach
b. Quantitative and approximate
c. Based on superior performer‟s output
d. Specific, objective and verifiable
11. It happens when the authority to make decisions is delegated to
responsible officers in different organizational units.
a. Centralization b. Decentralization
c. Empowerment d. Answer not given
12. A firm earning a profit can increase its return on investments by
a. Increasing sales revenue and operating expenses by the same peso
amount
b. Decreasing sales revenue and operating expenses by the same
percentage
c. Increasing investments and operating expenses by the same peso
amount
d. Increasing sales revenue and operating expenses by the same
percentage
13. He/she has a control or influence over the incurrence of costs.
a. Profit Center Manager b. Cost Center Manager
c. Investment Center Manager d.Revenue Center Manager
14. He/she controls both the generation of income and incurrence of costs.
a. Profit Center Manager b. Cost Center Manager
c. Investment Center Manager d. Revenue Center Manager
15. He/she controls the generation of revenue
a. Profit Center Manager b. Cost Center Manager
c. Investment Center Manager d. Revenue Center Manager
16.Which of the following is TRUE?
a. Either the responsibility or accountability could be present even without
the other
b. Responsibility without authority is absolute power
c. Authority without responsibility is blind obedience
d. In equation, Authority = Responsibility
17. He/she decides on which strategic business opportunity should the
company undertake.
a. Profit Center Manager b. Cost Center Manager
c Investment Center Manager d. Revenue Center Manager
18. This model in evaluating investment center performance encourages
investment center managers to wisely take investment only for those which
are of relevance to their operations.
a. The Residual Income Model b. Economic Value Added
c. Equity Spread d. The Du Pont Model
19. Segmented income statements are most meaningful to managers when
they are prepared
a. On an absorption cost basis b. On a cost behavior basis
c. On a cash basis d. In a single-step format
20. The invested capital turnover rate would include
a. Net income in the numerator b. Net income in the denominator
c. Sales in the numerator d. Sales in the denominator
CHAPTER 4
FALSE 1. If there is no alternative use of capacity, the incremental profit
(loss) is the sum of incremental sales and incremental costs and expenses.
TRUE 2.If the acceptance of the special sales order creates an
unnecessary competition to the regular product sales, the special sales
order is normally rejected.
TRUE 3. If the incremental sales are greater than the incremental costs of
further processing, it is advisable to sell the product as it is to maximize
profit.
TRUE 4. Relevant cost is a cost that is applicable to a particular decision in
the sense that it will have a bearing on which alternative the manager
selects.
FALSE 5. Planning is the core driver in making non routine operating
decisions.
TRUE 6. A division, product line, department, or business unit is
represented by a business segment.
FALSE 7. If the segment margin is negative, it means that the segment is
contributing to the overall profitability of the organization.
FALSE 8. If you continue the segment, the overall profitability of the
business will be diminished by the amount of the positive segment margin.
TRUE 9. Segment margin is sometimes labeled as division margin, product
margin, or department margin.
TRUE 10. Any cost that is avoidable is relevant for decision purposes.
FALSE 11. Strategic decisions are regularly made to impact medium-term
organizational activities. Its focus is profitability and liquidity and it is
concerned with customer‟s satisfaction.
TRUE 12. Differential and future-oriented are the two important features of
relevant costs
TRUE 13. Decisions may be strategic, tactical or operational.
TRUE 14. The primary interests served of strategic decision are financial
investors while tactical decision served the customers
FALSE 15. The sunk costs refer to the highest possible benefit that may be
derived from the best alternative use of capacity.
1. Which factor is not relevant in deciding whether or not to accept a
special order?
A. Incremental revenue that will be earned.
B. Additional costs that will be incurred.
C. The effect that the order will have on the company‟s regular sales
volume and selling price.
D. The average cost of production if the special order is accepted.
2. The opportunity cost of making a component part in a factory with no
excess capacity is the …?
A. Cost of the production given up in order to manufacture the component.
B.Net benefit forgone from the best alternative use of the capacity
required.
C. Variable manufacturing cost of the component.
D. Total manufacturing cost of the component.
3. Which of the following cost are always irrelevant in decision making?
A. Avoidable Cost B. Sunk Cost C. Opportunity Cost D. Fixed Cost
4. An Item whose entire amount is usually a differential cost is
A. Factory Overhead B. Direct cost C. Conversion Cost D. Period Cost
5. In the development of accounting data for decision-making purpose,
relevant cost are defined as
A. Future cost which will differ under each alternative course of
action
B. The change in prime cost under each alternative course of action
C. Standard cost which are developed by time and motion study
techniques because of their relevance to managerial control.
D. Historical cost which are the best available basis for estimating future
costs.
6. The relevance of particular cost to a decision is determined by the
A. Potential effect/s on the decision B.Amount of Cost
C.Riskiness of the Decision D. Accuracy of the cost
7. The following are example of non-routine operating decisions except
A. Accept or Reject a Special Order B. Make or Buy a Product Component
C. Selecting, hiring and training of personnel D Sell as is or process
further
8. Among the costs relevant to a make-or-buy decision, include avoidable
fixed costs as well as
A. Unavoidable costs. B. Variable manufacturing costs
C. Plant depreciation. D. Real estate taxes.
9. It is a revenue that differs between alternatives and makes a difference
in decision making
A. Incremental Revenue B. Sales Revenue
C. Unavoidable Revenue D. Relevant Revenue
10. In making decision whether to sell or process further a product, this
kind of analysis is being use to examine whether the additional revenue will
exceed the additional costs to be incurred on the additional process
A. Internal Analysis B. Production Analysis
C. Budget Analysis D. Incremental Analysis
11. Which would be an implicit cost for a firm? The cost:
A) of worker wages and salaries for the firm.
B) paid for leasing a building for the firm.
C) paid for production supplies for the firm.
D) of wages foregone by the owner of the firm.
12. The marginal product of labor curve shows the change in total product
resulting from a:
a) one-unit increase in the quantity of a particular resource used, letting
other resources vary.
b) one-unit increase in the quantity of a particular resource used,
holding constant other resources.
c) change in the cost of a variable resource.
d) change in the cost of a fixed resource.
13. are defined as the change in overall costs that result from particular
decisions being made.
a) Incremental costs b) Book costs c) Sunk costs d) None of the above
14. Incremental costs are also known as
a)avoidable costs b) escapable costs
c) differential costs d) all of the above
15. In order to maximise profits a firm endeavours to
a) increase its revenue b) lower its cost
c) both (A) and (B) d) increase its capital
CHAPTER 5
TRUE 1. The premium pricing model is based on the principle of scarcity of
resources and rationality of men.
TRUE 2. If the elasticity of demand is greater than 1, demand is considered
elastic.
FALSE 3. The life stages of a product are normally divided into three. The
controlled-market-based pricing based its prices on government regulations
or implied agreements among key players in the market.
TRUE 4. The controlled-market-based pricing based its prices on
government regulations or implied agreements among key players in the
market.
TRUE 5. A gross profit variance is a difference between the actual gross
profit and a base gross profit.
FALSE 6. The sales yield variance is sometimes called as the cost quantity
variance.
TRUE 7. Sales is a factor of number of units sold and a sales price.
TRUE 8. The market skimming pricing strategy is a part of a deliberate
attempt to reach a market segment that is willing to pay a premium price for
a particular brand or for a specialized or unique product.
FALSE 9. A market penetration pricing strategy calls for setting price levels
that are high enough to quickly build market share.
TRUE 10. Transfer pricing is a term that applies to transactions between
different divisions or units of the same company.
TRUE 11. Penetration prices often mean that the product may be sold at a
loss for a certain period of time.
FALSE 12. Mark-up pricing is common in retailing.
TRUE 13. An organization uses various types of skimming, penetration,
and odd pricing to increase an organization's sales.
TRUE 14. The targeted value and price drive decisions about what costs
can be incurred and the resulting product design.
FALSE 15. There are three key elements to price setting:
competitors‟ prices, consumers‟ perceptions of the product‟s value and
costs.
1. In this case, the net quantity variance may be divided into sales mix
variance and sales yield variance.
a. Gross profit variations analysis b. Contribution margin variance analysis
c. Multi-product sales operations d. Cost-based pricing
2. The sales yield price is also called as
a. Final sales volume variance b. Sales price variance
c. Sales mix variance d. Cost price variance
3. To compute for sales price variance, the formula to be use is
a. ∆ x unit gross profit last year b. ∆UCP x QSTY
c. ∆ x unit gross profit of current year d. ∆USP x QSTY
4. To compute for cost price variance, the formula to be use is
a. ∆ x unit gross profit last year b. ∆UCP x QSTY
c. ∆ x unit gross profit of current year d. ∆USP x QSTY
5. The mix variance is unfavorable if
a. The actual quantity sold per product is greater than the actual
quantity at standard sales mix.
b. The actual quantity sold per product is less than the actual quantity at
standard sales mix.
c. The actual quantity sold per product is equal to than the actual quantity
at standard sales mix.
d. None of the above.
6. If sales this year and sales last year are normally available. The item to
be calculated is the amount of _.
a. Gross profit variance b. Cost of goods sold at unit cost prices last year.
c. Sales this year at unit sales prices last year. d. Sales price variance
7. If cost this year and cost last year are normally available. The item to be
calculated is the amount of _.
a. Cost of goods sold at unit sales prices last year
b. Cost price variance
c. Cost quantity variance
d. Sales this year at unit sales prices last year.
8. STY @ USPLY also means
a. Applied Cost this year b. Applied Sales this year
c. Sales price variance d. Cost price variance
9. If the given is the Sales quantity variance, then what is the formula to be
used
a. STY @ USPLY = Sales this year / (1± Sales price variance ratio )
b. CTY @ UCPLY = Cost this year / (1± Cost price variance ratio )
c. STY @ USPLY = Sales this year / (1± Sales quantity variance ratio )
d. CTY @ UCPLY = Cost this year / (1± Cost quantity variance ratio )
10. It given may be a sales price variance ratio or a sales quantity variance
ratio
a. Sales price variance rate b. Sales this year at unit sales prices last year
c. Sales quantity variance rate d. Sales variance ratio
11. In gross profit variation analysis, if the cost variance is zero such
variance indicates that:
a. manufacturing management was unable to keep production costs at
budgeted costs.
b. manufacturing management was able to control production costs below
budgeted costs.
c. manufacturing management was able to control production costs
at budgeted costs.
d. manufacturing management was not able to control production at
budgeted cost but purchasing was able to keep at budgeted price.
12. The difference between the master budget amount and the amounts in
the flexible budget are due to:
a. activity level variances b. favorable variances
c. gaps in affectivity d. unfavorable variances
13. In analyzing operation, the controller of Jay Corporation found a
250,000 favorable flexible budget revenue variance. The variance was
calculated by comparing the actual result with the flexible budget. The
variance can be wholly explained by:
a. the total flexible budget variance b. changing in unit selling prices
c. the total static budget variance d. changes in the number of units sold
14. Actual and budgeted information about the sales of a product are
presented below for June:
Actual Budget
Units 8,000 10,000
Sales revenue 92,000 105,000
The sales price variance for June was:
a. 8,000 F b. 10,000 F c. 10,000 UF d. 105,000 UF
15. What is the formula in computing the materials quantity variance?
a. (Actual unit price – standard unit price) x Actual quantity sold
b. (Sales price variance – unit sales price) x quantity sold this year
c. (Actual quantity – standard quantity) x Standard unit price
d. sales price variance + Cost price variance