Quiz Questions for Chapter 8: Flexible Budgets and Variances

School: Northeastern University - Course: ACCT 2301 - Subject: Accounting

Quiz Questions for Chapter 8 Use the following information to answer the next two questions:Gamma's cost accountant prepared the following static budget based on expected activity of 2,000 units for the 2020 accounting period: Sales Revenue$64,000 Variable Costs(34,000) Contribution Margin30,000 Fixed Costs(18,000) Net Income$12,000 1.If Gamma actually produced 1,800 units, the flexible budget would show variable costs of a.$34,000. b.$22,666. c.$30,600. d.$25,500. 2.If Gamma actually produced 1,900 units, the flexible budget would show fixed costs amounting to a.$19,800. b.$18,000. c.$52,000. d.none of the above. Use the following information to answer the next two questions:Counsel Manufacturing Company prepared the following static budget income statement for 2020: Sales Revenue$125,000 Variable Costs(75,000) Contribution Margin50,000 Fixed Cost(30,000) Net Income$20,000 The budget was based on an expected sales volume of 5,000 units. Actual sales volume was 6,000 units. 3.The amount of net income based on a flexible budget of 6,000 units is expected to be a.$24,000. b.$26,000. c.$30,000. d.$45,000. 4.The sales revenue volume variance is a.$25,000 favorable. b.$10,000 unfavorable. c.$4,000 unfavorable. d.$6,000 favorable. 5.Clarion Jewels, a maker of fashionable rings, produced and sold 6,000 rings during the recent accounting period. The company had expected to sell 5,600 rings. Because of competition, the company priced the rings at $20 each, $2 lower than the budgeted selling price. Based on this information, there is a.a favorable $8,000 sales volume variance. b.an unfavorable $800 total sales variance. c.an unfavorable sales price variance. d.all of the above. 6.Which employees would most likely be held responsible for a volume variance? a.production workers b.marketing managers c.purchasing agents d.production managers 7.If the planned or expected level of activity is overstated (unreasonably high), what consequence is likely? a.The predetermined overhead rate will be overstated. b.Products are likely to be underpriced. c.Products are likely to be overpriced. d.Per-unit variable overhead costs are understated. Use the following information to answer the next two questions:Sparkle, Inc. (SI) makes a bleach that is used to whiten teeth. SI expects to use two ounces of Supra per bottle of whitener. Supra is expected to cost $0.20 per ounce. Actual materials cost amounted to $0.23 per ounce. SI expected to make and sell 1,000,000 bottles of whitener during the accounting period. SI actually used 2,047,500 ounces to produce 1,050,000 bottles. 8.The materials price variance for Supra is a.$61,425 unfavorable. b.$61,425 favorable. c.$20,000 favorable. d.$20,000 unfavorable. 9.The materials usage variance for Supra is a.$3,000 unfavorable. b.$3,000 favorable. c.$10,500 favorable. d.$10,500 unfavorable.