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Unformatted text preview: ch17 Student: ___________________________________________________________________________ 1. The variable production cost variances are computed using the units produced instead of the units sold. True False 2. If variances are not prorated at the end of the accounting period, they are closed to the Cost of Goods Sold. True False 3. If the number of units produced exceeds the number of units sold, the full-absorption operating profit will be lower than variable costing operating profit. True False 4. The direct material price variance is based on the quantity of materials purchased when the quantity purchased is different from the quantity used. True False 5. The market share variance is more controllable by the marketing department than the industry volume variance. True False 6. The industry volume variance is the portion of the sales activity variance due to a change in the company's proportion of sales in the markets in which they operate. True False 7. An increase in an industry's volume and a decrease in a company's market share implies that the company's sales price variance is unfavorable. True False 8. If a company sells two products, it is possible for both products to have a favorable sales mix variance. True False 9. The sales quantity variance is the same as the sales activity variance on a flexible budget performance report. True False 10. If a company sells two products, it is possible for both products to have an unfavorable sales quantity variance. True False 11. The production cost yield variance is conceptually the same as the sales quantity variance. True False 12. The production mix variance measures the impact of substituting one material for another material during the production process. True False 13. The direct labor yield variance is unfavorable when the total hours worked during a period are less than the total standard hours allowed for the actual number of units produced. True False 14. The basic variance analysis framework used for manufacturing companies can also be used in service organizations. True False 15. Labor variances are more important than material variances in service organizations. True False 16. Professional accounting firms could not compute a labor mix and labor yield variance for their auditors because labor in accounting is not substitutable. True False 17. Two important characteristics to consider when deciding how many variances to review are how large the variance is and the extent to which the variance can be managed. True False 18. The only variances that should be investigated are those for which the expected benefits of correction exceed the costs of investigating and correcting. True False 19. Some variances are the result of accounting errors and omissions, including timing differences. True False 20. Some variances are the result of standards that are inaccurate or do not reflect the current production process....
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- Spring '11