Chapter 17

Question 1

1. The variable production cost variances are computed using the units produced instead of the
   units sold.

Question 2

If variances are not prorated at the end of the accounting period, they are closed to the Cost of
Goods Sold.

Question 3

3. If the number of units produced exceeds the number of units sold, the full-absorption operating
   profit will be lower than variable costing operating profit.

Question 4

4. The direct material price variance is based on the quantity of materials purchased when the
   quantity purchased is different from the quantity used.

Question 5

5. The market share variance is more controllable by the marketing department than the industry
   volume variance.

Question 6

6. The industry volume variance is the portion of the sales activity variance due to a change in the
   company’s proportion of sales in the markets in which they operate.

Question 7

7. An increase in an industry’s volume and a decrease in a company’s market share implies that the
   company’s sales price variance is unfavorable.