Multiple Choice

50. Standards may be derived using a. historical data b. the assistance of industrial engineers c. benchmarking d. all of the above LO 2 51. Variances are calculated for which of the following reasons a. budgeting b. bookkeeping c. monitoring d. b and c LO 3 52. The process of calculating variances and analysing the reasons they occurred is called a. Benchmarking b. Budget analysis c. Trend analysis d. Variance analysis LO 3 53. Variance analysis includes which of the following processes? Calculating variances Choosing variances for further investigation Predicting variances in future periods a. I and II only b. I and II only c. I and III only d. I, II, and III LO 3 54. If actual costs are less than budgeted costs then the variance will be a. favourable b. unfavourable c. immaterial d. b and o LO 3 54. If actual revenue is less than budgeted revenue then the variance will be: a. favourable b. unfavourable c. immaterial d. a and c LO 3 55. Standard cost variances can be broken down into a. price variances b. efficiency variances c. operating variances d. a and b LO 3 56. Price variances analyse a. use of resources b. sales prices of outputs c. cost of inputs d. none of the above LO 3 I 57. The difference between the standard and actual prices paid for resources purchased is a: a. price variance b. efficiency variance c. volume variance d. quantity variance LO 3 58. The difference between the standard quantity of an input and the actual quantity of an input is a: a. price variance b. efficiency variance c. operating variance d. none of the above LO 3 59. Management by exception means that managers investigate: a. All variances b. All unfavourable variances c. Variances they consider important d. All exceptional variances LO 3 60. How do managers decide which variances are important enough to investigate? When the variance is unfavourable II When the variance is larger than a specified amount or percentage III When the variance trends are increasing a. I only b. II only c. III only d. I and III only LO 3