Network College
Department of management
Cost and management accounting II final exam for 4th year students
Time Allowed: 1:30 hrs
Total marks: 40%
Name …………………………………………………ID………………..……… January 2024
Part one: true/false (1 points each)
1. Unfavorable variance results when actual costs exceed budgeted costs. true
2. The static-budget variance is the difference between the actual result and the corresponding
budgeted amount in the static budget. true
3. Sales volume variance arises when the budgeted selling price or the variable cost are
different from the actual amount. false
4. A static-budget is calculated at the end of the period when actual output is known. False
5. Budget includes only financial data
6. Financial budgets may be prepared before operating budgets
7. Production must be adequate to meet budgeted sales and provide for sufficient ending
inventory
8. In preparing production budget, production equals sales unit plus beginning inventory minus
ending inventory.
9. Beginning direct material inventories are deduct from total material needed for production to
determine materials to be purchased.
10. All budgets derive from production budget.
Part two: multiple choice (1.5 points each)
1. Detailed plan that identifies the quantity of purchases required to meet budgeted production
and inventory needs and the costs associated with those purchases.
A. direct martial budget C. manufacturing overhead budget
B. direct labor cost budget D. cash budget
2. A budget that consists of the capital budget, cash budget, and ending balance sheet is known
as
A. Financial budget C. Master Budget
B. Operating budget D. Capital budget
3. Of the four costs shown below, which would not be included in the cash budget of an
insurance firm?
A. Depreciation of fixed assets C. Office salaries
B. Commission paid to agents D. Capital cost of a new computer
4. Standard material price per kg is Br. 15 and actual price per k.g is Br. 14 and actual direct
material used is 500 k.g. determine material price variance?
A. 500 unfavorable C. 5000 favorable
B. 500 favorable D. 5000 unfavorable
5. Which of the following budgets is prepared first in the master budget process?
A. Sales budget C. Cash budget
B. Production budget D. Capital budget
6. Which of the following steps in the preparation of a master budget would logically be
performed last?
A. Prepare a budgeted balance sheet C. Prepare production schedules.
B. Prepare a sales forecast. D. Prepare a cash budget.
7. A summary of performance showed three amounts for variable costs: actual: $180,000;
master budget: $185,000; and flexible budget: $170,000. The sales-volume variance is:
A. $15,000 favorable C. $10,000 unfavorable
B. $5,000 favorable D. $15,000 unfavorable
8. See the preceding question number 7, the flexible-budget variance is:
A. $15,000 favorable C. $10,000 unfavorable
B. $ 5,000 favorable D. $ 5,000 unfavorable
9. Data for a certain operation included a $20 standard material cost per kilogram, a $19 actual
material cost per kilogram, 130 actual material kilograms used, 30 product units produced,
and 4 standard material kilograms allowed per product unit. The material price variance is
A. $190 favorable C. $ 200 favorable
B. $ 200 unfavorable D. $ 130 favorable
10. See the preceding question number 9, the material efficiency variance is:
A. $200 favorable C. $ 200 unfavorable
B. $ 130 favorable D. $190 favorable
11.If more direct materials were used for production than were allowed for the output, then the:
A.Direct labor efficiency variance will be unfavorable.
B.Direct labor rate variance will be favorable.
C.Direct materials price variance will be favorable.
D.Direct materials usage variance will be unfavorable.
E.Overhead budget variance will be unfavorable.
12.The direct labor rate variance is computed as:
A. (Actual labor hours worked – Standard labor hours allowed) × Actual labor rate.
B. (Actual labor hours worked – Standard labor hours allowed) × Standard labor rate.
C. (Actual labor rate – Standard labor rate) × Standard hours allowed.
D. (Actual labor rate – Standard labor rate) × Actual hours worked.
E. None of the above.
13. The static-budget variance is the difference between
A. Flexible budget and master budget
B. Actual result and flexible budget
C. Master budget and actual result
D. Total costs at actual prices and actual inputs and master budget
Answer the following questions using the information below:
ABC Corporation used the following data to evaluate their current operating system. The
company sells items for $20 each and used a budgeted selling price of $20 per unit.
Actual Budgeted
Units sold 46,000 units 45,000 units
Variable costs $225,400 $216,000
Fixed costs $47,500 $50,000
14. What is the static-budget variance of revenues?
A. $20,000 favorable - C. $2,000 favorable
B. $20,000 unfavorable D. $2,000 unfavorable
15. What is the static-budget variance of variable costs?
A. $1,200 favorable C. $20,000 favorable
B. $9,400 unfavorable D. $1,200 unfavorable
16. What is the static-budget variance of operating income?
A. $10,600 favorable D. $13,100 unfavorable
B. $10,600 unfavorable E. $1,200 unfavorable
C. $13,100 favorable
17. Any variance is favorable when
A. Actual costs are greater than static budget costs
B. Standard costs are less than actual costs
C. Standard costs are less than static budget costs.
D. Actual costs are less than standard costs.
18. The standard hourly rate was birr. 140. The actual rate was birr. 130. The labour rate variance
was birr. 600, favorable. The actual labor hours (AH) were.
A. 6,000 B. 6,400 C. 1,000 D. 1,500
19. Variances provide managers with
A. Early warning of problems C. A basis for strategy evaluation
B. A basis for performance D. All
evaluation
20. Which one of the following is advantage of budget
A. Provides a framework for judging performance
B. Motivates managers and other employees
C. Promotes coordination and communication among subunits within the company
D. All
