Finance for Non-Finance Managers Budgeting and Variance Analysis 2

Question 1

Sales volume variance measures the impact of:

Accepted Answer

Selling a different quantity than budgeted

Answer

Selling at a different price than budgeted

Answer

Changes in production costs

Answer

Changes in the exchange rate

Question 2

Price variance in a budget context refers to:

Accepted Answer

Difference between standard and actual cost per unit

Answer

Difference between units produced and units budgeted

Answer

Difference between cash collected and invoices raised

Answer

Difference between fixed and variable costs

Question 3

Which of the following is a fixed cost?

Accepted Answer

Monthly building lease payment

Answer

Raw materials cost per unit

Answer

Sales commissions

Answer

Shipping cost per order

Question 4

Incremental budgeting is based on:

Accepted Answer

Adding a percentage increase to the previous period's budget

Answer

Starting from zero and building up from scratch

Answer

Using activity-based costing for every line item

Answer

Allocating budgets only to new projects

Question 5

A department manager reports a $10,000 favorable cost variance. The MOST likely explanation is:

Accepted Answer

The department spent $10,000 less than budgeted

Answer

The department spent $10,000 more than budgeted

Answer

Revenue was $10,000 above budget

Answer

Headcount increased by $10,000 above plan

Question 6

Which budget focuses specifically on long-term asset purchases such as machinery or facilities?

Accepted Answer

Capital expenditure budget

Answer

Operating budget

Answer

Cash budget

Answer

Revenue budget