Budgeting, Costing and Variance analysis

The following information is available for product K for May 20x1

Standard material usage per unit 1.5kg

Standard material cost per unit £9.00

Actual production 4,500 units

Material Usage variance £900 adverse

How many kg of material were used in May 20x1?

• 6650

• 6750

• 6850

• 7650

The following information is available for the sale of product D for April 20x1

Budgeted sales 3,100 units

Actual sales 2,950 units

Budgeted sales revenue £20,460

Actual sales units £19,765

What is the sales volume variance?

• £695 Adverse

• £695 Favourable

• £990 Adverse

• £990 Favourable

Which of the following variances may require the calculation of the flexed information?

• Labour efficiency and material price

• Labour efficiency and material usage

• Labour rate and material price

• Labour rate and material usage

Which of the following is the correct formula (all expressed in units) to calculate budgeted units of production?

• Sales - closing inventory - opening inventory

• Sales - closing inventory + opening inventory

• Sales + closing inventory - opening inventory

• Sales + closing inventory + opening inventory

Which of the following is NOT a benefit of budgeting?

• Budgets help calculate actual profit?

• Budgets help coordination between departments

• Budgets help management to control spending

• Budgets help with planning

which of the following is an advantage of zero-based budgeting?

• Budgets are quick to prepare

• It encourages managers to work together

• Inexpensive to operate

• Minimal planning required

A manufacturer employs one factory supervisor for every five factory workers.

Which best describes the cost of the factory supervisors' salaries?

• Direct and stepped fixed

• Direct and variable

• Indirect and stepped fixed

• Indirect and variable

A business has budgeted that overheads for the maintenance department will be 20% higher than last year's figure of £15,000. Maintenance overheads are apportioned using the net book value of machinery.

Department Net Book Value of Machinery

A £750,000

B £450,000

Which is the correct amount for the maintenance overheads to be apportioned to department B for next year?

• £5,625

• £6,750

• £9,375

• £11,250

The following information is provided for a business for the month of February:

Closing inventory 45 units

Production 460 units

Sales 540 units

Which is the correct opening inventory figure for the production for February?

• 35 units

• 45 units

• 80 units

• 125 units

Which costing technique uses cost pools and cost drivers?

• Absorption costing

• Activity based costing

• Marginal costing

• Standard Costing