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Chapter 15 Cost Control Answer Key
Multiple Choice Questions
1.
________________ is a technique used to filter cost information contained in performance
reports to each manager within the organization at an appropriate level of detail or
summarization.
2.
The term noncontrollable cost:
3.
An example of a cost that is noncontrollable in the short run is:
4.
The key difference between a controllable cost and a noncontrollable cost is:
5.
The principal objective of a performance report is to:
6.
For performance reports to be most effective for management by exception, they should:
7.
The best reason for flexing a budget is to:
8.
A budget adjusted to reflect a budget allowance based on actual activity achieved rather
than the planned level of activity in the original budget is a:
9.
If the actual level of activity is different from the budgeted level, a _________ budget is
prepared for the actual level of activity:
10.
When analyzing end of period production cost variances, which of the following product
cost components will not need "flexing"?
11.
The total variance for any particular cost component is referred to as the:
12.
The total budget variance is caused by two factors:
13.
A variance is the difference between actual costs and:
14.
The difference between standard and actual cost per unit of input is measured by:
15.
When an income statement shows data for segments of the organization, and data for
each segment are added together to get totals for the whole organization:
16.
Val's travel budget for October was $720, based on her plan to drive 3,000 miles at a cost
of $0.24 per mile. During October, she actually drove 2,800 miles at a total cost of $700. A
flexed budget performance report would show a variance of:
17.
If it is to be most useful for control purposes, what variance should be reported to the
supervisor responsible for the number of pounds of corn syrup used in the manufacture of
a candy bar?
18.
The purchasing agent of an organization acquired some raw materials at a bargain price,
even though she knew that their quality was lower than that of the materials customarily
used. This action resulted in a favorable raw materials purchase price variance that might
very well have been more than offset by:
19.
When an appropriately established and effective standard cost system is used to value
inventory:
20.
A performance report for direct labor shows a variance between the budget and actual
amounts. This difference is a:
21.
If they are to be useful to managers, variances should be reported:
22.
What should the decision rule be to determine what budget variances to investigate?
23.
Which of the following variances is
not
determined during an overhead variance analysis?
24.
The fixed manufacturing overhead variance caused by actual activity being different from
the estimated activity used in calculating the predetermined overhead application rate is
called the:
25.
The part of the variable overhead budget variance due to the difference between actual
hours required and standard hours allowed for the work done is called the:
26.
The part of the variable overhead budget variance due to the difference between actual
variable overhead cost and the standard cost allowed for the actual inputs used is called
the:
27.
If the net variance of a business using standard costing is significant relevant to total
production cost, the net variance should be:
28.
If the net of all variances is immaterial relative to the total production costs incurred
during the period, the net variance is:
29.
The preferred format for a segmented income statement emphasizes:
30.
Which of the following is a
true
statement pertaining to segment income statements?
31.
How is performance evaluated for a cost center?
32.
How is performance evaluated for a profit center?
33.
How is performance evaluated for an investment center?
34.
_____________ allows managers to focus their attention on maximizing an amount of
earnings above a minimum required ROI.
35.
ROI used to evaluate the performance of an investment center manager can sometimes
lead to suboptimization. A performance measure designed to avoid the risk of
suboptimization is:
36.
The term transfer price refers to:
37.
A favorable materials quantity variance would occur if:
38.
April Corporation developed the following per-unit standards for its product: 2 pounds of
direct materials at $3.75 per pound. Last month, 2,000 pounds of direct materials were
purchased for $7,600. The direct materials price variance for last month was:
39.
A set of integrated financial and operating performance measures that communicate an
organization's priorities associated with achieving strategic goals is known as a:
40.
An example of a cost that is controllable in the short run is:
