CBS Performance Measurement & Variance Analysis 2

Question 1

What is the purpose of a variance analysis report in budget management?

Accepted Answer

To explain differences between budgeted and actual financial results

Answer

To set next year's budget targets

Answer

To record all journal entries for the period

Answer

To calculate employee bonuses

Question 2

A company budgeted $500,000 in sales but achieved $480,000. How is this variance classified?

Accepted Answer

Unfavorable, $20,000

Answer

Favorable, $20,000

Answer

Favorable, $480,000

Answer

Neutral, $20,000

Question 3

Which budgeting method establishes performance targets based on prior-period spending plus an incremental adjustment?

Accepted Answer

Incremental budgeting

Answer

Zero-based budgeting

Answer

Activity-based budgeting

Answer

Rolling budget

Question 4

In flexible budget variance analysis, the 'activity variance' measures the effect of:

Accepted Answer

Operating at a different volume than originally planned

Answer

Paying higher prices for materials than budgeted

Answer

Using more direct labor hours than standard

Answer

Incurring more overhead than budgeted

Question 5

A return on investment (ROI) metric is best used in performance measurement to evaluate:

Accepted Answer

How effectively capital was deployed to generate profit

Answer

Whether payroll was processed on time

Answer

The accuracy of the accounts payable ledger

Answer

Compliance with tax filing deadlines

Question 6

Which document formally compares budgeted versus actual figures and identifies causes of variances for management review?

Accepted Answer

Budget-to-actual report

Answer

Chart of accounts

Answer

Trial balance

Answer

Cash disbursement journal

Question 7

Which concept describes a budgeting approach where new budgets are prepared continuously, adding a future period as each current period ends?

Accepted Answer

Rolling (continuous) budgeting

Answer

Static budgeting

Answer

Zero-based budgeting

Answer

Program budgeting