The difference between actual price per unit of input and the standard price per unit of input results in a:

The difference between actual price per unit of input and the standard price per unit of input results in a: 

A. Standard variance.

B. Quantity variance.

C. Volume variance.

D. Controllable variance.

E. Price variance.


Answer: E. Price variance.

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are: 

A. Variable costs.

B. Fixed costs.

C. Standard costs.

D. Product costs.

E. Period costs.


Answer: C. Standard costs.

When there is a difference between the actual volume of production and the standard volume of production, which of the following, based solely on fixed overhead, occurs:

When there is a difference between the actual volume of production and the standard volume of production, which of the following, based solely on fixed overhead, occurs: 

A. Production variance.

B. Volume variance.

C. Overhead cost variance.

D. Quantity variance.

E. Controllable variance.


Answer: B. Volume variance.

Standard costs are used in the calculation of:

Standard costs are used in the calculation of: 

A. Price and quantity variances.

B. Price variances only.

C. Quantity variances only.

D. Price, quantity, and sales variances.

E. Quantity and sales variances.


Answer: A. Price and quantity variances.

Operating budgets include all the following budgets except the:

Operating budgets include all the following budgets except the: 

A. Sales budget.

B. Selling expense budget.

C. Cash budget.

D. Production budget.

E. General and administrative expense budget.


Answer: C. Cash budget.

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called: 

A. Participatory budgeting.

B. Capital budgeting.

C. Balanced budgeting.

D. Continuous budgeting.

E. Primary budgeting.


Answer: D. Continuous budgeting.

Which of the following must be prepared before the direct labor budget?

Which of the following must be prepared before the direct labor budget? 

A. Budgeted income statement.

B. Merchandise purchases budget.

C. Capital expenditures budget.

D. Selling expense budget.

E. Production budget.


Answer: E. Production budget.

All of the following are necessary for budgets to be effective except:

All of the following are necessary for budgets to be effective except: 

A. Goals should be challenging and attainable.

B. Employees affected by a budget should be consulted when it is prepared.

C. Evaluations should be made carefully with opportunities to explain differences between actual and budgeted amounts.

D. Managers must be aware of potential negative outcomes of budgeting, such as budgetary slack.

E. All budgeted amounts must be spent to ensure that budgets aren't reduced for the next period


Answer: E. All budgeted amounts must be spent to ensure that budgets aren't reduced for the next period

When evaluating a special order, management should:

When evaluating a special order, management should: 

A. Only accept the order if the incremental revenue exceeds all product costs.

B. Only accept the order if the incremental revenue exceeds fixed product costs.

C. Only accept the order if the incremental revenue exceeds total variable product costs.

D. Only accept the order if the incremental revenue exceeds full absorption product costs.

E. Only accept the order if the incremental revenue exceeds regular sales revenue.


Answer: C. Only accept the order if the incremental revenue exceeds total variable product costs.

Which of the following would be a line item for a variable costing income statement?

Which of the following would be a line item for a variable costing income statement? 

A. Gross margin

B. Cost of goods available for sale

C. Total cost of goods sold

D. Contribution margin

E. Work-in-process inventory


Answer: D. Contribution Margin

Which of the following is not included in the product cost under variable costing?

Which of the following is not included in the product cost under variable costing? 

A. Direct materials.

B. Fixed manufacturing overhead

C. Direct labor.

D. Variable manufacturing overhead

E. All variable manufacturing costs.


Answer: B. Fixed manufacturing overhead.

The sales level at which a company neither earns a profit nor incurs a loss is the:

The sales level at which a company neither earns a profit nor incurs a loss is the: 

A. Relevant range.

B. Margin of safety.

C. Step-wise variable level.

D. Break-even point.

E. Contribution margin.


Answer: D. Break-even point.

In cost-volume-profit analysis, the unit contribution margin is:

In cost-volume-profit analysis, the unit contribution margin is: 

A. Sales price per unit less cost of goods sold per unit.

B. Sales price per unit less unit fixed cost per unit.

C. Sales price per unit less total variable cost per unit .

D. Sales price per unit less unit total cost per unit.

E. The same as the contribution margin ratio.


Answer: C. Sales price per unit less total variable cost per unit.

A target income refers to:

A target income refers to: 

A. Income at the break-even point.

B. Income from the most recent period.

C. Income planned for a future period.

D. Income only in a multiproduct environment.

E. Income at the minimum contribution margin.


Answer: C. Income planned for a future period.

Which of the following statements is NOT true?

Which of the following statements is NOT true?

A. Total fixed costs remain the same regardless of volume within the relevant range.

B. Total variable costs change with volume.

C. Total variable costs decrease as the volume increases.

D. Fixed costs per unit increase as the volume decreases.

E. Variable costs per unit remain the same regardless of the volume.



Answer: C. Total variable costs decrease as the volume increases.