Question 1

(Appendix 10B)A favourable labour efficiency variance would result in a credit balance in the labour efficiency variance account.

Accepted Answer

A) True 
 B)False

Question 2

The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow:
 
-What was the total standard cost for direct labour for May?

Accepted Answer

A)  $120,000. 
B)  $161,000. 
C)  $168,000. 
D)  $180,000. 
A)  $120,000. 
B)  $161,000. 
C)  $168,000. 
D)  $180,000.

Question 3

The Litton Company has established standards as follows:
 
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
 
The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-What was the labour rate variance?

Accepted Answer

A)  $480 favourable. 
B)  $480 unfavourable. 
C)  $440 favourable. 
D)  $440 unfavourable. 
A)  $480 favourable. 
B)  $480 unfavourable. 
C)  $440 favourable. 
D)  $440 unfavourable.

Question 4

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

Accepted Answer

A)  When material is issued. 
B)  When material is purchased. 
C)  When material is used in production. 
D)  When production is completed. 
A)  When material is issued. 
B)  When material is purchased. 
C)  When material is used in production. 
D)  When production is completed.

Question 5

A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
 
The following data pertain to operations for the most recent period:
 
-What was the fixed overhead volume variance for the period,rounded to the nearest dollar?

Accepted Answer

A)  $1,225 favourable. 
B)  $2,720 unfavourable. 
C)  $2,811 unfavourable. 
D)  $3,945 unfavourable. 
A)  $1,225 favourable. 
B)  $2,720 unfavourable. 
C)  $2,811 unfavourable. 
D)  $3,945 unfavourable.

Question 6

An outdoor barbecue grill manufacturer has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
 
The following data pertain to operations for the most recent period:
 
-What was the fixed overhead volume variance for the period,rounded to the nearest dollar?

Accepted Answer

A)  $163 favourable. 
B)  $815 favourable. 
C)  $978 favourable. 
D)  $993 favourable. 
A)  $163 favourable. 
B)  $815 favourable. 
C)  $978 favourable. 
D)  $993 favourable.

Question 7

Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

Accepted Answer

A) True 
 B)False

Question 8

(Appendix 10A) Saskatoon Company uses two raw materials, A and B, in the manufacture of its only product: Zizbo. The materials are very close substitutes. The standard proportions for the manufacture of a unit of Zizbo are 2 units of A and 3 units of B. The unit standard prices of A and B are $10 and $8, respectively. During the month of August, the company used 450 units of A and 750 units of B to produce 230 units of Zizbo.
-(Appendix 10A)For raw material A,what were the mix and yield variances,respectively?

Accepted Answer

A)  $60 favourable and $440 unfavourable. 
B)  $200 unfavourable and $300 favourable. 
C)  $300 favourable and $200 unfavourable. 
D)  $300 unfavourable and $200 favourable. 
A)  $60 favourable and $440 unfavourable. 
B)  $200 unfavourable and $300 favourable. 
C)  $300 favourable and $200 unfavourable. 
D)  $300 unfavourable and $200 favourable.

Question 9

The Alpha Company produces toys for national distribution. Standards for a particular toy are:

Materials: 12 grams per unit at $0.56 per gram.
Labour: 2 hours per unit at $2.75 per hour.

During the month of December, the company produced 1,000 units. Information for the month follows:

Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $8,000.

-What was the labour efficiency variance?

Accepted Answer

A)  $1,375 favourable. 
B)  $1,375 unfavourable. 
C)  $1,600 favourable. 
D)  $1,600 unfavourable. 
A)  $1,375 favourable. 
B)  $1,375 unfavourable. 
C)  $1,600 favourable. 
D)  $1,600 unfavourable.

Question 10

The Litton Company has established standards as follows:
 
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
 
The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-What was the labour efficiency variance?

Accepted Answer

A)  $800 favourable. 
B)  $800 unfavourable. 
C)  $840 favourable. 
D)  $840 unfavourable. 
A)  $800 favourable. 
B)  $800 unfavourable. 
C)  $840 favourable. 
D)  $840 unfavourable.

Question 11

(Appendix 10B)Vernon Mills,Inc.is a large producer of men's and women's clothing.The company uses standard costs for all of its products.The standard costs and actual costs per unit of product for a recent period are given below for one of the company's product lines:
 
During this period, the company produced 4,800 units of this product. A comparison of standard and actual costs for the period on a total cost basis is given below:
 
There was no inventory of materials on hand at the beginning of the period. During the period, 21,120 metres of materials were purchased, all of which were used in production.

Required:

a) (Appendix 10B) For direct materials, compute the price and quantity variances for the period and prepare journal entries to record all activity relating to direct materials for the period.
b) (Appendix 10B) For direct labour, compute the rate and efficiency variances and prepare a journal entry to record the incurrence of direct labour cost for the period.
c) For variable overhead, compute the spending and efficiency variances.

Accepted Answer

a) Materials Price Variance:
@#IMG-DLM&

Question 12

Which one of the following variances is MOST controllable by a production supervisor?

Accepted Answer

A)  Materials price variance. 
B)  Materials usage variance. 
C)  Fixed overhead volume variance. 
D)  Variable overhead spending variance. 
A)  Materials price variance. 
B)  Materials usage variance. 
C)  Fixed overhead volume variance. 
D)  Variable overhead spending variance.

Question 13

The following materials standards have been established for a particular product:
 
The following data pertain to operations concerning the product for the last month:
 
-What was the materials quantity variance for the month?

Accepted Answer

A)  $5,814 unfavourable. 
B)  $5,916 unfavourable. 
C)  $8,550 unfavourable. 
D)  $8,700 unfavourable. 
A)  $5,814 unfavourable. 
B)  $5,916 unfavourable. 
C)  $8,550 unfavourable. 
D)  $8,700 unfavourable.

Question 14

An outdoor barbecue grill manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
 
The following data pertain to operations for the most recent period:
 
-What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

Accepted Answer

A)  $1,450 favourable. 
B)  $2,503 favourable. 
C)  $3,009 unfavourable. 
D)  $5,810 unfavourable. 
A)  $1,450 favourable. 
B)  $2,503 favourable. 
C)  $3,009 unfavourable. 
D)  $5,810 unfavourable.

Question 15

The following standards for variable manufacturing overhead have been established for a company that makes only one product:
 
The following data pertain to operations for the last month:
 
-What was the variable overhead efficiency variance for the month?

Accepted Answer

A)  $1,155 unfavourable. 
B)  $1,190 favourable. 
C)  $1,190 unfavourable. 
D)  $1,680 favourable. 
A)  $1,155 unfavourable. 
B)  $1,190 favourable. 
C)  $1,190 unfavourable. 
D)  $1,680 favourable.

Question 16

The following standards for variable manufacturing overhead have been established for a company that makes only one product: $\begin{array}{lccc}
\text {Standard hours per unit of output}&\text {7.8  hours}\
\text {Standard variable overhead rate}&\text { \$ 12.55 per hour}\
\end{array}$
 The following data pertain to operations for the last month: $\begin{array} { l r } 
\text { Actual hours } & 2,900 \text { hours } \
\text { Actual total variable overhead cost } & \$ 36,975 \
\text { Actual output } & 200 \text { units }
\end{array}$ What was the variable overhead efficiency variance for the month?

Accepted Answer

A)  $0. 
B)  $16,817 unfavourable. 
C)  $580 unfavourable. 
D)  $17,397 unfavourable. 
A)  $0. 
B)  $16,817 unfavourable. 
C)  $580 unfavourable. 
D)  $17,397 unfavourable.

Question 17

A manufacturer of industrial equipment has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
 
The following data pertain to operations for the most recent period:
 
-What was the total predetermined overhead rate,rounded to the nearest cent?

Accepted Answer

A)  $23.59. 
B)  $23.91. 
C)  $23.98. 
D)  $24.30. 
A)  $23.59. 
B)  $23.91. 
C)  $23.98. 
D)  $24.30.

Question 18

In a standard costing system,under- or overapplied fixed overhead is equal to the sum of the fixed overhead budget variance and the fixed overhead volume variance.

Accepted Answer

A) True 
 B)False

Question 19

Standard costs should generally be based on the actual costs of prior periods.

Accepted Answer

A) True 
 B)False

Question 20

Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
 
The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows:
 
-What was the labour rate variance for January?

Accepted Answer

A)  $475 favourable. 
B)  $475 unfavourable. 
C)  $585 favourable. 
D)  $585 unfavourable. 
A)  $475 favourable. 
B)  $475 unfavourable. 
C)  $585 favourable. 
D)  $585 unfavourable.

(Appendix 10B)A favourable labour efficiency variance would result in a credit balance in the labour efficiency variance account.

The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: -What was the total standard cost for direct labour for May?

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

Which one of the following variances is MOST controllable by a production supervisor?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: -What was the materials quantity variance for the month?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: -What was the variable overhead efficiency variance for the month?

In a standard costing system,under- or overapplied fixed overhead is equal to the sum of the fixed overhead budget variance and the fixed overhead volume variance.

Standard costs should generally be based on the actual costs of prior periods.

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Management

Budgeting

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Filters

Exam 10: Standard Costs and Overhead Analysis

(Appendix 10B)A favourable labour efficiency variance would result in a credit balance in the labour efficiency variance account.

The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: -What was the total standard cost for direct labour for May?

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

Which one of the following variances is MOST controllable by a production supervisor?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: -What was the materials quantity variance for the month?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: -What was the variable overhead efficiency variance for the month?

In a standard costing system,under- or overapplied fixed overhead is equal to the sum of the fixed overhead budget variance and the fixed overhead volume variance.

Standard costs should generally be based on the actual costs of prior periods.

Managerial Accounting and the Business Environment

Cost Terms, Concepts, and Classifications

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Variable Costing: A Tool for Management

Budgeting

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

Filters