Chapter 16 Fundamentals of Variance Analysis Answer Key
True / False Questions
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Multiple Choice Questions
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Which of the following statements regarding variances is(are) false?
(A) In general and holding all other things constant, an unfavorable variance decreases
operating profits.
(B) A favorable variance is not always good, and an unfavorable variance is not always
bad.
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When a manager is concerned with monitoring total cost, total revenue, and net profit
conditioned upon the level of productivity, an accountant should normally recommend:
(CPA adapted)
Flexible Budgeting
Standard Costing
A.
Yes
Yes
B.
Yes
No
C.
No
Yes
D.
No
No
33.
Based on past experience, Moss Company has developed the following budget formula for
estimating its shipping expenses. The company’s shipments average 12 lbs. per shipment:
Shipping costs = $16,000 + ($0.50 × lbs. shipped).
The planned activity and actual activity regarding orders and shipments for the current
month are given in the following schedule:
Plan
Actual
Sales orders
800
780
Shipments
800
820
Units shipped
8,000
9,000
Sales
$120,000
$144,000
Total pounds shipped
9,600
12,300
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