Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 7, Problem 20Q
In comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a favorable variance and still not have met revenue expectations?
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A revenue variance is favorable if the actual revenue exceeds what the revenue should have been for the actual level of activity of the period.
Select one:
True
False
Sales volume variances are attributable to differences between planned and actual activity volumes, as well as differences in selling price.
True or False
Identify the cause of an unfavorable variance in profit.
a.Actual labor cost is lower than budget
b.Actual sales volume is higher than budget
c.Actual material cost is higher than budget
d. Actual sales price is higher than budget
Explain
Chapter 7 Solutions
Principles of Cost Accounting
Ch. 7 - Prob. 1QCh. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Explain zero-based budgeting and how it differs...Ch. 7 - Prob. 6QCh. 7 - Which operating budget must be prepared before the...Ch. 7 - Prob. 8QCh. 7 - Why is it important to have front-line managers...Ch. 7 - If the sales forecast estimates that 50,000 units...
Ch. 7 - What are the advantages and disadvantages of each...Ch. 7 - What three operating budgets can be prepared...Ch. 7 - Prob. 13QCh. 7 - What are the three budgets that are needed in...Ch. 7 - Why might Web-based budgeting be more useful than...Ch. 7 - What is a flexible budget?Ch. 7 - Why is a flexible budget better than a master...Ch. 7 - Why is it important to distinguish between...Ch. 7 - Why is the concept of relevant range important...Ch. 7 - In comparing actual sales revenue to flexible...Ch. 7 - How would you define the following? a. Theoretical...Ch. 7 - Is it possible for a factory to operate at more...Ch. 7 - If a factory operates at 100% of capacity one...Ch. 7 - How is the standard cost per unit for factory...Ch. 7 - When allocating service department costs to...Ch. 7 - The sales department of Macro Manufacturing Co....Ch. 7 - The sales department of F. Pollard Manufacturing...Ch. 7 - Barnes Manufacturing Co. forecast October sales to...Ch. 7 - Prepare a cost of goods sold budget for the Crest...Ch. 7 - Prepare a cost of goods sold budget for MacLaren...Ch. 7 - Roman Inc. has the following totals from its...Ch. 7 - Starburst Inc. has the following items and amounts...Ch. 7 - Using the following per-unit and total amounts,...Ch. 7 - Cortez Manufacturing, Inc. has the following...Ch. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Calculating factory overhead The normal capacity...Ch. 7 - The Sales Department of Minimus Inc. has forecast...Ch. 7 - Sales, production, direct materials, direct labor,...Ch. 7 - Budgeted selling and administrative expenses for...Ch. 7 - Prob. 4PCh. 7 - Selling and administrative expense budget and...Ch. 7 - Preparing a flexible budget Use the information in...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Preparing a performance report Use the flexible...Ch. 7 - Flexible budget for factory overhead Presented...Ch. 7 - Prob. 10PCh. 7 - Overhead application rate Creole Manufacturing...Ch. 7 - Overhead application rate Roll Tide Manufacturing...Ch. 7 - Flexible budgeting, performance measurement, and...
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- What are some possible reasons for a material price variance? A. substandard material B. labor rate increases C. labor rate decreases D. labor efficiencyarrow_forwardWhen is the material price variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard pricearrow_forwardWhat assumption is implicitly made about cost behavior when actual results are directly compared to a static planning budget? Why is this assumption questionable?arrow_forward
- Considering the variance analysis, which of the following statements is true? a. When there is favourable variance the actual profit is higher than the budgeted profit (lower costs than budgeted or higher income than budgeted.. b. When there is favourable variance the actual profit is lower than the budgeted profit (higher costs than budgeted or higher income than budgeted. c. None of the answers provided are true d. When there is adverse variance the actual profit is lower budgeted profit (lower costs than budgeted or lower income than budgeted. e. When there is adverse variance the actual profit is higher budgeted profit (higher costs than budgeted or lower income than budgeted.arrow_forward2. Which of the following would result to a favorable volume variance? a)There is a favorable spending variance b)Production is equal to sales c)There is a favorable efficiency variance d)Production is greater than budgetedarrow_forwardConsidering the variance analysis, which of the following statements is true? O a. When there is adverse variance the actual profit is lower budgeted profit (lower costs than budgeted or lower income than budgeted. O b. When there is adverse variance the actual profit is higher budgeted profit (higher costs than budgeted or lower income than budgeted. O c. When there is favourable variance the actual profit is higher than the budgeted profit (lower costs than budgeted or higher income than budgeted.. O d. When there is favourable variance the actual profit is lower than the budgeted profit (higher costs than budgeted or higher income than budgeted. O e. None of the answers provided are truearrow_forward
- Which of the following would result to a favorable volume variance? Production is equal to sales There is a favorable spending variance There is a favorable efficiency variance Production is greater than budgetedarrow_forwardThis variance is the difference involving spending less or using less than the budgeted amount.arrow_forwardWhich of the following is NOT a use of CVP (Cost-Volume-Profit) analysis? a.what is the impact on the break-even point of an increase or decrease in fixed costs b.how many units must be sold to break even c.the identification of price and efficiency variances d.the ability to conduct sensitivity analysis of cost or price changesarrow_forward
- Show how managers can gain insight into the causes of a sales-volume variance by subdividing the components of this variance.arrow_forwardWhat can you tell me about variance, as it concerns fixed or variable budgets? What is favorable variance in budget?arrow_forwardWhat assumption is implicitly made about cost behavior when a budget is directly compared toactual results? Why is this assumption questionable?arrow_forward
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