Question 1

Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service.

Accepted Answer

A) True 
 B)False

Question 2

Cabot Company collected the following data regarding production of one of its products.Compute the direct materials quantity variance. $$\begin{array} { l l } 
\text { Direct materials stardard (6lbs. @ } \$ 2 / lb ) & \$ 12 \mathrm { per } \text { firished urit } \
\text { Actual direct materials used } & 243,000 \mathrm { lbs } \
\text { Actual firished urits produced } & 40,000 \mathrm { units } \
\text { Actual cost of direct materials used } & \$ 483,570
\end{array}$$

Accepted Answer

A) $2,430 unfavorable. 
B) $3,570 unfavorable. 
C) $2,430 favorable. 
D) $6,000 unfavorable. 
E) $3,570 favorable. 
A) $2,430 unfavorable. 
B) $3,570 unfavorable. 
C) $2,430 favorable. 
D) $6,000 unfavorable. 
E) $3,570 favorable.

Question 3

Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units.The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.What is the direct materials quantity variance?

Accepted Answer

A) $ 400 unfavorable. 
B) $ 450 unfavorable. 
C) $2,500 unfavorable. 
D) $2,550 unfavorable. 
E) $2,950 unfavorable. 
A) $ 400 unfavorable. 
B) $ 450 unfavorable. 
C) $2,500 unfavorable. 
D) $2,550 unfavorable. 
E) $2,950 unfavorable.

Question 4

An overhead cost variance is the difference between the actual overhead incurred for the period and the standard overhead applied.

Accepted Answer

A) True 
 B)False

Question 5

__________ are preset costs for delivering a product or service under normal conditions.

Accepted Answer

The answer of __________ are preset costs for delivering a...

Question 6

Within the same budget performance report,it is impossible to have both favorable and unfavorable variances.

Accepted Answer

A) True 
 B)False

Question 7

A product has a sales price of $20.Based on a 15,000-unit production level,the variable costs are $12 per unit and the fixed costs are $6 per unit.Using a flexible budget for an actual production and sales level of 18,000 units,what is the budgeted operating income?

Accepted Answer

Fixed costs = $6 * 15,000 unit

Question 8

Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units.The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.What is the direct materials price variance?

Accepted Answer

A) $ 400 unfavorable. 
B) $ 450 unfavorable. 
C) $2,500 unfavorable. 
D) $2,550 unfavorable. 
E) $2,950 unfavorable. 
A) $ 400 unfavorable. 
B) $ 450 unfavorable. 
C) $2,500 unfavorable. 
D) $2,550 unfavorable. 
E) $2,950 unfavorable.

Question 9

A flexible budget is prepared:

Accepted Answer

A) Before the operating period only. 
B) After the operating period only. 
C) During the operating period only. 
D) At any time in the planning period. 
E) A flexible budget should never be prepared. 
A) Before the operating period only. 
B) After the operating period only. 
C) During the operating period only. 
D) At any time in the planning period. 
E) A flexible budget should never be prepared.

Question 10

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

Accepted Answer

A) Rolling budget. 
B) Production budget. 
C) Flexible budget. 
D) Merchandise purchases budget. 
E) Fixed budget. 
A) Rolling budget. 
B) Production budget. 
C) Flexible budget. 
D) Merchandise purchases budget. 
E) Fixed budget.

Question 11

What are the four steps in the effective management of variance analysis?

Accepted Answer

The four steps are: (1)prepare

Question 12

Product A has a sales price of $10 per unit.Based on a 10,000-unit production level,the variable costs are $6 per unit and the fixed costs are $3 per unit.Using a flexible budget for 12,500 units,what is the budgeted operating income from Product A?

Accepted Answer

A) $12,500. 
B) $25,000. 
C) $20,000. 
D) $30,000. 
E) $35,000. 
A) $12,500. 
B) $25,000. 
C) $20,000. 
D) $30,000. 
E) $35,000.

Question 13

Variable budget is another name for a flexible budget.

Accepted Answer

A) True 
 B)False

Question 14

Cheshire,Inc.allocates fixed overhead at a rate of $18 per direct labor hour.This amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units.During May,Cheshire produced 5,500 units.Budgeted fixed overhead is $66,000,and overhead incurred was $67,000.
Required:
 Determine the volume variance for May.

Accepted Answer

@#IMG-DLM& ^*(3,600 DLH/6,000 un

Question 15

Fairfield Co.collected the following information about its production activities for the current year.
a.Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable.
b.Prepare the journal entry to record the issuance of direct materials into production.
Actual costs and quantities:
Direct materials used 95,000 lbs.@ $6.30 per lb.
Units completed during the year,50,000 units
Standard costs and quantities:
Price per lb.of direct material,$6.05
Two lbs.of direct material per unit

Accepted Answer

@#IMG-DLM& ^*50,000 un

Question 16

Whistler Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials.What might be the cause of this pattern of variances?

Accepted Answer

The company's purchasing manager may hav

Question 17

A company's flexible budget for 12,000 units of production showed sales,$48,000; variable costs,$18,000; and fixed costs,$16,000.The operating income expected if the company produces and sells 16,000 units is:

Accepted Answer

A) $ 2,667. 
B) $14,000. 
C) $18,667. 
D) $24,000. 
E) $35,000. 
A) $ 2,667. 
B) $14,000. 
C) $18,667. 
D) $24,000. 
E) $35,000.

Question 18

Based on predicted production of 25,000 units,Best Co.anticipates $175,000 of fixed costs and $137,500 of variable costs.What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

Accepted Answer

@#IMG-DLM& At 20,000 units: ($5.50 * 20,

Question 19

Bok Company's output for the current period was assigned a $400,000 standard direct labor cost.The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance.What is the actual total direct labor cost for the current period?

Accepted Answer

A) $414,000. 
B) $386,000. 
C) $394,000. 
D) $406,000. 
E) $410,000. 
A) $414,000. 
B) $386,000. 
C) $394,000. 
D) $406,000. 
E) $410,000.

Question 20

What are some causes of direct labor rate and efficiency variances?

Accepted Answer

The use of workers with different skill

Exam 23: Flexible Budgets and Standard Costs

Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service.

Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units.The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.What is the direct materials quantity variance?

An overhead cost variance is the difference between the actual overhead incurred for the period and the standard overhead applied.

__________ are preset costs for delivering a product or service under normal conditions.

Within the same budget performance report,it is impossible to have both favorable and unfavorable variances.

A product has a sales price of $20.Based on a 15,000-unit production level,the variable costs are $12 per unit and the fixed costs are $6 per unit.Using a flexible budget for an actual production and sales level of 18,000 units,what is the budgeted operating income?

Bradford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units.The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.What is the direct materials price variance?

A flexible budget is prepared:

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

What are the four steps in the effective management of variance analysis?

Product A has a sales price of $10 per unit.Based on a 10,000-unit production level,the variable costs are $6 per unit and the fixed costs are $3 per unit.Using a flexible budget for 12,500 units,what is the budgeted operating income from Product A?

Variable budget is another name for a flexible budget.

Whistler Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials.What might be the cause of this pattern of variances?

A company's flexible budget for 12,000 units of production showed sales,$48,000; variable costs,$18,000; and fixed costs,$16,000.The operating income expected if the company produces and sells 16,000 units is:

Based on predicted production of 25,000 units,Best Co.anticipates $175,000 of fixed costs and $137,500 of variable costs.What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

What are some causes of direct labor rate and efficiency variances?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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