Question 1

Standards are designed to evaluate price and quantity variances separately.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following conditions normally would not indicate that standard costs should be revised?

Accepted Answer

A) The engineering department has revised product specifications in responding to customer suggestions. 
B) The company has signed a new union contract that increases the factory wages on average by $2.00 an hour. 
C) Actual costs differed from standard costs for the preceding week. 
D) The world price of raw materials increased. 
A) The engineering department has revised product specifications in responding to customer suggestions. 
B) The company has signed a new union contract that increases the factory wages on average by $2.00 an hour. 
C) Actual costs differed from standard costs for the preceding week. 
D) The world price of raw materials increased.

Question 3

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product is termed as variable factory overhead controllable variance.

Accepted Answer

A) True 
 B)False

Question 4

The budgeted volume of production is normally computed as the sum of (1)the expected sales volume and (2)the desired ending inventory.

Accepted Answer

A) True 
 B)False

Question 5

Refer to the information provided for Octofic Cans Inc.Budgeted production for aluminum cans during the month is:

Accepted Answer

A) 383,000 units. 
B) 508,000 units. 
C) 502,000 units. 
D) 532,000 units. 
A) 383,000 units. 
B) 508,000 units. 
C) 502,000 units. 
D) 532,000 units.

Question 6

Favorable volume variances may be harmful when:

Accepted Answer

A) machine repairs cause work stoppages. 
B) supervisors fail to maintain an even flow of work. 
C) production in excess of normal capacity cannot be sold. 
D) there are insufficient sales orders to keep the factory operating at normal capacity. 
A) machine repairs cause work stoppages. 
B) supervisors fail to maintain an even flow of work. 
C) production in excess of normal capacity cannot be sold. 
D) there are insufficient sales orders to keep the factory operating at normal capacity.

Question 7

The following data relate to direct labor costs for the current period:

Accepted Answer

A) $23,000 unfavorable 
B) $23,500 unfavorable 
C) $23,500 favorable 
D) $23,000 favorable 
A) $23,000 unfavorable 
B) $23,500 unfavorable 
C) $23,500 favorable 
D) $23,000 favorable

Question 8

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

Accepted Answer

A) Sales orders at a low level 
B) Machine breakdowns 
C) Employee inexperience 
D) Increase in utility costs 
A) Sales orders at a low level 
B) Machine breakdowns 
C) Employee inexperience 
D) Increase in utility costs

Question 9

The budget procedure that requires all levels of management to start from zero in estimating sales,production,and other operating data is called zero-based budgeting.

Accepted Answer

A) True 
 B)False

Question 10

Variances from standard costs are usually reported to:

Accepted Answer

A) suppliers. 
B) stockholders. 
C) management. 
D) creditors. 
A) suppliers. 
B) stockholders. 
C) management. 
D) creditors.

Question 11

Which of the following will not affect direct materials quantity variance?

Accepted Answer

A) Malfunctioning equipment 
B) Purchasing of inferior raw materials 
C) Material requiring rework 
D) Spoilage of materials 
A) Malfunctioning equipment 
B) Purchasing of inferior raw materials 
C) Material requiring rework 
D) Spoilage of materials

Question 12

Planning for capital expenditures is necessary for all of the following reasons except:

Accepted Answer

A) machinery and other fixed assets wear out. 
B) expansion may be necessary to meet increased demand. 
C) amounts spent for office equipment may be immaterial. 
D) fixed assets may fall below minimum standards of efficiency. 
A) machinery and other fixed assets wear out. 
B) expansion may be necessary to meet increased demand. 
C) amounts spent for office equipment may be immaterial. 
D) fixed assets may fall below minimum standards of efficiency.

Question 13

The cash budget summarizes future plans for acquisition of fixed assets.

Accepted Answer

A) True 
 B)False

Question 14

Based on the following production and sales data of Jackson Co.for March of the current year,prepare (a)a sales budget and (b)a production budget.

Accepted Answer

(a) Jackson Co. Sales Budget For Month E

Question 15

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided for Quaker Inc.What is the amount of the fixed factory overhead volume variance?

Accepted Answer

A) $12,500 favorable 
B) $10,000 unfavorable 
C) $12,500 unfavorable 
D) $10,000 favorable 
A) $12,500 favorable 
B) $10,000 unfavorable 
C) $12,500 unfavorable 
D) $10,000 favorable

Question 17

Trapp Co.was organized on August 1 of the current year.Projected sales for the next three months are as follows:

Accepted Answer

Trapp Co. Schedule of Collections of Acc

Question 18

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

Accepted Answer

A) True 
 B)False

Question 19

Refer to the information provided for Frogue Company.The total factory overhead cost variance is:

Accepted Answer

A) $3,900 favorable. 
B) $10,400 favorable. 
C) $10,400 unfavorable. 
D) $9,900 unfavorable. 
A) $3,900 favorable. 
B) $10,400 favorable. 
C) $10,400 unfavorable. 
D) $9,900 unfavorable.

Question 20

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17,the rate variance was $1,200 favorable.

Accepted Answer

A) True 
 B)False

Standards are designed to evaluate price and quantity variances separately.

Which of the following conditions normally would not indicate that standard costs should be revised?

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product is termed as variable factory overhead controllable variance.

The budgeted volume of production is normally computed as the sum of (1)the expected sales volume and (2)the desired ending inventory.

Refer to the information provided for Octofic Cans Inc.Budgeted production for aluminum cans during the month is:

Favorable volume variances may be harmful when:

The following data relate to direct labor costs for the current period:

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

The budget procedure that requires all levels of management to start from zero in estimating sales,production,and other operating data is called zero-based budgeting.

Variances from standard costs are usually reported to:

Which of the following will not affect direct materials quantity variance?

Planning for capital expenditures is necessary for all of the following reasons except:

The cash budget summarizes future plans for acquisition of fixed assets.

Based on the following production and sales data of Jackson Co.for March of the current year,prepare (a)a sales budget and (b)a production budget.

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

Refer to the information provided for Quaker Inc.What is the amount of the fixed factory overhead volume variance?

Trapp Co.was organized on August 1 of the current year.Projected sales for the next three months are as follows:

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

Refer to the information provided for Frogue Company.The total factory overhead cost variance is:

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17,the rate variance was $1,200 favorable.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

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Exam 13: Budgeting and Standard Cost Systems

Standards are designed to evaluate price and quantity variances separately.

Which of the following conditions normally would not indicate that standard costs should be revised?

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product is termed as variable factory overhead controllable variance.

The budgeted volume of production is normally computed as the sum of (1)the expected sales volume and (2)the desired ending inventory.

Refer to the information provided for Octofic Cans Inc.Budgeted production for aluminum cans during the month is:

Favorable volume variances may be harmful when:

The following data relate to direct labor costs for the current period:

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

The budget procedure that requires all levels of management to start from zero in estimating sales,production,and other operating data is called zero-based budgeting.

Variances from standard costs are usually reported to:

Which of the following will not affect direct materials quantity variance?

Planning for capital expenditures is necessary for all of the following reasons except:

The cash budget summarizes future plans for acquisition of fixed assets.

Based on the following production and sales data of Jackson Co.for March of the current year,prepare (a)a sales budget and (b)a production budget.

Once a static budget has been determined,it is changed regularly as the underlying activity changes.

Refer to the information provided for Quaker Inc.What is the amount of the fixed factory overhead volume variance?

Trapp Co.was organized on August 1 of the current year.Projected sales for the next three months are as follows:

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

Refer to the information provided for Frogue Company.The total factory overhead cost variance is:

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17,the rate variance was $1,200 favorable.

The Role of Accounting in Business

Basic Accounting Concepts

Accrual Accounting Concepts

Accounting for Merchandising Businesses

Sarbanes-Oxley, internal Control, and Cash

Receivables and Inventories

Fixed Assets and Intangible Assets

Liabilities and Stockholders Equity

Financial Statement Analysis

Accounting Systems for Manufacturing Businesses

Cost Behavior and Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters