chapter 17

Question 1

non-substitutable materials

Answer 1

materials that cannot be substituted because this would alter the product.

Question 2

mix

Answer 2

refers to the relative proportion or combination of the different inputs used within an input category such as direct materials or direct manufacturing labour to produce the quantity of the finished product.

Question 3

yield

Answer 3

refers to the quantity of finished output units produced from a budgeted or standard mix of inputs within an input category.

Question 4

sources of direct materials efficiency improvement when inputs are substitutable

Answer 4

1. using less input to achieve a given output
2. using a cheaper mix to produce a given output

Question 5

total direct materials yield variance

Answer 5

the sum of the direct materials yield variances for each input. if the budgeted input mix is unchanged.

Question 6

total direct materials mix variance

Answer 6

the difference between (1) the budgeted cost for the actual direct materials input mix and (2) the budgeted cost if the budgeted direct materials input mix had been unchanged.

Question 7

static-budget variance for revenues

Answer 7

the difference between the actual revenues and the budgeted revenues from the static budget.

Question 8

flexible-budget variance for revenues

Answer 8

the difference between the actual revenues and the flexible-budget for the actual unit volume of sales.

Question 9

sales-volume variance

Answer 9

the effect of the difference between the actual and budgeted quantity on the variable used to ‘flex’ the flexible budget.

Question 10

composite product unit

Answer 10

a hypothetical unit with weights related to the individual products of the company.