Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The difference between cost variances and efficiency variances pertains to ________.

Accepted Answer

A) the difference between the static budget and actual results 
B) the difference between the flexible budget and actual results 
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 difference between the static budget and actual results 
B) the difference between the flexible budget and actual results 
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 3

Fernandez Manufacturing uses a standard cost system.Standard and actual data for manufacturing overhead are as follows:
Variable overhead allocation rate: $30 per direct labor hour
Fixed overhead allocation rate: $10 per direct labor hour
Actual overhead incurred (variable and fixed): $45,600
Standards for direct labor are as follows:
Hours per unit 0.5,Direct labor cost per hour $18.00
Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Actual and planned production for the month: 3,000 units
Prepare the journal entry to allocate overhead cost (both variable and fixed)to production.

Accepted Answer

@#IMG-DLM&
Explanation:
Total Direct Lab

Question 4

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 5

Speedy Bikes Couriers Company prepared the following static budget for the year:
 
If a flexible budget is prepared at a volume of 8,700,calculate the amount of operating income.The production level is within the relevant range.

Accepted Answer

A) $30,000 
B) $13,050 
C) $44,850 
D) $3,000 
A) $30,000 
B) $13,050 
C) $44,850 
D) $3,000

Question 6

Setting standard costs is a function of the company's production department and does not require input from other departments.

Accepted Answer

A) True 
 B)False

Question 7

The static budget,at the beginning of the month,for Helloise Décor Company follows:
Static budget:
Sales volume: 2,100 units: Sales price: $58.00 per unit
Variable cost: $14.00 per unit: Fixed costs: $27,000 per month
Operating income: $65,400
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 1,850 units: Sales price: $59.00 per unit
Variable cost: $18.00 per unit: Fixed costs $35,000 per month
Operating income: $40,850
Calculate the sales volume variance for variable costs.

Accepted Answer

A) $11,000 U 
B) $3,500 F 
C) $250 U 
D) $11,000 F 
A) $11,000 U 
B) $3,500 F 
C) $250 U 
D) $11,000 F

Question 8

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

Accepted Answer

A) standard quantity for actual production times standard cost per unit of direct materials 
B) standard quantity for actual production times actual cost per unit of direct materials 
C) actual quantity times standard cost per unit of direct materials 
D) actual quantity times actual cost per unit of direct materials 
A) standard quantity for actual production times standard cost per unit of direct materials 
B) standard quantity for actual production times actual cost per unit of direct materials 
C) actual quantity times standard cost per unit of direct materials 
D) actual quantity times actual cost per unit of direct materials

Question 9

Holiday Foods is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Holiday purchases by the pound.In addition,the production requires a certain amount of direct labor.Holiday uses a standard cost system,and at the end of the first quarter,there was a favorable direct labor efficiency 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 10

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

Accepted Answer

A) True 
 B)False

Question 11

Standard costs are developed by the cooperative effort of purchasing,production,human resources,and accounting personnel.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Which of the following amounts of a flexible budget changes,within the specified relevant range,with changes in sales volume?

Accepted Answer

A) sales price per unit 
B) total fixed costs 
C) variable cost per unit 
D) total contribution margin 
A) sales price per unit 
B) total fixed costs 
C) variable cost per unit 
D) total contribution margin

Question 14

Top managers of Marshall Industries predicted annual sales of 23,600 units of its Product at a unit price of $5.00.Actual sales for the year were 22,800 units at $5.50 each.Variable costs were budgeted at $2.45 per unit,and actual variable costs were $2.40 per unit.Actual fixed costs of $45,000 exceeded budgeted fixed costs by $2,000.Prepare Marshall's flexible budget performance report.

Accepted Answer

The answer of Top managers of Marshall Industries predicted annual...

Question 15

When recording direct materials usage,what does an unfavorable direct materials efficiency variance represent? Will this variance have a debit or credit balance?

Accepted Answer

An unfavorable direct materials efficien

Question 16

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous 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 17

A static budget presents financial data at multiple levels of sales volume.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Based on the following,what is the total fixed overhead variance for the total production cost flexible budget variance?

Accepted Answer

A) $650 F 
B) $425 F 
C) $350 U 
D) $725 U 
A) $650 F 
B) $425 F 
C) $350 U 
D) $725 U

Exam 23: Flexible Budgets and Standard Cost Systems

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

The difference between cost variances and efficiency variances pertains to ________.

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)________.

Speedy Bikes Couriers Company prepared the following static budget for the year: If a flexible budget is prepared at a volume of 8,700,calculate the amount of operating income.The production level is within the relevant range.

Setting standard costs is a function of the company's production department and does not require input from other departments.

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

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

Standard costs are developed by the cooperative effort of purchasing,production,human resources,and accounting personnel.

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

Which of the following amounts of a flexible budget changes,within the specified relevant range,with changes in sales volume?

When recording direct materials usage,what does an unfavorable direct materials efficiency variance represent? Will this variance have a debit or credit balance?

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

A static budget presents financial data at multiple levels of sales volume.

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

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

Based on the following,what is the total fixed overhead variance for the total production cost 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

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