Question 1

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

Accepted Answer

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

Question 2

The direct materials cost and efficiency variances make up the total direct materials variance.

Accepted Answer

A) True 
 B)False

Question 3

For each of the following variances,state which manager is most likely to be responsible for the variance.

Accepted Answer

The answer of For each of the following variances,state which...

Question 4

Cake Lady Bakery is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Cake Lady purchases by the pound.In addition,the production requires a certain amount of direct labor.Cake Lady uses a standard cost system,and at the end of the first quarter,there was an unfavorable direct labor cost variance.Which of the following is a logical explanation for that variance?

Accepted Answer

A) The cost of workers' medical insurance plans jumped up dramatically during the quarter. 
B) The factory lost two experienced workers at the beginning of the quarter,and their replacements wasted a large amount of direct materials during their training period. 
C) The purchasing 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 production required fewer direct labor hours. 
A) The cost of workers' medical insurance plans jumped up dramatically during the quarter. 
B) The factory lost two experienced workers at the beginning of the quarter,and their replacements wasted a large amount of direct materials during their training period. 
C) The purchasing 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 production required fewer direct labor hours.

Question 5

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

Accepted Answer

1.Prepare the master budget.
2

Question 6

Which of the following is an example of a direct labor efficiency standard?

Accepted Answer

A) $20 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit 
A) $20 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit

Question 7

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing wastage of valuable direct materials.The production manager decided to recruit some highly skilled production workers from another company to bring down the defect rate but was worried that the higher wages of these workers might negatively affect operating income.This would produce a(n)________.

Accepted Answer

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

Question 8

List the direct materials variances,and briefly describe each.

Accepted Answer

The direct materials variances are the d

Question 9

What does the fixed overhead volume variance measure?

Accepted Answer

The fixed overhead volume vari

Question 10

The fixed overhead volume variance always reveals underallocated fixed overhead costs.

Accepted Answer

A) True 
 B)False

Question 11

Grace Company manufactures candles.The standard direct materials quantity required to produce one large candle is one pound at a cost of $5 per pound.During November,7,200 large candles were produced using 7,500 pounds of direct materials that cost $45,000.
Using the format below,prepare an analysis of the direct materials variances.

Accepted Answer

@#IMG-DLM& 
Note:Actual cost =

Question 12

An unfavorable flexible budget variance in operating income might be due to a(n)________.

Accepted Answer

A) increase in sales price per unit 
B) decrease in sales volume 
C) increase in variable cost per unit 
D) decrease in fixed costs 
A) increase in sales price per unit 
B) decrease in sales volume 
C) increase in variable cost per unit 
D) decrease in fixed costs

Question 13

The management of Alpha Lawnmowers has calculated the following variances:
 
What is the total variable overhead variance of the company?

Accepted Answer

A) $4,500 F 
B) $12,500 F 
C) $8,500 F 
D) $4,000 F 
A) $4,500 F 
B) $12,500 F 
C) $8,500 F 
D) $4,000 F

Question 14

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

Accepted Answer

A variance is the difference between an

Question 15

Based on the following,what is the total direct materials variance?

Accepted Answer

A) $150 U 
B) $300 F 
C) $150 F 
D) $300 U 
A) $150 U 
B) $300 F 
C) $150 F 
D) $300 U

Question 16

Fixed overhead volume variance is a flexible budget variance.

Accepted Answer

A) True 
 B)False

Question 17

Glendale Brands Company uses standard costs for its 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:
 
At the end of the year,actual data were as follows:
 
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) $2,036 F 
B) $2,036 U 
C) $2,955 F 
D) $2,955 U 
A) $2,036 F 
B) $2,036 U 
C) $2,955 F 
D) $2,955 U

Question 18

Which of the following statements about management by exception is incorrect?

Accepted Answer

A) Managers concentrate on results that are outside the accepted parameters. 
B) There is no need to investigate variances that are less than 10%. 
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D) Many companies use a combination of percentages and dollar amounts. 
A) Managers concentrate on results that are outside the accepted parameters. 
B) There is no need to investigate variances that are less than 10%. 
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D) Many companies use a combination of percentages and dollar amounts.

Question 19

Akao Products uses a standard cost system.Overhead costs are allocated based on direct labor hours.In the first quarter,Akao had an unfavorable efficiency variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Accepted Answer

A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours. 
A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours.

Question 20

Cavalaris Products uses a standard cost system.Overhead costs are allocated based on direct labor hours.In the first quarter,Cavalaris had an unfavorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Accepted Answer

A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours. 
A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours.

Exam 23: Flexible Budgets and Standard Cost Systems

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

The direct materials cost and efficiency variances make up the total direct materials variance.

For each of the following variances,state which manager is most likely to be responsible for the variance.

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

Which of the following is an example of a direct labor efficiency standard?

List the direct materials variances,and briefly describe each.

What does the fixed overhead volume variance measure?

The fixed overhead volume variance always reveals underallocated fixed overhead costs.

An unfavorable flexible budget variance in operating income might be due to a(n)________.

The management of Alpha Lawnmowers has calculated the following variances: What is the total variable overhead variance of the company?

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

Based on the following,what is the total direct materials variance?

Fixed overhead volume variance is a flexible budget variance.

Which of the following statements about management by exception is incorrect?

Akao Products uses a standard cost system.Overhead costs are allocated based on direct labor hours.In the first quarter,Akao had an unfavorable efficiency variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Cavalaris Products uses a standard cost system.Overhead costs are allocated based on direct labor hours.In the first quarter,Cavalaris had an unfavorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this 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

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