A306 Exam 3 Questions with Correct Answers Graded A+
T/F: Budgets reflect what happened over the previous period - Answers False
Flexible budgets differ from the master budget by changing what aspect? - Answers Quantity. FB uses
AQ and the MB uses BQ
The difference between the master budget and the flex budget reflects what variance? - Answers
quantity variances
Variance analysis provides good information to management, but what is the issue? - Answers It is
delayed
Which budget is directly impacted by the sales budget - Answers production budget
T/F: In a centralized decision-making environment, the manager delegates decision making to
individuals with relevant experience and knowledge - Answers false
How do you calculate flex budget? - Answers AQ x BP
The amount we expect to pat for the direct materials or DL is called... - Answers Budget or standard
price
T/F: The production manager is responsible for the quality of materials used in production - Answers
false
What inventory needs to be considered when calculating the budgeted units of production? - Answers
Finished goods inventory
T/F Budgets are prepared for different time periods - Answers true
Which variances require the master (planning) budget to calculate? - Answers Total profit variance and
sales volume variance
T/F: The difference between the master budget and the flex budget reflects activity variances. - Answers
true
The material spending variance can be decomposed into which 2 variances - Answers material quantity
variance and the material price variance
Master budgets are used as a ____ against actual performance - Answers reference point/ benchmark
What can cause a sales price variance? - Answers low quality product, price war competition, suppliers
changing input prices
What us the cornerstone or foundational step in every budget? - Answers Budgeting revenue
, Which 2 variances when totaled equal the VMOH spending variance? - Answers VMOH efficiency
variance and VMOH rate variance
Labor efficiency and labor rate variances are responsible for ___. - Answers labor spending variance
What do companies use to supplement variance analysis - Answers non-financial controls and measures
Which budgeting approach has the advantage of reducing the "Super Star" syndrome? - Answers Top-
down approach
If the flex budget contribution margin is $27000 and the master budget contribution margin is $30000,
what is the total activity variance (or sales volume variance)? - Answers $3000 unfavorable. Master-
Flex= 30000-27000
A company provides the following info:
Material price variance: 800F
Material spending variance: 250F
Budgeted material/unit: 1.5 ft
Budgeted material price: $6ft
Actual units produces: 100
Budgeted units produces: 120
What is the material quantity variance - Answers $550U
SQA: 100units*1.5 ft= 150ft*$6= $900
Material Spending Variance= Mat Qty Var+ Mat Price Var 250F = X + 800F
Mat Qty Var = 550U
If the purchasing manager bought less expensive raw materials of lower-than-average quality, what
variances would this create? - Answers favorable materials price variance and unfavorable materials
quantity variance
The material spending variance is $550 F and the material quantity variance is $600 U. The actual
amount spent on materials was $37,570. What amount appears in the as-if budget. - Answers $38720
Mat spending var= mat qty var + mat price var
$550F=$600U + X
Mat price var = $1150F
T/F: Budgets reflect what happened over the previous period - Answers False
Flexible budgets differ from the master budget by changing what aspect? - Answers Quantity. FB uses
AQ and the MB uses BQ
The difference between the master budget and the flex budget reflects what variance? - Answers
quantity variances
Variance analysis provides good information to management, but what is the issue? - Answers It is
delayed
Which budget is directly impacted by the sales budget - Answers production budget
T/F: In a centralized decision-making environment, the manager delegates decision making to
individuals with relevant experience and knowledge - Answers false
How do you calculate flex budget? - Answers AQ x BP
The amount we expect to pat for the direct materials or DL is called... - Answers Budget or standard
price
T/F: The production manager is responsible for the quality of materials used in production - Answers
false
What inventory needs to be considered when calculating the budgeted units of production? - Answers
Finished goods inventory
T/F Budgets are prepared for different time periods - Answers true
Which variances require the master (planning) budget to calculate? - Answers Total profit variance and
sales volume variance
T/F: The difference between the master budget and the flex budget reflects activity variances. - Answers
true
The material spending variance can be decomposed into which 2 variances - Answers material quantity
variance and the material price variance
Master budgets are used as a ____ against actual performance - Answers reference point/ benchmark
What can cause a sales price variance? - Answers low quality product, price war competition, suppliers
changing input prices
What us the cornerstone or foundational step in every budget? - Answers Budgeting revenue
, Which 2 variances when totaled equal the VMOH spending variance? - Answers VMOH efficiency
variance and VMOH rate variance
Labor efficiency and labor rate variances are responsible for ___. - Answers labor spending variance
What do companies use to supplement variance analysis - Answers non-financial controls and measures
Which budgeting approach has the advantage of reducing the "Super Star" syndrome? - Answers Top-
down approach
If the flex budget contribution margin is $27000 and the master budget contribution margin is $30000,
what is the total activity variance (or sales volume variance)? - Answers $3000 unfavorable. Master-
Flex= 30000-27000
A company provides the following info:
Material price variance: 800F
Material spending variance: 250F
Budgeted material/unit: 1.5 ft
Budgeted material price: $6ft
Actual units produces: 100
Budgeted units produces: 120
What is the material quantity variance - Answers $550U
SQA: 100units*1.5 ft= 150ft*$6= $900
Material Spending Variance= Mat Qty Var+ Mat Price Var 250F = X + 800F
Mat Qty Var = 550U
If the purchasing manager bought less expensive raw materials of lower-than-average quality, what
variances would this create? - Answers favorable materials price variance and unfavorable materials
quantity variance
The material spending variance is $550 F and the material quantity variance is $600 U. The actual
amount spent on materials was $37,570. What amount appears in the as-if budget. - Answers $38720
Mat spending var= mat qty var + mat price var
$550F=$600U + X
Mat price var = $1150F
