S1: The percentage increase in selling price is found by dividing the favorable sales price variance by last year's sales at the current year's sales quantity. S2: The percentage decrease in units sold is found by dividing the favorable cost volume variance by the planned level of cost of sales. A. both are true B. both are false C. S1 is true D. S2 is true

S1: The percentage increase in selling price is found by dividing the favorable sales price variance by last year's sales at the current year's sales quantity. S2: The percentage decrease in units sold is found by dividing the favorable cost volume variance by the planned level of cost of sales. A. both are true B. both are false C. S1 is true D. S2 is true

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following statements is false? a. The sum of the cost price variance and cost volume variance is equal to the cost of sales variance. b. The sum of sale mix variance and net gross profit volume variance is equal to the final sales volume variance c. The sum of the price factor and price-quantity factor is equal to the sales price variance. d. The sum of the sales price variance and sales volume variance is equal to the sales variance. e. The sum of the cost factor and price-quantity factor is equal to the cost price variance.
The correlation (r) between the price of a product (x) and average daily sales (y) is –0.95. Complete the following statements: a) The coefficient of determination is b) The coefficient of non-determination is
Compute for the following and indicate if its FAVORABLE or UNFAVORABLE. Format: 11,111 F or 11,111 U Sales price variance = Sales volume variance= Sales variance=
When selling prices and inventory costs are stable, a decrease in units sold would result to _sales volume variance and cost volume variance. A. favorable; favorable C. unfavorable; favorable B. unfavorable; unfavorable D. favorable; unfavorable
For each of the following situations, indicate whether FIFO, LIFO, or weighted average applies: a. In a period of falling prices, net income would be highest. b. In a period of falling prices, the unit cost of goods would be the same for ending inventory and cost of goods sold. c. In a period of rising prices, net income would be highest. d. In a period of rising prices, cost of goods sold would be highest. e. In a period of rising prices, ending inventory would be highest.
Compute for the following and Indicate if its FAVORABLE or UNFAVORABLE. Format: 11,111 F or 11,111 U Total gross profit variance = Price variance =
Which of the following analysis of variances is true? a. Unfavorable sales volume variance means that the actual quantity of units sold is less than the amount of sales at standard quantity. b. A unfavorable sales price variance under the 3-way analysis has a same interpretation with that of the favorable sales price variance under the 4-way analysis. c. A cost price variance that is favorable shows that the current year cost of sales per unit is greater than the prior year cost of sales. d. A favorable volume variance means that the number of units sold as per budget exceed the actual number of units sold.
Which statement is true? A. Gross profit (GP) variance analysis, is an essential part of financial statements analysis that is used to evaluate the performance of a firm's departments responsible for the firm's line activities (functions). B. Increases and decreases in sales and cost of sales have direct relationship with increases and decreases in GP. C. If there is a negative sales price variance and there is no cost variance, the gross profit variance will be equal to the sales price variance. D. A zero cost variance indicates that there is no difference between the standard cost prices and actual cost prices. E. none of the above
Profit volume ratio is used for the calculation of: Select one: O a. Profit at given sales O b. Breakeven point O c. Profit when margin of safety is given O d. For all options provided
1. Explain the total sales volume variance for a period. How can this total variance be decomposed?2. Explain the meaning of the joint price-quantity variance.
Which of the following statements is false? a. The sum of the sales volume variance and cost volume variance should be equal to the sum of the sales mix variance and final sales volume variance in a 4-way variance analysis. b. Gross profit variance analysis can be used to assess the effectiveness of the company’s purchasing policies, pricing and mark-up policies. c. There will be a unfavorable sales price variance is the actual sales price is lower than the base sales price. d. There will be a unfavorable cost volume variance if the actual sales volume is less than the base sales volume.
Gross profit variance analysis can be used to study the effect of: a. Changes in volume of goods sold on a company's profitability. b. Changes in cost of goods sold on a company's profitability. c. Changes in product sales mix on a company's profitability. d. All of the choices. e. Changes in selling prices on a company's profitability.