Question 1

When using management by exception,which of the following variances would not affect the production manager?

Accepted Answer

A)  direct materials efficiency 
B)  variable overhead efficiency 
C)  direct labor cost 
D)  direct labor efficiency 
A)  direct materials efficiency 
B)  variable overhead efficiency 
C)  direct labor cost 
D)  direct labor efficiency

Question 2

A favorable variance has a debit balance and is a contra revenue.

Accepted Answer

A) True 
 B)False

Question 3

The management of Guardian Fire Alarms has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 9000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 36,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 13,500 \mathrm { U } \
\hline \text { Total variable overhead variance } & 8500 \mathrm {~F} \
\hline \text { Total fixed overhead variance } & 3000 \mathrm {~F} \
\hline
\end{array}$$ What is the total direct materials variance of the company?

Accepted Answer

A)  $1500 F 
B)  $27,000 F 
C)  $11,500 F 
D)  $6000 F 
A)  $1500 F 
B)  $27,000 F 
C)  $11,500 F 
D)  $6000 F

Question 4

The following information relates to Thomas Manufacturing's overhead costs for the month:
 $$\begin{array} { | l | l | } 
\hline \text { Static budget variable overhead } & \$ 14,200 \
\hline \text { Static budget fixed overhead } & \$ 5,600 \
\hline \text { Static budget direct labor hours } & 1,000 \text { hours } \
\hline \text { Static budget number of units } & 5,000 \text { units } \
\hline
\end{array}$$ Thomas allocates manufacturing overhead to production based on standard direct labor hours.
Thomas reported the following actual results for last month: actual variable overhead,$14,500; actual fixed overhead,$5,400; actual production of 4,700 units at 0.22 direct labor hours per unit.The standard direct labor time is 0.20 direct labor hours per unit.
Compute the fixed overhead volume variance.

Accepted Answer

FOH volume variance= Budgeted @#LAT-DLM& - Allocat

Question 5

The fixed overhead volume variance reveals underallocated fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following will result in an unfavorable direct materials efficiency variance?

Accepted Answer

A)  the actual cost per unit of direct materials exceeds the standard cost of direct materials 
B)  the actual cost per unit of direct materials is less than the standard cost per unit of direct materials 
C)  the actual quantity of direct materials used per unit exceeds the standard quantity of direct materials allowed per unit 
D)  the actual quantity of direct materials used per unit is less than the standard quantity of direct materials allowed per unit 
A)  the actual cost per unit of direct materials exceeds the standard cost of direct materials 
B)  the actual cost per unit of direct materials is less than the standard cost per unit of direct materials 
C)  the actual quantity of direct materials used per unit exceeds the standard quantity of direct materials allowed per unit 
D)  the actual quantity of direct materials used per unit is less than the standard quantity of direct materials allowed per unit

Question 7

Midnight Sun Outfitters projected sales of 76,000 units for the year at a unit sales price of $12.00.Actual sales for the year were 72,000 units at $15.00 per unit.Variable costs were budgeted at $4.50 per unit,and the actual variable cost was $4.75 per unit.Budgeted fixed costs totaled $378,000,while actual fixed costs amounted to $410,000.What is the sales volume variance for operating income?

Accepted Answer

A)  $136,000 unfavorable 
B)  $30,000 unfavorable 
C)  $30,000 favorable 
D)  $166,000 unfavorable 
A)  $136,000 unfavorable 
B)  $30,000 unfavorable 
C)  $30,000 favorable 
D)  $166,000 unfavorable

Question 8

Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Allen 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: 1 pound per unit; $11 per pound
Direct labor: 4 hours per unit; $19 per hour
Allen produced 4000 units during the quarter.At the end of the quarter,an examination of the direct materials records showed that the company used 7500 pounds of direct materials and actual total materials costs were $99,300.
What is the direct materials efficiency variance?

Accepted Answer

A)  $44,000 U 
B)  $38,500 U 
C)  $44,000 F 
D)  $38,500 F 
A)  $44,000 U 
B)  $38,500 U 
C)  $44,000 F 
D)  $38,500 F

Question 9

Which of the following is the correct formula for measuring an efficiency variance?

Accepted Answer

A)  Efficiency Variance = (Actual Quantity + Standard Quantity) - Standard Cost 
B)  Efficiency Variance = (Actual Quantity × Standard Quantity) / Standard Cost 
C)  Efficiency Variance = (Actual Quantity / Standard Quantity) × Standard Cost 
D)  Efficiency Variance = (Actual Quantity - Standard Quantity) × Standard Cost 
A)  Efficiency Variance = (Actual Quantity + Standard Quantity) - Standard Cost 
B)  Efficiency Variance = (Actual Quantity × Standard Quantity) / Standard Cost 
C)  Efficiency Variance = (Actual Quantity / Standard Quantity) × Standard Cost 
D)  Efficiency Variance = (Actual Quantity - Standard Quantity) × Standard Cost

Question 10

A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated,and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget.This could produce a(n)________.

Accepted Answer

A)  unfavorable direct materials cost variance 
B)  unfavorable direct materials efficiency variance 
C)  unfavorable direct labor efficiency variance 
D)  unfavorable direct labor cost variance 
A)  unfavorable direct materials cost variance 
B)  unfavorable direct materials efficiency variance 
C)  unfavorable direct labor efficiency variance 
D)  unfavorable direct labor cost variance

Question 11

Porter Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.The allocation base for variable overhead costs is direct labor hours.At the beginning of the year,the static budget for variable overhead costs included the following data: $$\begin{array} { | l | l | } 
\hline \text { Production volume } & 6000 \text { units } \
\hline \text { Budgeted variable overhead costs } & \$ 14,000 \
\hline \text { Budgeted direct labor hours (DLHr) } & 600 \text { hours } \
\hline
\end{array}$$ At the end of the year,actual data were as follows:
$$\begin{array} { | l | l | } 
\hline \text { Production volume } & 4000 \text { units } \
\hline \text { Actual variable overhead costs } & \$ 15,200 \
\hline \text { Actual direct labor hours (DLHr) } & 480 \text { hours } \
\hline
\end{array}$$ What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $1866 F 
B)  $1866 U 
C)  $2534 F 
D)  $2534 U 
A)  $1866 F 
B)  $1866 U 
C)  $2534 F 
D)  $2534 U

Question 12

Match the variance to the correct definition.
-Cost 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 three ways in which using a standard cost system helps managers.

Accepted Answer

@#LAT-DLM& 2.Set target levels of perfor

Question 14

Benson Company manufactures special metallic materials for luxury homes that require highly skilled labor.Benson 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: 2 pounds per unit; $3 per pound
Direct labor: 5 hours per unit; $16 per hour
Benson produced 4000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $250,000.What is the direct labor efficiency variance?

Accepted Answer

A)  $80,000 U 
B)  $80,000 F 
C)  $70,000 F 
D)  $70,000 U 
A)  $80,000 U 
B)  $80,000 F 
C)  $70,000 F 
D)  $70,000 U

Question 15

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

Accepted Answer

A)  keeps unit 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 unit 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 16

Only substantial unfavorable variances should be investigated to determine their causes.

Accepted Answer

A) True 
 B)False

Question 17

Devon Company has collected the following data for one of its products: $$\begin{array} { | l | l | } 
\hline \text { irect materials standard (3 pounds } @ \$ 1 / \mathrm { lb } \text {.) } & \$ 3 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,500 \
\hline \text { Actual direct materials used } & 101,000 \text { pounds } \
\hline \text { Actual units produced } & 18,000 \text { units } \
\hline
\end{array}$$ What is the direct materials efficiency variance?

Accepted Answer

A)  $18,000 U 
B)  $47,000 F 
C)  $47,000 U 
D)  $18,000 F 
A)  $18,000 U 
B)  $47,000 F 
C)  $47,000 U 
D)  $18,000 F

Question 18

Define variance.What is the difference between a favorable and an unfavorable variance?

Accepted Answer

A variance is the difference between an

Question 19

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $9 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $14 per hour.Payroll taxes are approximately 21% of wages.Benefits amount to $2 per hour.How much is the direct materials cost standard per square foot?

Accepted Answer

A)  $9.40 
B)  $9.00 
C)  $16.00 
D)  $25.00 
A)  $9.40 
B)  $9.00 
C)  $16.00 
D)  $25.00

Question 20

Which of the following is NOT a flexible budget variance?

Accepted Answer

A)  total fixed overhead volume variance 
B)  total variable overhead variance 
C)  total direct materials variance 
D)  total direct labor variance 
A)  total fixed overhead volume variance 
B)  total variable overhead variance 
C)  total direct materials variance 
D)  total direct labor variance

When using management by exception,which of the following variances would not affect the production manager?

A favorable variance has a debit balance and is a contra revenue.

The fixed overhead volume variance reveals underallocated fixed overhead costs.

Which of the following will result in an unfavorable direct materials efficiency variance?

Which of the following is the correct formula for measuring an efficiency variance?

Match the variance to the correct definition. -Cost variance

List three ways in which using a standard cost system helps managers.

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

Only substantial unfavorable variances should be investigated to determine their causes.

Define variance.What is the difference between a favorable and an unfavorable variance?

Which of the following is NOT a flexible budget variance?

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

Filters

Exam 23: Flexible Budgets and Standard Cost Systems

When using management by exception,which of the following variances would not affect the production manager?

A favorable variance has a debit balance and is a contra revenue.

The fixed overhead volume variance reveals underallocated fixed overhead costs.

Which of the following will result in an unfavorable direct materials efficiency variance?

Which of the following is the correct formula for measuring an efficiency variance?

Match the variance to the correct definition. -Cost variance

List three ways in which using a standard cost system helps managers.

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

Only substantial unfavorable variances should be investigated to determine their causes.

Define variance.What is the difference between a favorable and an unfavorable variance?

Which of the following is NOT a flexible budget variance?

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

Filters