Quiz 7

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Arizona State University, West Campus *

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350

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Industrial Engineering

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Dec 6, 2023

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docx

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Quiz 7 Why might a flexible-budget analysis be more informative than a static-budget analysis? Question content area bottom Part 1 A. A flexible-budget analysis enables a manager to distinguish how much of the difference between an actual result and a budgeted amount is due to (a) the difference between actual and budgeted output levels, and (b) the difference between actual and budgeted selling prices, variable costs, and fixed costs. Question content area top Part 1 How does variance analysis help in continuous improvement? Question content area bottom Part 1 A. The underlying causes of unfavorable variances are identified, and corrective action taken where possible. B. Favorable variances can provide information if the organization can identify why a favorable variance occured. Steps can often be taken to replicate those conditions more often. D. A and B. How might a manager get insight into the causes of a direct materials flexible-budget variance? Question content area bottom Part 1 A. A manager should subdivide the flexible-budget variance for direct materials into a price variance (that reflects the difference between actual and budgeted quantities of direct materials used to produce actual output) and an efficiency variance (that reflects the difference between the actual and budgeted prices of direct materials). The individual causes of these variances can then be investigated, recognizing possible interdependencies across these individual causes. B. A manager should subdivide the flexible-budget variance for direct materials into a price variance (that reflects the difference between actual and budgeted prices of direct matarials) and an efficiency variance (that reflects the difference between the actual and budgeted quantities of direct materials used to produce actual output). The individual causes of these variances can then be investigated, recognizing possible interdependencies across these individual causes. When inputs are substitutable, how can the direct materials efficiency variance be decomposed further to obtain useful information? Question content area bottom Part 1 A. The direct materials efficiency variance can be decomposed into two parts: a direct materials mix variance that reflects the impact of using a cheaper mix of inputs to produce a given quantity of output, and the direct materials yield variance, which captures the impact of using less input to achieve a given quantity of output.

Select the possible source(s) of information a company might use to compute the budgeted amount in variance analysis? Question content area bottom Part 1 A. Data from other companies that have similar processes B. Detailed engineering studies C. Past amounts D. All of the above

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Quiz 7

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