Identify each statement as True or False.

a. In the performance report, the flexible budget costs for the units produced are compared to the actual costs to produce those units.

b. The term “flexible budget” is used for the standard rate per input unit and standard quantity per input unit, and the term “standard costs” is used for total standard costs.

c. Responsibility accounting deals with assigning blame for the unfavorable variances and rewarding managers who report favorable variances.

d. The activity variance, a measure of effectiveness, can be calculated by multiplying the budgeted contribution margin per unit by the difference between units expected to be sold and actual units sold.

e. Ideal standards are developed through the participation of all levels of management; they are ideal because they motivate employees in a positive manner.

f.  A price variance (rate variance or spending variance) is computed for each of the four product costs: direct materials, direct labor, variable overhead, and fixed overhead.

g.  A quantity variance (efficiency variance) is computed for each of the four product costs: direct materials, direct labor, variable overhead, and fixed overhead.

h. Production supervisors are usually responsible for both the price and quantity variances for direct materials and direct labor.

i. The master budget is often called the static budget and is prepared before the budget period begins for the expected original level of output.

j. For product costing, under a standard costing system, actual costs are assigned to ending inventory and variances are never closed to cost of goods sold.

k. There is never a quantity (efficiency) variance for fixed overhead.

l. When an efficiency variance is calculated for fixed overhead, the variance is always unfavorable if the direct labor efficiency variance is unfavorable and overhead is based on machine hours.