Question Details

11. One cause of an unfavourable overhead volume variance would be increases in cost for fixed overhead

items.

True False

12. If the denominator activity (in hours) used to compute the predetermined overhead rate is equal to the

actual activity (in hours) for the period, then there is no volume variance.

True False

13. Since managers want stable unit cost figures, the accountant creates an artificial stability so far as fixed

costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

True False

14. A static budget is geared toward a single level of activity.

True False

15. The static budget is a good tool for assessing whether variable costs are under control.

True False

16. A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not

adjusted at the end of the budgeted period.

True False

17. A flexible budget enables managers to compute a richer set of variances than a static budget does.

True False

18. The flexible budget variance is the difference between the actual results and the flexible-budget amount

for the actual levels of the revenue and cost drivers.

True False

19. The flexible budget variance pertaining to revenues is also called the variance of operating income.

True False

20. If a company has a favourable efficiency variance, it uses less inputs than were budgeted for the output

units achieved.

True False

    o prevent loading icon loadPreventer.cancel(); if (connection.frame) { if (connection.frame.stop) { connection.frame.stop(); } else { try {