Question 1

The variable overhead efficiency variance measures how well the business ________.

Accepted Answer

A)  keeps costs of variable overhead inputs within standard 
B)  uses its variable overhead inputs 
C)  keeps fixed overhead within standard 
D)  explains why fixed overhead is under allocated or overallocated 
A)  keeps costs of variable overhead inputs within standard 
B)  uses its variable overhead inputs 
C)  keeps fixed overhead within standard 
D)  explains why fixed overhead is under allocated or overallocated

Question 2

For each of the following variances,state which manager is most likely to be responsible for the variance.
 $$\begin{array} { | l | l | } 
\hline \text { Variance } & \text { Responsible Manager } \
\hline \text { Direct Materials Cost } & \
\hline \text { Direct Labor Efficiency } & \
\hline \text { Variable Overhead } & \
\text { Efficiency } & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | } 
\hline \t

Question 3

Match the variance to the correct definition.
-Efficiency variance

Accepted Answer

A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget 
A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget

Question 4

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

Accepted Answer

A) True 
 B)False

Question 5

An unfavorable variance means more cost has been incurred than planned.

Accepted Answer

A) True 
 B)False

Question 6

The management of Lawnshark Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 40,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 17,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 13,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 5500 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline
\end{array}$$ What is the total variable overhead variance of the company?

Accepted Answer

A)  $2500 F 
B)  $12,500 F 
C)  $8500 F 
D)  $4000 F 
A)  $2500 F 
B)  $12,500 F 
C)  $8500 F 
D)  $4000 F

Question 7

A company is setting its direct materials and direct labor standards for its leading product.Direct material costs from the supplier are $9 per square foot,net of purchase discount.Freight-in amounts to $0.30 per square foot.Basic wages of the assembly line personnel are $19 per hour.Payroll taxes are approximately 23% of wages.How much is the direct labor cost standard per hour? (Round your answer to the nearest cent.)

Accepted Answer

A)  $4.37 
B)  $19.00 
C)  $23.37 
D)  $32.37 
A)  $4.37 
B)  $19.00 
C)  $23.37 
D)  $32.37

Question 8

Under a standard cost system,the journal entry to record direct labor includes ________.

Accepted Answer

A)  a debit for standard direct labor quantity for actual production times standard direct labor cost per hour 
B)  a credit for standard quantity usage for actual production times actual cost per hour 
C)  a debit for actual quantity times standard cost per hour 
D)  a credit for standard quantity for actual production times standard cost per hour 
A)  a debit for standard direct labor quantity for actual production times standard direct labor cost per hour 
B)  a credit for standard quantity usage for actual production times actual cost per hour 
C)  a debit for actual quantity times standard cost per hour 
D)  a credit for standard quantity for actual production times standard cost per hour

Question 9

The fixed overhead cost variance measures the difference between actual fixed overhead and allocated fixed overhead.

Accepted Answer

A) True 
 B)False

Question 10

The flexible budget variance is the difference between the ________.

Accepted Answer

A)  actual results and the expected results in the flexible budget for the actual units sold 
B)  expected results in the flexible budget for the units expected to be sold and the static budget 
C)  flexible budget and actual amounts due to differences in volumes 
D)  flexible budget and static budget due to differences in fixed costs 
A)  actual results and the expected results in the flexible budget for the actual units sold 
B)  expected results in the flexible budget for the units expected to be sold and the static budget 
C)  flexible budget and actual amounts due to differences in volumes 
D)  flexible budget and static budget due to differences in fixed costs

Question 11

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the month,the actual sales price was higher than the expected sales 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 12

Match the variance to the correct definition.
-Sales volume variance

Accepted Answer

A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget 
A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget

Question 13

List the direct labor variances and briefly describe each.

Accepted Answer

The direct labor variances are the direc

Question 14

A standard is a sales price,cost,or quantity that is expected under normal conditions.

Accepted Answer

A) True 
 B)False

Question 15

The sum of the cost variances and efficiency variances equal ________.

Accepted Answer

A)  the static budget variance 
B)  the flexible budget variance 
C)  the difference between the flexible budget and the static budget 
D)  the difference between the static budget and the previous year's actual results 
A)  the static budget variance 
B)  the flexible budget variance 
C)  the difference between the flexible budget and the static budget 
D)  the difference between the static budget and the previous year's actual results

Question 16

The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.

Accepted Answer

A) True 
 B)False

Question 17

Match the variance to the correct definition.
-Static budget variance

Accepted Answer

A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget 
A) measures how well the business uses its materials or human resources 
B) the difference between the expected results in the flexible budget for the actual units sold and the static budget 
C) the difference between actual results and expected results in the flexible budget for the actual units sold 
D) measures how well the business keeps unit material and labor costs within standards 
E) the difference between actual results and the expected results in the static budget

Question 18

A favorable sales volume variance in variable costs suggests a(n)________.

Accepted Answer

A)  increase in number of actual units sold when compared to the expected number of units sold 
B)  decrease in number of actual units sold when compared to the expected number of units sold 
C)  increase in variable cost per unit 
D)  decrease in fixed costs 
A)  increase in number of actual units sold when compared to the expected number of units sold 
B)  decrease in number of actual units sold when compared to the expected number of units sold 
C)  increase in variable cost per unit 
D)  decrease in fixed costs

Question 19

Bear Creek Golf Center reported actual operating income for the current year as $65,000.The flexible budget operating income for actual volume is $58,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?

Accepted Answer

A)  $7000 favorable 
B)  $7000 unfavorable 
C)  $1000 unfavorable 
D)  $1000 favorable 
A)  $7000 favorable 
B)  $7000 unfavorable 
C)  $1000 unfavorable 
D)  $1000 favorable

Question 20

Poseidon Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Poseidon uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 4 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $15 per hour
Poseidon produced 5000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the direct labor cost variance was $6000 F.Which of the following is a logical explanation for this variance?

Accepted Answer

A)  The company used fewer labor hours than allowed by the standards. 
B)  The company paid a lower cost per hour for labor than allowed by the standards. 
C)  The company used a lower quantity of direct materials than allowed by the standards. 
D)  The company paid a lower cost for the direct materials than allowed by the standards. 
A)  The company used fewer labor hours than allowed by the standards. 
B)  The company paid a lower cost per hour for labor than allowed by the standards. 
C)  The company used a lower quantity of direct materials than allowed by the standards. 
D)  The company paid a lower cost for the direct materials than allowed by the standards.

Exam 23: Flexible Budgets and Standard Cost Systems

The variable overhead efficiency variance measures how well the business ________.

For each of the following variances,state which manager is most likely to be responsible for the variance. Variance Responsible Manager Direct Materials Cost Direct Labor Efficiency Variable Overhead Efficiency

Match the variance to the correct definition. -Efficiency variance

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

An unfavorable variance means more cost has been incurred than planned.

Under a standard cost system,the journal entry to record direct labor includes ________.

The fixed overhead cost variance measures the difference between actual fixed overhead and allocated fixed overhead.

The flexible budget variance is the difference between the ________.

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

Match the variance to the correct definition. -Sales volume variance

List the direct labor variances and briefly describe each.

A standard is a sales price,cost,or quantity that is expected under normal conditions.

The sum of the cost variances and efficiency variances equal ________.

The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.

Match the variance to the correct definition. -Static budget variance

A favorable sales volume variance in variable costs suggests a(n)________.

Bear Creek Golf Center reported actual operating income for the current year as $65,000.The flexible budget operating income for actual volume is $58,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?

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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