Question 1

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the total fixed overhead variance.

Accepted Answer

A) $2,000 U 
B) $2,000 F 
C) $14,000 U 
D) $14,000 F 
A) $2,000 U 
B) $2,000 F 
C) $14,000 U 
D) $14,000 F

Question 2

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or if the cost standard needs to be updated.

Accepted Answer

A) True 
 B)False

Question 3

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the fixed overhead cost variance.

Accepted Answer

A) $3,000 F 
B) $3,000 U 
C) $5,000 F 
D) $5,000 U 
A) $3,000 F 
B) $3,000 U 
C) $5,000 F 
D) $5,000 U

Question 4

Western Outfitters projected sales of 75,000 units for the year 2015 at a unit sale price of $12.00. Actual sales in 2015 was 72,000 units, at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual variable cost was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the flexible budget variance for operating income?

Accepted Answer

A) $48,000 unfavorable 
B) $65,000 favorable 
C) $65,000 unfavorable 
D) $41,000 favorable 
A) $48,000 unfavorable 
B) $65,000 favorable 
C) $65,000 unfavorable 
D) $41,000 favorable

Question 5

The management technique whereby managers concentrate on results that are outside the accepted parameters is called management by:

Accepted Answer

A) variance. 
B) standard. 
C) exception. 
D) budget. 
A) variance. 
B) standard. 
C) exception. 
D) budget.

Question 6

The fixed overhead volume variance is essentially a cost variance.

Accepted Answer

A) True 
 B)False

Question 7

Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in their books.
Sales Revenues: $750,000
Cost of Goods Sold (standard costing): $400,500
Marketing & Admin expenses: $150,000
Variances:   Calculate the standard net operating income.

Accepted Answer

The answer of Caterlebe Productions uses a standard costing system....

Question 8

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual fixed costs were lower than the expected fixed costs as per the static budget. This difference results in a(n):

Accepted Answer

A) unfavorable flexible budget variance for fixed costs. 
B) favorable sales volume variance for fixed costs. 
C) favorable flexible budget variance for fixed costs. 
D) unfavorable sales volume variance for fixed costs. 
A) unfavorable flexible budget variance for fixed costs. 
B) favorable sales volume variance for fixed costs. 
C) favorable flexible budget variance for fixed costs. 
D) unfavorable sales volume variance for fixed costs.

Question 9

Standard costs help motivate employees by serving as benchmarks against which their performance is measured.

Accepted Answer

A) True 
 B)False

Question 10

Fixed overhead volume variance is a flexible budget variance.

Accepted Answer

A) True 
 B)False

Question 11

The management of Zeta Company has calculated the following variances:   Calculate the total direct materials variance of Zeta Company.

Accepted Answer

A) $3,000 F 
B) $27,000 F 
C) $10,050 F 
D) $7,000 F 
A) $3,000 F 
B) $27,000 F 
C) $10,050 F 
D) $7,000 F

Question 12

The total variable overhead variance is obtained by adding variable overhead cost variance and:

Accepted Answer

A) total manufacturing overhead variance. 
B) total direct labor variance. 
C) fixed overhead cost variance. 
D) variable overhead efficiency variance. 
A) total manufacturing overhead variance. 
B) total direct labor variance. 
C) fixed overhead cost variance. 
D) variable overhead efficiency variance.

Question 13

Onyx Company has prepared a static budget at the beginning of the month. At the end of the month, the following information has been retrieved from the records. Static budget:
Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500
Actual results:
Sales volume: 990 units: Price: $74 per unit
Variable expense: $35 per unit: Fixed expenses: $33,000 per month
Operating income: $5,610
Calculate the sales volume variance for revenues.

Accepted Answer

A) $4,500 U 
B) $700 U 
C) $380 U 
D) $3,960 F 
A) $4,500 U 
B) $700 U 
C) $380 U 
D) $3,960 F

Question 14

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):

Accepted Answer

A) favorable flexible budget variance for sales revenues. 
B) favorable sales volume variance for sales revenues. 
C) unfavorable flexible budget variance for sales revenues. 
D) unfavorable sales volume variance for sales revenues. 
A) favorable flexible budget variance for sales revenues. 
B) favorable sales volume variance for sales revenues. 
C) unfavorable flexible budget variance for sales revenues. 
D) unfavorable sales volume variance for sales revenues.

Question 15

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

Accepted Answer

A) True 
 B)False

Question 16

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the fixed overhead volume variance.

Accepted Answer

A) $14,000 F 
B) $3,000 U 
C) $3,000 F 
D) $14,000 U 
A) $14,000 F 
B) $3,000 U 
C) $3,000 F 
D) $14,000 U

Question 17

If both favorable and unfavorable variances exist, then the variance obtained by netting them is always a favorable variance.

Accepted Answer

A) True 
 B)False

Question 18

The management of Zeta Company has calculated the following variances:   Calculate the total direct labor variance of Zeta Company.

Accepted Answer

A) $15,000 F 
B) $10,050 F 
C) $27,000 F 
D) $3,000 F 
A) $15,000 F 
B) $10,050 F 
C) $27,000 F 
D) $3,000 F

Question 19

Delicious Food Products is famous for their specialty fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was a favorable materials cost variance. Which of the following would be a logical explanation for that variance?

Accepted Answer

A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down. 
B) The factory lost two experienced workers at the beginning of the quarter, and their replacements worked at a much slower rate during their training period. 
C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard. 
D) The production staff changed the work flow process so that there was less wastage of direct materials during production. 
A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down. 
B) The factory lost two experienced workers at the beginning of the quarter, and their replacements worked at a much slower rate during their training period. 
C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard. 
D) The production staff changed the work flow process so that there was less wastage of direct materials during production.

Question 20

Elite Brands Company uses standard costs for their manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data:   How much is the standard cost per direct labor hour for variable overhead?

Accepted Answer

A) $22.50 per direct labor hour 
B) $33.75 per direct labor hour 
C) $28.12 per direct labor hour 
D) $25.00 per direct labor hour 
A) $22.50 per direct labor hour 
B) $33.75 per direct labor hour 
C) $28.12 per direct labor hour 
D) $25.00 per direct labor hour

Exam 23: Flexible Budgets and Standard Cost Systems

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the total fixed overhead variance.

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or if the cost standard needs to be updated.

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the fixed overhead cost variance.

The management technique whereby managers concentrate on results that are outside the accepted parameters is called management by:

The fixed overhead volume variance is essentially a cost variance.

Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in their books. Sales Revenues: $750,000 Cost of Goods Sold (standard costing): $400,500 Marketing & Admin expenses: $150,000 Variances: Calculate the standard net operating income.

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual fixed costs were lower than the expected fixed costs as per the static budget. This difference results in a(n):

Standard costs help motivate employees by serving as benchmarks against which their performance is measured.

Fixed overhead volume variance is a flexible budget variance.

The management of Zeta Company has calculated the following variances: Calculate the total direct materials variance of Zeta Company.

The total variable overhead variance is obtained by adding variable overhead cost variance and:

A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

Zenith Fashions uses standard costs for their manufacturing division. From the following data, calculate the fixed overhead volume variance.

If both favorable and unfavorable variances exist, then the variance obtained by netting them is always a favorable variance.

The management of Zeta Company has calculated the following variances: Calculate the total direct labor variance of Zeta Company.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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