$116$

$121$

K$87$

$4-1$ When the actual number of units is lower than the planning budget, the activity variance of contribution margin is always unfavorable.

A$.$ True.

B$.$ False.

C$.$ It depends.

$4-2$ Is the activity variance of a fixed cost always zero?

A$.$ Yes.

B$.$ No$.$

C$.$ It depends.

$4-3$ Why is the activity variance of direct material cost favorable?

A$.$ because it's by chance.

B$.$ because the direct material cost in the flexible budget is higher than the planning budget.

C$.$ because the direct material cost in the flexible budget is lower than the planning budget.

D$.$ because the direct material cost in the actual income statement is higher than the flexible budget.

E$.$ because the direct material cost in the actual income statement is lower than the flexible budget.

$4-4$ Judging from the revenue$/$spending variances, whi$$ statement below about Keenan Music's performance is false?

A$.$ the revenue$/$spending variances are better indicators of its performance because they compare the budgeted numbers with the actual numbers based on the same number of guitars sold.

B$.$ its overall performance is good because the operating net income's variance is favorable.

C$.$ Keenan Music did not do well in revenue because the actual selling price per guitar is lower than the planning budget.

D$.$ Although Keenan Music did not do well in controlling direct material, direct labor, variable selling and fixed selling costs, it did well in controlling variable manufacturing overhead and fixed manufacturing overhead.

$4-5$ Why is the spending variance of fixed selling & administrative unfavorable?

A$.$ because it's by chance.

B$.$ because the fixed selling & administrative cost in the flexible budget is higher than the planning budget.

C$.$ because the fixed selling & administrative cost in the flexible budget is lower than the planning budget.

D$.$ because the fixed selling & administrative cost in the actual income statement is higher than the flexible budget.

E$.$ because the fixed selling & administrative cost in the actual income statement is lower than the flexible budget.

$4-6$ Why is the revenue variance favorable?

A$.$ because it's by chance.

B$.$ because the revenue cost in the flexible budget is higher than the planning budget.

C$.$ because the revenue cost in the flexible budget is lower than the planning budget.

D$.$ because the revenue cost in the actual income statement is higher than the flexible budget.

E$.$ because the revenue cost in the actual income statement is lower than the flexible budget.