Direct Material Price Variance and Flexible Budget

Topics: Direct material price variance, Cost, Costs Pages: 3 (633 words) Published: June 20, 2013
Quality review Materials
1. Standard costs can serve as a basis for evaluating actual performance. True False 2. Standard material, labor, and overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants. True False

3. Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service. True False
4. When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate. True False
5. Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards. True False
6. While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process. True False
7. A cost variance is the difference between actual cost and standard cost. True False 8. A budget performance report that includes variances can have variances caused by both price differences and quantity differences. True False

9. A cost variance equals the sum of the quantity variance and the price variance. True False 10. When computing a price variance, the price is held constant. True False 11. Within the same budget performance report, it is impossible to have both favorable and unfavorable variances. True False

12. Cost variances are ignored under management by exception. True False 13. Management by exception allows managers to focus on the most significant variances in performance. True False

14. Variable budget is another name for a flexible budget. True False 15. Fixed budget performance reports compare actual results with the expected amounts in the fixed budget. True False

16. Another name for a static budget is a variable budget. True False 17. Fixed budgets are also known as flexible budgets. True False 18. The amounts in a flexible...
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