Question 1

An unfavorable labor quantity variance may be caused by

Accepted Answer

A)  paying workers higher wages than expected. 
B)  misallocation of workers. 
C)  worker fatigue or carelessness. 
D)  higher pay rates mandated by union contracts. 
A)  paying workers higher wages than expected. 
B)  misallocation of workers. 
C)  worker fatigue or carelessness. 
D)  higher pay rates mandated by union contracts.

Question 2

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Accepted Answer

A)  separately disclosed. 
B)  deducted as other expenses and revenues. 
C)  added to cost of goods sold. 
D)  closed directly to retained earnings. 
A)  separately disclosed. 
B)  deducted as other expenses and revenues. 
C)  added to cost of goods sold. 
D)  closed directly to retained earnings.

Question 3

The total standard cost to produce one unit of product is shown

Accepted Answer

A)  at the bottom of the income statement. 
B)  at the bottom of the balance sheet. 
C)  on the standard cost card. 
D)  in the Work in Process Inventory account. 
A)  at the bottom of the income statement. 
B)  at the bottom of the balance sheet. 
C)  on the standard cost card. 
D)  in the Work in Process Inventory account.

Question 4

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

Accepted Answer

A)  Quality control 
B)  Purchasing 
C)  Engineering 
D)  Production 
A)  Quality control 
B)  Purchasing 
C)  Engineering 
D)  Production

Question 5

The perspectives included in the balanced scorecard approach include all of the following except the

Accepted Answer

A)  internal process perspective. 
B)  capacity utilization perspective. 
C)  learning and growth perspective. 
D)  customer perspective. 
A)  internal process perspective. 
B)  capacity utilization perspective. 
C)  learning and growth perspective. 
D)  customer perspective.

Question 6

The standard cost of Product 245 manufactured by Essex Company includes 2 pounds of direct materials at $5.00 per pound. During September, 40,000 pounds of direct materials are purchased at a cost of $4.80 per pound, and all of the direct materials are used to produce 19,000 units of Product 245.
Instructions
(a) Compute the materials price and quantity variances.
(b) Journalize the purchase of the materials and the issuance of the materials, assuming a standard cost system is used.

Accepted Answer

*19,000 × 2 pounds = 38,000
(b) Raw Mate

Question 7

Information on Francona's direct labor costs for the month of August is as follows:   What was the standard rate for August?

Accepted Answer

A)  $9.94 
B)  $9.40 
C)  $10.60 
D)  $10.06 
A)  $9.94 
B)  $9.40 
C)  $10.60 
D)  $10.06

Question 8

The matrix approach to variance analysis

Accepted Answer

A)  will yield slightly different variances than the formula approach. 
B)  is more accurate than the formula approach. 
C)  does not separate the price and quantity variance calculations. 
D)  provides a convenient structure for determining each variance. 
A)  will yield slightly different variances than the formula approach. 
B)  is more accurate than the formula approach. 
C)  does not separate the price and quantity variance calculations. 
D)  provides a convenient structure for determining each variance.

Question 9

The total variance is $25,000. The total materials variance is $10,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

Accepted Answer

A)  $2,500 
B)  $5,000 
C)  $7,500 
D)  $10,000 
A)  $2,500 
B)  $5,000 
C)  $7,500 
D)  $10,000

Question 10

The per-unit standards for direct labor are 1.5 direct labor hours at $12 per hour. If in producing 2,400 units, the actual direct labor cost was $36,800 for 3,000 direct labor hours worked, the total direct labor variance is

Accepted Answer

A)  $1,920 unfavorable. 
B)  $6,400 favorable. 
C)  $4,000 unfavorable. 
D)  $6,400 unfavorable. 
A)  $1,920 unfavorable. 
B)  $6,400 favorable. 
C)  $4,000 unfavorable. 
D)  $6,400 unfavorable.

Question 11

A variance is the difference between actual costs and standard costs.

Accepted Answer

A) True 
 B)False

Question 12

Gant Co. manufactures a product with a standard direct labor cost of two hours at $24.00 per hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor quantity variance was

Accepted Answer

A)  $4,880 F. 
B)  $4,800 U. 
C)  $3,280 U. 
D)  $4,880 U. 
A)  $4,880 F. 
B)  $4,800 U. 
C)  $3,280 U. 
D)  $4,880 U.

Question 13

The direct materials quantity standard should

Accepted Answer

A)  exclude unavoidable waste. 
B)  exclude quality considerations. 
C)  allow for normal spoilage. 
D)  always be expressed as an ideal standard. 
A)  exclude unavoidable waste. 
B)  exclude quality considerations. 
C)  allow for normal spoilage. 
D)  always be expressed as an ideal standard.

Question 14

During January, HPA Company incurs 1,850 hours of direct labor at an hourly cost of $9.60 in producing 1,000 units of its finished product. HPA standard labor cost per unit of output is $18 (2 hours x $9.00).
Instructions
Compute the total, price, and quantity labor variances for HPA Company for January.

Accepted Answer

Total labor variance = $240 F, (1,850 ×

Question 15

Ideal standards

Accepted Answer

A)  are rigorous but attainable. 
B)  are the standards generally used in a master budget. 
C)  reflect optimal performance under perfect operating conditions. 
D)  will always motivate employees to achieve the maximum output. 
A)  are rigorous but attainable. 
B)  are the standards generally used in a master budget. 
C)  reflect optimal performance under perfect operating conditions. 
D)  will always motivate employees to achieve the maximum output.

Question 16

Wagner Company developed the following standard costs for its product for 2011:   
The company expected to work at the 60,000 direct labor hours level of activity and produce 30,000 units of product.
Actual results for 2011 were as follows:
$\bullet$28,400 units of product were actually produced.
$\bullet$Direct labor costs were $546,000 for 56,000 direct labor hours actually worked.
$\bullet$Actual direct materials purchased and used during the year cost $554,400 for 115,500 pounds.
$\bullet$Total actual manufacturing overhead costs were $340,000.
Instructions
Compute the following variances for Wagner Company for 2011 and indicate whether the variance is favorable or unfavorable.
1. Direct materials price variance.
2. Direct materials quantity variance.
3. Direct labor price variance.
4. Direct labor quantity variance.
5. Overhead controllable variance.
6. Overhead volume variance.

Accepted Answer

1. Direct materials price variance = $23

Question 17

A company uses 8,400 pounds of materials and exceeds the standard by 400 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?

Accepted Answer

A)  $1.50 
B)  $3.00 
C)  $4.50 
D)  Cannot be determined from the data provided. 
A)  $1.50 
B)  $3.00 
C)  $4.50 
D)  Cannot be determined from the data provided.

Question 18

ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $12,090. ToolTime's total variance is

Accepted Answer

A)  $300 F. 
B)  $90 U. 
C)  $310 U. 
D)  $400 U. 
A)  $300 F. 
B)  $90 U. 
C)  $310 U. 
D)  $400 U.

Question 19

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $12. Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $810,000. The direct labor quantity variance was

Accepted Answer

A)  $18,000 unfavorable. 
B)  $27,000 unfavorable. 
C)  $27,000 favorable. 
D)  $18,000 favorable. 
A)  $18,000 unfavorable. 
B)  $27,000 unfavorable. 
C)  $27,000 favorable. 
D)  $18,000 favorable.

Question 20

The difference between a budget and a standard is that

Accepted Answer

A)  a budget expresses what costs were, while a standard expresses what costs should be. 
B)  a budget expresses management's plans, while a standard reflects what actually happened. 
C)  a budget expresses a total amount, while a standard expresses a unit amount. 
D)  standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system. 
A)  a budget expresses what costs were, while a standard expresses what costs should be. 
B)  a budget expresses management's plans, while a standard reflects what actually happened. 
C)  a budget expresses a total amount, while a standard expresses a unit amount. 
D)  standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

Exam 25: Budgetary Control and Responsibility Accounting

An unfavorable labor quantity variance may be caused by

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

The total standard cost to produce one unit of product is shown

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

The perspectives included in the balanced scorecard approach include all of the following except the

Information on Francona's direct labor costs for the month of August is as follows: What was the standard rate for August?

The matrix approach to variance analysis

The total variance is $25,000. The total materials variance is $10,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

The per-unit standards for direct labor are 1.5 direct labor hours at $12 per hour. If in producing 2,400 units, the actual direct labor cost was $36,800 for 3,000 direct labor hours worked, the total direct labor variance is

A variance is the difference between actual costs and standard costs.

Gant Co. manufactures a product with a standard direct labor cost of two hours at $24.00 per hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor quantity variance was

The direct materials quantity standard should

Ideal standards

A company uses 8,400 pounds of materials and exceeds the standard by 400 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?

ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $12,090. ToolTime's total variance is

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $12. Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $810,000. The direct labor quantity variance was

The difference between a budget and a standard is that

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Standard Costs and Balanced Scorecard

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