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ACC Final Part 3

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31. Consider the following terms:

a. Flexible Budget
b. Flexible Budget Variance
c. Sales Volume Variance
d. Static Budget
e. Variance

1. A summarized budget for several levels of volume that separates variable costs from fixed costs.
2. The budget prepared for only one level of sales volume.
3. The difference between an actual amount and the budget.
4. The difference arising because the company actually earned more or less revenue, or incurred more or less cost, than expected for the actual level of output.
5. The difference arising only because the number of units actually sold differs from the static budget units.

1. Match each term to the correct definition.

32. Consider the following terms:

Efficiency Variance
Fixed Overhead Spending Variance
Price Variance
Fixed Overhead Volume Variance
Standard Cost

1. Measures whether the quantity of materials or labor used to make the actual number of
outputs is within the standard allowed for that number of outputs.
2. Using standards based on “best practice.”
3. Measures how well the business keeps unit prices of material and labor inputs within
4. A budget for a single unit.
5. Compares actual overhead spent to budgeted overhead costs.
6. Arises when budgeted overhead differs from applied overhead.

33. Moje, Inc., manufactures travel locks. The budgeted selling price is 16 per lock, the variable cost is 9 per lock, and budgeted fixed costs are $12,000.00

Prepare a flexible budget for output levels of 7,000 locks and 9,000 locks month ended April 30, 2012.

Choose the labels and enter the amounts to complete the flexible budget.

34. Consider the following partially completed income statement performance report for Moje, Inc:

1. Complete the flexible budget variance analysis by filling in the blanks in the partial income statement performance report for 7,000 travel locks

Actual Results at Actual Prices
Flexible budget
Flexible Budget for Actual #
Output units
sales revenue
variable expenses
Contribution margin
fixed Expenses
Operating income

35. Setting standards for a product may involve many employees of the company.

1. Identify some of the employees who may be involved in setting the standard
costs and describe what their role might be in setting those standards.

Requirements 1. A list of employees who may or may not be involved in setting the standard costs is given below. Select the role each employee may most likely play in setting the standard costs. If the employee is not in setting the standards costs, leave the corresponding cell blank.

Cost Account
Human Resources/payroll manager
Production supervisor
Product manager
Research and development supervisor
Warehouse manager

36. Decentralization divides company operations into various reporting units. Most
decentralized subunits can be described as one of four different types of responsibility

1. Explain why companies decentralize. Describe some typical methods of decentralization.
2. List the four most common types of responsibility centers and describe their responsibilities

37. Each of the following managers has been given certain decision-making authority:

1. Classify each of the managers according to the type of responsibility center
they manage.
a. Manager of Holiday Inn’s Central Reservation Office
b. Managers of various corporate-owned Holiday Inn locations
c. Manager of the Holiday Inn Corporate Division
d. Manager of the Housekeeping Department at a Holiday Inn
e. Manager of the Holiday Inn Express Corporate Division
f. Manager of the complimentary breakfast buffet at a Holiday Inn Express

38. Well-designed performance evaluation systems accomplish many goals. Consider the
following actions:

1. State which goal is being achieved by the action.

a. Comparing targets to actual results
b. Providing subunit managers with performance targets
c. Comparing actual results with industry standards
d. Providing bonuses to subunit managers who achieve performance targets
e. Aligning subunit performance targets with company strategy
f. Comparing actual results to the results of competitors
g. Taking corrective actions
h. Using the adage, “you get what you measure,” when designing the performance evaluation system

39. Consider the following key performance indicators:

1. Classify each of the preceding key performance indicators according to the
balanced scorecard perspective it addresses. Choose from financial perspective,
customer perspective, internal business perspective, or learning and
growth perspective.

a. Number of employee suggestions implemented
b. Revenue growth
c. Number of on-time deliveries
d. Percentage of sales force with access to real-time inventory levels
e. Customer satisfaction ratings
f. Number of defects found during manufacturing
g. Number of warranty claims
h. ROI
i. Variable cost per unit
j. Percentage of market share
k. Number of hours of employee training
l. Number of new products developed
m.Yield rate (number of units produced per hour)
n. Average repair time
o. Employee satisfaction
p. Number of repeat customers

40. Management by exception is a term often used in performance evaluation.

1. Describe management by exception and how it is used in the evaluation of cost,
revenue, and profit centers.

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