A company operates in export and import markets, and its operational cash flows are affected by movements in exchange rates, which are highly volatile. As a result, the company has great difficulty in establishing a budgeting system that is reliable for more than three months ahead.

Which of the following approaches to budgeting would be most appropriate for this company's situation?

The first item of a new product took 2,000 hours to manufacture (at a labour cost of $15 per hour). A 90% learning curve was expected to apply, and it was decided to establish a standard time as the time required to manufacture the 50th item of the product, rounded to the nearest hour. The 50th item actually took 980 hours.

What is the labour efficiency variance for the 50th unit produced?

A standard product uses 3 kg of direct material costing $4 per kg. During the most recent month, 120 units of the product were manufactured. These required 410 kg of material costing $4.50 per kg. It is decided in retrospect that the standard usage quantity of the material should have been 3.5 kg, not 3 kg.

What is the favourable materials operational usage variance, if it is chosen to use planning and operational variances for reporting performance?

Tech World is a company which manufactures mobile phone handsets. From its past experiences, Tech World has realised that whenever a new design engineer is employed, there is a learning curve with a 75% learning rate which exists for the first 15 jobs.

A new design engineer has just completed their first job in five hours.

Note. At the learning rate of 75%, the learning factor (b) is equal to –0·415.

How long would it take the design engineer to complete the sixth job?

Total production costs for 900 units of output are $58,200 and total production costs for 1,200 units are $66,600.

The variable cost per unit is constant up to a production level of 2,000 units per month, but a step up of $6,000 in the monthly total fixed cost occurs when production reaches 1,100 units per month.

What is the total cost for a month when 1,000 units are produced?

A company sells two products X and Y. Product X sells for $30 per unit and achieves a standard contribution of $12 per unit, which is 40% of the selling price. Product Y, a new product, sells for $80 per unit and achieves a standard contribution of just $10 per unit, which is 12.5% of the selling price. Budgeted sales are 5,000 units of X and 3,000 units of Y.

However, the sudden cancellation of an advertising campaign for Product Y has meant that sales for the product will be well below budget, and there has been some price discounting in an attempt to obtain sales for the product. Sales of X were in line with the budget.

Which of the following sales variances, if calculated, would you expect to show a favourable variance for the period?

Which of the following correctly describes a standard hour?

A company makes and sells three products. Budgeted and actual results for the period just ended were as follows.

What was the adverse sales mix variance?

The following statements have been made about the application of standard costing systems.

1. Standard costing systems are compatible with a Total Quality Management approach to operations.
2. Standard costing systems are less commonly used in an industry that operates in a rapidly changing environment.

Which of the above statements is/are true?

For which of the following reasons is zero-based budgeting (ZBB) often considered more suitable for public sector service organisations than for private sector companies?

What is an attainable standard?

A company makes and sells three products. Budgeted and actual results for the period just ended were as follows.

What was the adverse sales quantity variance?

The following statements have been made about flexible budgets.

1. Flexible budgets enable proper comparisons to be made between actual and expected revenues and costs.
2. In every variance reporting system with flexible budgets that compares budgeted and actual profit, there must be a sales volume variance.

Which of the above statements is/are true?

The following statements have been made about standard mix and yield variances.

1. Mix variances should be calculated whenever a standard product contains two or more direct materials.
2. When a favourable mix variance is achieved, there may be a counterbalancing adverse yield variance.

Which of the above statements is/are true?

A budget that is continuously updated by adding a further accounting period (a month or quarter) when the earlier accounting period has expired is known as which of the following?

Which of the following provides the most suitable definition of the controllability principle in business?

Capacity levels used in setting standard absorption rates for production overheads are often related to performance standards.

To which performance standard is budgeted capacity often associated?

Vibrant Paints Co manufactures and sells paints. Business Unit A of the company makes a paint called Micra is made using three key materials: R, S and T.

At the end of period 1, a total material cost variance of $4,900 adverse was correctly recorded for Micra.

The following information relates to Micra for period 1:

The standard ratio of mixing material R, material S and material T is 30:50:20.

The material price variance for Micra has been correctly calculated as $4,800 adverse.

What is the total material yield variance for Micra for period 1?

The following cost information relates to product XY, which is produced in a continuous process from several different materials.

What is the favourable materials yield variance for the period?

For which of the following variances should a production manager usually be held responsible?

Which TWO of the following points state why it is generally regarded to be more difficult to set standards for service function costs than for manufacturing costs?

Which of the following is the LEAST likely reason why standard costs might not easily be applied to road haulage and distribution services?

Which TWO of the following statements are true in the context of a just in time (JIT) inventory system?

Are the following statements about zero-based budgeting true or false?

1. Employees will focus on eliminating wasteful expenditure.
2. Short-term benefits could be emphasised over long-term benefits.

In which TWO of the following ways might a budgetary control be a disincentive to management to achieve targeted performance?

Which TWO of the following are arguments that variance analysis from a standard costing system is redundant in a total quality management environment?

The following statements have been made about standard mix and yield variances.

1. Mix and yield variances enable management to resolve problems with the quality of production output.
2. Persistent adverse mix variances may have an adverse effect on sales volume variances and direct labour efficiency variances.

Which of the above statements is/are true?

The following information is given about standard and actual material costs during one month for a production process.

What was the favourable materials mix variance?

Which TWO of the following statements correctly describe an attainable standard?

The following statements have been made about learning curves.

1. Learning curves are easier to apply in companies with a high labour turnover than those with a lower rate of staff turnover.
2. Learning rates are not affected by time gaps between the production of additional units of a product.

Which of the above statements is/are true?