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1 |  |  One of the following statements is not true
(Learning Objective 1 Ch 14) |
|  | A) | Flexible budgets are superior to Static budgets |
|  | B) | Flexible budgets improve management of costs when activity levels vary |
|  | C) | Flexible budgets take into account changed costs when activity levels vary |
|  | D) | Flexible budgets are valid for all levels of activity |
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2 |  |  One of the activities below is not true when choosing the measurement of activity
(Learning Objective 2 Ch 14) |
|  | A) | The activity base is best expressed in currency terms |
|  | B) | The activity base should be simple and easy to understand |
|  | C) | A causal relationship should exist between the activity base and the activity |
|  | D) | Direct Labour hours could be an example of a good activity base |
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3 |  |  One of these statements is true
(Learning Objective 2 Ch 14) |
|  | A) | It is not possible to have any degree of control over fixed costs |
|  | B) | Variable costs can always be controlled easily |
|  | C) | Favourable variances are always good |
|  | D) | Some variance should not be investigated because they are too small |
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4 |  |  One of the following statements is untrue
(Learning Objective 3 Ch 14) |
|  | A) | The variable overhead spending variance has the same cause(s) as the labour rate variance |
|  | B) | The variable overhead spending variance is only of use if variable overheads vary with hours worked |
|  | C) | If actual rather than standard hours are used then only a spending variance will be calculated |
|  | D) | The variable overhead spending variance is useful only if the costs vary with the actual hours worked |
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5 |  |  One of these is untrue
(Learning Objective 4 Ch 14) |
|  | A) | The reasons for the variable overhead efficiency variance are the same as those behind the labour efficiency variance |
|  | B) | The variable overhead efficiency variance is only of use if variable overheads vary with hours worked |
|  | C) | The variable overhead efficiency variance measures the inefficient use of the variable overheads |
|  | D) | The variable overhead efficiency variance shows the inefficient use of the base (usually labour hours) |
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6 |  |  One of the following statements is untrue
(Learning Objective 5 Ch 14) |
|  | A) | The denominator activity changes frequently throughout the year |
|  | B) | Fixed costs do not change with activity within the relevant range |
|  | C) | The predetermined overhead rate gives stability to costing products during the year |
|  | D) | The denominator activity is important as this can have a big effect on overall unit cost |
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7 |  | 
The following information relates to Questions 7-10:  _ (2.0K)_ The fixed overhead budget variance is
(Learning Objective 7 Ch 14) |
|  | A) | NIL |
|  | B) | £4,000 U |
|  | C) | £4,000 F |
|  | D) | None of these |
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8 |  |  A possible cause of the fixed overhead budget variance in Q7 could have been
(Learning Objective 7 Ch 14) |
|  | A) | We produced more units than budgeted for due to poor production control |
|  | B) | We produced less units than budgeted for as demand was reduced |
|  | C) | We overspent on overheads due to poor accounting controls |
|  | D) | We underspent on overheads due to a rent reduction |
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9 |  |  The fixed overhead volume variance is
(Learning Objective 7 Ch 14) |
|  | A) | NIL |
|  | B) | £4,000 U |
|  | C) | £4,000 F |
|  | D) | None of these |
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10 |  |  A possible cause of the fixed overhead volume variance in Q9 could have been
(Learning Objective 7 Ch 14) |
|  | A) | We worked more hours than we should have done due to bad working practices |
|  | B) | We worked less hours than we should have done due to good working practices |
|  | C) | We produced more units than budgeted for due to poor production control |
|  | D) | We produced less units than budgeted for as demand was reduced |
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11 |  |  Which one of the following is not a criticism that has been made of budgets
(Learning Objective 8 Ch 14) |
|  | A) | Budgets concentrate on events that are easy to measure |
|  | B) | Benchmarking is a not a valid alternative to some of the functions of budgets |
|  | C) | Activities covered by budgets become institutionalised |
|  | D) | Budgets hinder any response by the organisation to uncertainty |
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