ACCA Q5

Company X had planned for operating income of 10 mio in the master budget with a contribution margin of 3 mio.

Actually achieved operating income of 8 mio and contribution margin of 2.5 mio.

• Static budget variance for op. Income is 2 mio unfavorable

• Static budget variance for op. Income is 2 mio favorable

The variable overhead flexible budget variance, can be further explained by calculating the:

• Spending Variance and Efficiency Variance

• Price Variance and Efficiency Variance

• Sales-Volume Variane and Spending Variance

• Static-Budget Variance and Sales-Volume Variance

A favorable flexible-budget variance for variable costs may be the result of…

• Using less imput quantities then budgeted

• Paying higer Prices than budgeted

• Selling output at a lower price then budgeted

• Selling more quantity then budgeted

Efficency variance reflects the differencce between…

• An actual input quantity and a budgeted input quantity

• A standard input quantity in a company and in it’s main competitors

• An actual input quantity used in a company and in it’s competitors

• Actual input quantities used last period and current period

Company A budgeted sales for 11’000 bottles at p=23$ per bottle. Has Direct mat. Costs=3$ per bottle, Direct manufacturing labor=11$, manufacturing overhead=5$ per bottle. Has the following inventory as 2024:

Finished good inventory beginning: 100

Finished good inventory ending: 600

On the budgeted income statement what amount will be reported for sales?

• 253’000

• 231’000

Which of the following statements is not true for a budget?

• Budgets are most useful when they are planned in connection with the company’s strategic plans.

• Budgets are used to express the operational and strategic plans of a company

• Budgets help managers revise their plans and strategies

• Budgets use financial indicators from the upcoming period to explain performance of the past period

Budgets should not…

• Only be developed for short periods of time such as quarters

• Be controlled to sustain organizational flexibility

• Include variable costs

• Allow for intra-year adjustments in spending

Which of the following is the correct mathematical expression to calculate the fixed overhead production-volume variance?

• Budgeted fixed overhead - Fixed overhead allocated for actual output

• Static budget amount - flexible budget amount

• Actual costs incurred - fixed overhead allocated for actual amount

• Flexible budget amount - actual costs incurred

If a Sales-Volume Variance was caused by by poor quality products, then the … would be in the best position to explain the variance.

• Manifacturing lead

• Logistc manager

• Marketing manager

• Financial supervisor

Which of the following is false about master budgets?

• They aid in quantifying the expectations of stakeholders

• Controllers support in analysing deviations from the master budget

• Includes both financial and operational aspects of management’s plans

• Includes financial, environmental, social and governance (ESG) aspects of management’s plans.