general business data bank

31. A standard that assumes perfect implementation and maximum efficiency is called a(n):

A. Currently attainable standard.

B. Practical standard.

C. Efficiency standard.

D. Normal standard.

E. Ideal standard.

32. A standard that sets the performance criterion at a level that workers with proper training and experience can attain most of the time without extraordinary effort is a(n):

A. Currently attainable standard. B. Practical standard.

C. Efficiency standard. D. Ideal standard.

33. The total variable cost flexible-budget variance for any given period:

A. Is the difference between actual total variable cost incurred and master budgeted total variable cost. B. Is decomposable into sales-volume and sales-mix components.

C. Is decomposable into production-volume and production-mix components.

D. Can be broken down into flexible-budget variances for major costs such as materials, labor, variable overhead, and variable selling expenses.

34. The flexible-budget variable cost variance includes all of the following except:

A. Direct materials variances.

B. Sales price variance.

C. Variable selling and administrative expenses variances.

D. Direct labor variances.

E. Variable overhead variances.

35. Which one of the following is the difference in direct material costs between the actual amount incurred and the total standard cost in the flexible budget for the units manufactured during the period?

A. Direct materials price variance.

B. Direct materials mix variance.

C. Direct materials usage variance.

D. Direct materials flexible-budget variance.

E. Direct materials efficiency variance.

36. For a direct material, which one of the following is the difference between the actual and standard unit price of the direct material multiplied by the actual quantity of the material purchased?

A. Direct materials price variance.

B. Direct materials volume variance.

C. Direct materials usage variance.

D. Direct materials flexible-budget variance.

E. Direct materials mix variance.

37. Which one of the following, for each direct material used in production, is the difference between the actual units of material used and the total standard units of the direct material that should have been used for the units of the product manufactured during the period, multiplied by the standard unit price of the direct materials?

A. Direct materials sales-volume variance.

B. Direct materials rate variance.

C. Direct materials usage variance.

D. Direct materials flexible-budget variance.

E. Direct materials mix variance.

38. Which one of the following is the difference between the actual and standard hourly wage rate multiplied by the actual direct labor hours worked during a period?

A. Total direct labor standard cost variance.

B. Direct labor efficiency variance.

C. Direct labor usage variance.

D. Direct labor flexible-budget variance.

E. Direct labor rate variance.

39. Which one of the following is the difference between the actual and standard direct labor hours for the units manufactured, multiplied by the standard hourly wage rate per hour?

A. Direct labor price variance.

B. Direct labor efficiency variance.

C. Total direct labor standard cost variance.

D. Direct labor flexible-budget variance.

E. Direct labor operating-income variance.

40. The primary purpose of calculating standard cost variances each period is:

A. To achieve financial control regarding operating activities.

B. To facilitate the recording of manufacturing costs during a period.

C. To adjust reported income to flexible-budget income.

D. To diagnose the problems of operating problems as well as what should be done to correct such problems.

41. A firm uses a JIT inventory system and has an unfavorable selling price variance for the period just ended. If the proportion of the total variable manufacturing costs to total sales in both the flexible budget and the actual operating results is 70%:

A. The firm has an unfavorable total variable manufacturing cost variance.

B. The firm has a favorable total variable manufacturing cost variance.

C. The firm has an unfavorable total flexible-budget variance.

D. The firm has a favorable contribution margin variance.

E. The firm has a favorable total flexible-budget variance.

42. The effect on sales, expenses, or operating income of changes in units sold is measured by the:

A. Flexible-budget variance.

B. Sales-volume variance.

C. Sales price variance.

D. Operating income flexible-budget variance.

E. Production-volume variance.

43. The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the:

A. Controllable variance. B. Master budget variance. C. Flexible-budget variance.

D. Quantity (or efficiency) variance. E. Price variance.

44. Which of the following is not a plausible cause of a direct labor efficiency variance?

A. Poor scheduling of work.

B. Inadequate supervision of workers.

C. Materials used are different from those specified.

D. Failure to update the standard cost to conform to wage provisions in the union contract. E. Batch sizes during the period were different from standard.

45. The direct materials usage ratio for a given period is:

A. Defined as the ratio of quantity purchased to quantity used.

B. Defined as the inverse of the materials quantity variance for the period. C. Entered into its own variance account at the end of the period.

D. A useful indicator of performance by the manufacturing department. E. A useful indicator of performance of the purchasing department.

46. A favorable cost variance of significant magnitude:

A. Is the result of exceptional planning.

B. May lead to future improvements in production methods if the variance is investigated to determine its underlying cause(s). C. Is strong evidence of excellent operating performance.

D. Is strong evidence of tight financial control.

E. Does not need to be investigated as to its underlying cause. 47. A flexible budget contains:

A. Cost targets based on actual output for the period. B. Cost targets based on planned output for the period.

C. Actual costs incurred for the actual output of the period.

D. Costs and revenues for the difference between planned and actual output.

E. Costs based on actual output of the period, and revenue based on master budgeted output. 48. A favorable price variance for direct materials indicates that:

A. Lower-quality materials were purchased. B. The materials standard is likely out of date.

C. A lower price than expected was paid for the materials.

D. Less material was used in production this period than should have been used.

E. There will most likely be an unfavorable materials efficiency (quantity) variance.

49. A manufacturer planned to use $82 of materials per unit produced, but in the most recent period it actually used $80 of material per unit produced. During this same period, the company planned to produce 1,200 units, but actually produced only 1,000 units. The flexible-budget variance for materials is:

A. $2,000 favorable.

B. Impossible to determine without additional information.

C. $14,000 unfavorable.

D. $16,400 unfavorable.

E. $2,400 unfavorable.

50. All of the following are limitations of short-term financial performance indicators except:

A. Employees and managers can take actions that improve short-term financial performance at the expense of long-term performance.

B. Focusing on individual cost variances can result in optimum local but not global (i.e., firm-wide) performance.

C. Operating personnel may not readily understand or be able to interpret financial-performance indicators.

D. Senior managers typically find non-financial performance indicators more useful than summary financial-performance indicators.

51. Flexible budgets and standard costs are useful for assessing:

A. Strategic performance during the most recent period. B. Operating performance during the period.

C. Short-term financial performance. D. Management control.

52. For operational control, a management accounting system should include:

A. Performance measures associated with basic business processes. B. Only financial-control measures, such as standard cost variances.

C. High-level financial metrics such as return on investment (ROI) or return on sales (ROS). D. A combination of short-term and strategic financial-performance metrics.

53. Which of the following is not considered a basic business process?

A. Operating processes.

B. Customer-management processes. C. Innovation processes.

D. Social/regulatory processes. E. Just-in-time (JIT) processes.

54. Which of the following is not an anticipated benefit of switching to a JIT production system?

A. Reduction in inventory holding costs.

B. Reduction of monitoring costs associated with the production system. C. Reduction in customer-response time.

D. Increased sales due to increases in quality and customer satisfaction.

E. Reduction in internal failure costs, such as the cost of reworking defective outputs. 55. Customer-response time (CRT) is defined as:

A. The time between when a customer places an order and the time when the order is received by the customer. B. The elapsed time between initial customer contact and the time a customer places an order.

C. The time between when a customer places an order and when that order is manufactured.

D. The time between when an order is started into production and when that order is completed. 56. The term "processing cycle efficiency" (PCE):

A. Like manufacturing cycle time, is a measure of operational efficiency. B. Is defined as the ratio of manufacturing lead time to delivery time.

C. Is defined as manufacturing lead time minus delivery time.

D. Is defined as the ratio of customer-response time to order-delivery time. E. Is at an optimum level when PCE = 0.

57. Which of the following is not indicated as an advantage of using nonfinancial performance measures, relative to financial performance measures, as part of an operational control system?

A. Nonfinancial performance indicators are readily understandable by operating personnel.

B. Nonfinancial performance indicators can be viewed as drivers of future financial performance. C. Nonfinancial performance indicators direct attention to precise problem areas that need attention. D. Nonfinancial performance measures are more reliable than financial performance measures.

58. Which of the following statements about processing cycle efficiency (PCE) is not true:

A. It is defined as the ratio of processing time to non-processing time. B. It is a measure of operating process efficiency.

C. It is based on the relationship between actual processing time and total production time.

D. It incorporates notions of "value-added" and "non-value-added," as discussed in the development of activity-based cost (ABC) systems. E. The optimum value of PCE is 1.

59. A flexible-budget variance for any fixed cost:

A. Is defined as the difference between flexible-budget fixed cost and the level of fixed costs reflected in the master (static) budget. B. Is undefined, except when actual output equals budgeted output.

C. Is typically zero, because the volume assumed in the flexible budget and the master budget for fixed costs is identical. D. Is the difference between budgeted fixed cost and actual fixed cost.

60. The total operating-income variance for any period:

A. Is unaffected by variances between actual and budgeted sales volume.

B. Can be decomposed into a total flexible-budget variance and a sales-volume variance.

C. Can be decomposed into a total flexible-budget variance and a sales price variance.

D. Is equal to the sum of selling and administrative expense variances plus the total sales-volume variance for the period.

E. Equals the sum of the total flexible-budget variance plus the sales-mix variance for the period.