Chap017 - Chapter 17 - Flexible Budgets, Overhead Cost...

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Chapter 17 - Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting Chapter 17 Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting True / False Questions 1. A flexible budget is a budget that is valid within the firm's relevant range of activity. TRUE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Decision Making; Measurement; Reporting Difficulty: Easy Learning Objective: 1 2. The variable-overhead efficiency variance measures the cost of variable overhead cost driver. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Decision Making; Measurement Difficulty: Easy Learning Objective: 5 3. Activity levels in the flexible budget are based on output measures. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Decision Making; Measurement; Reporting Difficulty: Easy Learning Objective: 1 4. In a multiproduct firm, units of output usually are not a meaningful measure because one would have to add numbers of unlike units. TRUE AACSB: Analytic AICPA BB: Critical Thinking; Decision Making; Measurement Difficulty: Medium Learning Objective: 1 17-1
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Chapter 17 - Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting 5. The activity-based budget provides a less accurate benchmark against which to compare actual costs. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Decision Making; Measurement; Reporting Difficulty: Medium Learning Objective: 8 6. In a standard costing system, overhead application refers to the addition of actual overhead cost to the Work-in-Process inventory as a product cost. FALSE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 7. Variable-overhead cost and the activity measure for the flexible budget should move together as overall productive activity changes. TRUE AACSB: Analytic AICPA BB: Critical Thinking; AICPA FN: Measurement Difficulty: Medium Learning Objective: 4 8. The flexible overhead budget is the cost manager's primary tool for the control of manufacturing-overhead costs under traditional cost management techniques. TRUE AACSB: Analytic; Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Decision Making; Measurement; Reporting Difficulty: Medium Learning Objective: 5 17-2
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Chapter 17 - Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting 9. Sales variance analysis attempts to explain the difference between actual sales performance and budgeted sales performance by focusing on several factors that underlie overall sales results. TRUE AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Difficulty: Medium Learning Objective: 11 10. The sales-volume variance can be broken down into the revenue sales-mix variance and the revenue sales-quantity variance. TRUE
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Chap017 - Chapter 17 - Flexible Budgets, Overhead Cost...

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