Cost accounting Horngren 15th ed. chapter 7 -9 Exam Questions with Complete Solutions.

Cost accounting Horngren 15th ed. chapter 7 -9 Exam Questions with Complete Solutions Variance - Correct Answers: The difference between actual results and expected/budgeted performance. Expected/Budgeted performance - Correct Answers: A point of reference for making comparisons. Management by exception - Correct Answers: A practice whereby managers focus more closely on areas that are not operating as expected and less closely on areas that are. Static/master budget - Correct Answers: Based on the level of output planned at the start of the budget period. Static-budget variance - Correct Answers: The difference between the actual result and the corresponding budgeted amount in the static budget. Favorable variance - Correct Answers: Has the effect, when considered in isolation, of increasing operating income relative to the budgeted amount. Unfavorable variance - Correct Answers: Has the effect, when viewed in isolation, of decreasing operating income relative to the budgeted amount. Flexible budget - Correct Answers: Calculates budgeted revenues and budgeted costs based on the actual output in the budget period. Sales-volume variance - Correct Answers: The difference between a flexible-budget amount and the corresponding static-budget amount. Flexible-budget variance - Correct Answers: The difference between an actual result and the corresponding flexible-budget amount. Selling-price variance - Correct Answers: The difference between the actual selling price and the budgeted selling price. Standard - Correct Answers: A carefully determined price, cost, or quantity that is used as a benchmark for judging performance. Standard input - Correct Answers: Carefully determined quantity of input required for one unit of output. Standard price - Correct Answers: Carefully determined price a company expects to pay for a unit of input. Standard cost - Correct Answers: Carefully determined cost of a unit of output. Price/rate variance - Correct Answers: The difference between actual price and budgeted price, multiplied by the actual input quantity. Efficiency/usage variance - Correct Answers: The difference between the actual input quantity used and the budgeted input quantity allowed for actual output, multiplied by budgeted price. Performance measurement - Correct Answers: 1) Effectiveness 2) Efficiency Benchmarking - Correct Answers: The continuous process of comparing your firm's performance levels against the best levels of performance in competing companies or in companies having similar processes. Standard Costing - Correct Answers: A costing system that 1) traces direct costs to output produced by multiplying the standard prices or rates by the standard quantities of inputs allowed for actual outputs and 2) allocates overhead costs on the basis of the standard overhead-cost rate times the standard quantities of the allocation bases allowed for actual outputs produced. Denominator Level - Correct Answers: The denominator in the budgeted fixed overhead rate computation. Variable overhead flexible-budget variance - Correct Answers: Measures the difference between actual variable overhead costs incurred and flexible-budget overhead amounts. Variable overhead efficiency variance - Correct Answers: The difference between actual quantity of the cost-allocation base used and budgeted quantity of the cost-allocation base that should have been used to produce the actual output, multiplied by the budgeted variance overhead cost per unit of the cost-allocation base. Variable overhead spending variance - Correct Answers: The difference between the actual variable overhead cost per unit of the cost-allocation base and the budgeted variable overhead cost per unit of the cost-allocation base, multiplied by the actual quantity of variable overhead cost-allocation base used. Fixed overhead flexible-budget variance - Correct Answers: The difference between actual fixed overhead costs and fixed overhead costs in the flexible budget. Fixed overhead spending variance - Correct Answers: Will be the same amount as the fixed overhead flexible-budget variance as there is no efficiency variance. Production-volume variance AKA denominator-level variance - Correct Answers: Is only for fixed costs, and is the difference between the budgeted fixed overhead and the fixed overhead allocated on the basis of actual output produced. Total-overall variance - Correct Answers: The sum of the Spending variance, Efficiency variance and the Production-Volume variance. Operating-Income volume variance - Correct Answers: The difference between the static-budget operating income and the budgeted operating income. Variable costing/direct costing - Correct Answers: A method of inventory costing in which all variable manufacturing costs (direct and indirect) are included as inventoriable costs. All fixed costs are excluded and are treated as period costs. Absorption costing - Correct Answers: A method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. Variable manufacturing costs - Correct Answers: Variable costing: Inventoriable Absorption costing: Inventoriable Fixed manufacturing costs - Correct Answers: Variable costing: Deducted as an expense of the period Absorption costing: Inventoriable by using budgeted denominator level Throughput Costing/super-variable costing - Correct Answers: An extreme form of variable costing in which only direct material costs are included as inventoriable costs.All other costs are cost of the period in which they incurred. Throughput margin - Correct Answers: Revenues minus all direct material cost of the goods sold. Theoretical capacity - Correct Answers: The level of capacity based on producing at full efficiency all the time. Practical capacity - Correct Answers: The level of capacity that reduces theoretical capacity by considering unavoidable operating interruptions, such as scheduled maintenance time and shutdowns for holidays. Normal capacity utilization - Correct Answers: The level of capacity utilization that satisfies average customer demand over a period that includes seasonal, cyclical, and trend factors. Master-budget capacity utilization - Correct Answers: The level of capacity utilization that managers expect for the current budget period, which is typically one year. budgeted fixed manufacturing costs - Correct Answers: the cost per unit of supplying the capacity. Downward demand spiral - Correct Answers: The continuing reduction in the demand for its products that occurs when competitor prices are not met.