Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable? Department managers' performances should not be evaluated based on actual results to budgeted results. Department managers should be credited for favorable variances even if they are beyond their control. Department managers should be held accountable for all variances from budgets for their departments. Department managers should only be held accountable for controllable variances for their departments.

Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable? Department managers' performances should not be evaluated based on actual results to budgeted results. Department managers should be credited for favorable variances even if they are beyond their control. Department managers should be held accountable for all variances from budgets for their departments. Department managers should only be held accountable for controllable variances for their departments.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 1CMA: When compared to static budgets, flexible budgets: a. offer managers a more realistic comparison of...

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In comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a favorable variance and still not have met revenue expectations?
30. Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable? Group of answer choices Department managers should be credited for favorable variances even if they are beyond their control. Department managers should only be held accountable for controllable variances for their departments. Department managers' performances should not be evaluated based on actual results to budgeted results. Department managers should be held accountable for all variances from budgets for their departments.
Which of the following statements about budgets is FALSE ? Budgets help the company manage risks . Incurring actual costs at a level in excess of the amount in the flexible budget for the actual level of operation always results in an unfavorable variance Budgets help move the company from an informal reactive style to a more formal proactive style of management Incurring actual costs at a level in excess of the amount planned in the original static budget always results in a favorable variance . Budgets help establish responsibility and evaluate managers performance .
Which of the following is not a reason standard costs are separated into two components? a.Identifying variances determines which manager must find a solution to major discrepancies. b.If a negative variance is overshadowed by a favorable variance, managers may overlook potential corrections. c.The price and quantity variances need to be identified separately to correct the actual major differences. d.Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual results.
Which of the following statements is true? It is recommended when making a budget to incorporate a conservative amount of slack to account for unexpected events. An example of an unfavorable variance is when actual expenses are less than budgeted expenses. Budgets are estimates for revenue and expenditures that are used to set, achieve, and evaluate an organization’s goals. Static budgets are generated at the beginning of the year and then subsequently updated for the actual level of volume that occurs during the period. An example of a favorable variance is when actual revenue is less than budgeted revenue.
In gross profit analysis, a favorable cost of sales variance that includes an unfavorable cost volume variance will mean: * a. The production department was able to control costs within the budget but the purchasing department went over the budget. b. The purchasing department was able to control costs within the budget but the production department over the budget. c. The production and purchasing department were able to control costs within the budget. d.The production and purchasing departments went over the budget.
hich of the following statements is true? A budget reconciliation report shows the difference between actual profit and budgeted profit and does not show the other variances. Comparing the flexible budget to the as-if budget isolates a change in input price (e.g. budgeted input price vs. actual input price). Sales quantity (budgeted sales volume vs. actual sales volume) is the only item which differs between the master budget and the flexible budget. Activity-based costing is not used to evaluate customer profitability.
Which of the following statements is true of performance reporting? A. Responsibility reports should focus on the person responsible for unfavorable variances, rather than information. B. Every variance, regardless of magnitude, must be investigated by the managers. C. Managers should not be held accountable for uncontrollable variances. D. Only unfavorable variances in the reports should be explained.
How do managers use budgets to control business activities?a) Match the concept (by number) to the correct terminology. 1. Static Budget2. Budget Performance Report3. Variance4. Static Budget Variance5. Flexible Budget6. Flexible Budget Variance7. Sales Volume Variance______ A budget prepared for various levels of sales volume.______ The difference between actual results and the expected results in the flexible budget for the actual units sold. ______ The difference between the expected results in the flexible budget for the actual units soldand the static budget. _____ The difference between actual results and the expected results in the static budget. _____ A report that summarizes the actual results, budgeted amounts, and the differences. _____ A budget prepared for only one level of sales volume. _____ The difference between an actual amount and the budgeted amount; labeled as favorable if it increases operating income and unfavorable if it decreases operating income. In…
Information technology has made it easier for managers to perform all of the following tasks except a. preparing performance reports that identify variances between actual and budgeted revenues and costs. b. combining individual units’ budgets into the companywide budget. c. sensitivity analyses. d. removing budgetary slack from the budget.
Which of the following statements is false? Standard costs (e.g., how much should be paid for each unit of input) are benchmarks for measuring performance. Managers should investigate only unfavorable variances. Variance analysis enhances responsibility accounting. A variance is the difference between the budgeted amount and actual amount.
The budgeted variable selling, and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit. True or False Waste on the production line will result in an unfavorable materials price variance. True or False Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances. True or False In general, the production manager is responsible for the materials price variance. True or False A quantity standard indicates how much of an input should be used to make a unit of product or provide a unit of service. True or False The standard quantity or standard hours allowed refers to the amount of the input that should have been used to produce the actual output of the period. True or False If activity is higher than expected, total fixed costs should be…