Question 1

Within the same budget performance report, it is impossible to have both favorable and unfavorable variances.

Accepted Answer

A) True 
 B)False

Question 2

Gates Company reports the following information regarding the production on one of its products for the month. Compute the direct labor cost variance, the direct labor rate variance, the direct labor efficiency variance and identify each as either favorable or unfavorable.

Accepted Answer

Direct labor cost variance
Actual units

Question 3

The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:

Accepted Answer

A)  Production variance. 
B)  Quantity variance. 
C)  Volume variance. 
D)  Price variance. 
E)  Controllable variance. 
A)  Production variance. 
B)  Quantity variance. 
C)  Volume variance. 
D)  Price variance. 
E)  Controllable variance.

Question 4

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials price variance.

Accepted Answer

A)  $2,430 unfavorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable. 
A)  $2,430 unfavorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable.

Question 5

The difference between the actual cost incurred and the standard cost is called the:

Accepted Answer

A)  Flexible variance. 
B)  Price variance. 
C)  Cost variance. 
D)  Controllable variance. 
E)  Volume variance. 
A)  Flexible variance. 
B)  Price variance. 
C)  Cost variance. 
D)  Controllable variance. 
E)  Volume variance.

Question 6

Thomas Co. provides the following fixed budget data for the year:
Required: Prepare a flexible budget performance report for the year using the contribution margin format.

Accepted Answer

The answer of Thomas Co. provides the following fixed budget...

Question 7

Stanton Co. produces and sells two lines of t-shirts, Deluxe and Mega. Stanton provides the following data. Compute the sales price and the sales volume variances for each product.

Accepted Answer

The answer of Stanton Co. produces and sells two lines...

Question 8

Brewer Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales price variance for the month.

Accepted Answer

A)  $22,000 unfavorable. 
B)  $10,000 favorable. 
C)  $22,000 favorable. 
D)  $32,000 unfavorable. 
E)  $32,000 favorable. 
A)  $22,000 unfavorable. 
B)  $10,000 favorable. 
C)  $22,000 favorable. 
D)  $32,000 unfavorable. 
E)  $32,000 favorable.

Question 9

Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartels' labor rate variance for August?

Accepted Answer

A)  $2,000 favorable. 
B)  $2,104 unfavorable. 
C)  $2,104 favorable. 
D)  $4,160 favorable. 
E)  $2,000 unfavorable. 
A)  $2,000 favorable. 
B)  $2,104 unfavorable. 
C)  $2,104 favorable. 
D)  $4,160 favorable. 
E)  $2,000 unfavorable.

Question 10

Job #305 was budgeted to require 3.5 hours of labor at $11.00 per hour. However, it was completed in 3 hours by a person who worked for $14.00 per hour. What is the total labor cost variance for Job #305?

Accepted Answer

The answer of Job #305 was budgeted to require 3.5...

Question 11

A flexible budget expresses all costs on a per unit basis.

Accepted Answer

A) True 
 B)False

Question 12

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance.

Accepted Answer

A)  $2,430 unfavorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable. 
A)  $2,430 unfavorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable.

Question 13

When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate.

Accepted Answer

A) True 
 B)False

Question 14

Abrams, Inc., provides the following results of March's operations:
Required:(a) Determine the total overhead cost variance for March.
(b) Applying the management by exception approach, which of the variances shown are of greatest concern? Why?

Accepted Answer

The answer of Abrams, Inc., provides the following results of...

Question 15

Bok Company's output for the current period was assigned a $200,000 standard direct materials cost. The direct materials variances included a $5,000 favorable price variance and a $3,000 unfavorable quantity variance. What is the actual total direct materials cost for the current period?

Accepted Answer

A)  $208,000. 
B)  $198,000. 
C)  $202,000. 
D)  $192,000. 
E)  $205,000. 
A)  $208,000. 
B)  $198,000. 
C)  $202,000. 
D)  $192,000. 
E)  $205,000.

Question 16

Although a fixed budget is only useful over the relevant range of operations, a flexible budget is useful over all possible production levels.

Accepted Answer

A) True 
 B)False

Question 17

Cabot Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance.

Accepted Answer

A)  $14,300 favorable. 
B)  $18,000 favorable. 
C)  $18,000 unfavorable. 
D)  $18,300 unfavorable. 
E)  $14,300 unfavorable. 
A)  $14,300 favorable. 
B)  $18,000 favorable. 
C)  $18,000 unfavorable. 
D)  $18,300 unfavorable. 
E)  $14,300 unfavorable.

Question 18

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity), and which presents the differences between actual and budgeted amounts as variances, is called a(n):

Accepted Answer

A)  Sales budget performance report. 
B)  Flexible budget performance report. 
C)  Master budget performance report. 
D)  Static budget performance report. 
E)  Operating budget performance report. 
A)  Sales budget performance report. 
B)  Flexible budget performance report. 
C)  Master budget performance report. 
D)  Static budget performance report. 
E)  Operating budget performance report.

Question 19

Flexible budgets may be prepared before or after an actual period of activity. Why would management prepare such budgets at differing time frames?

Accepted Answer

Flexible budgets are prepared prior to a

Question 20

Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain.

Accepted Answer

Any significant variance, whether favora

Exam 24: Flexible Budgets and Standard Costs

Within the same budget performance report, it is impossible to have both favorable and unfavorable variances.

Gates Company reports the following information regarding the production on one of its products for the month. Compute the direct labor cost variance, the direct labor rate variance, the direct labor efficiency variance and identify each as either favorable or unfavorable.

The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials price variance.

The difference between the actual cost incurred and the standard cost is called the:

Thomas Co. provides the following fixed budget data for the year: Required: Prepare a flexible budget performance report for the year using the contribution margin format.

Stanton Co. produces and sells two lines of t-shirts, Deluxe and Mega. Stanton provides the following data. Compute the sales price and the sales volume variances for each product.

Brewer Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales price variance for the month.

Job #305 was budgeted to require 3.5 hours of labor at $11.00 per hour. However, it was completed in 3 hours by a person who worked for $14.00 per hour. What is the total labor cost variance for Job #305?

A flexible budget expresses all costs on a per unit basis.

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance.

When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate.

Abrams, Inc., provides the following results of March's operations: Required:(a) Determine the total overhead cost variance for March. (b) Applying the management by exception approach, which of the variances shown are of greatest concern? Why?

Bok Company's output for the current period was assigned a $200,000 standard direct materials cost. The direct materials variances included a $5,000 favorable price variance and a $3,000 unfavorable quantity variance. What is the actual total direct materials cost for the current period?

Although a fixed budget is only useful over the relevant range of operations, a flexible budget is useful over all possible production levels.

Cabot Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance.

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity), and which presents the differences between actual and budgeted amounts as variances, is called a(n):

Flexible budgets may be prepared before or after an actual period of activity. Why would management prepare such budgets at differing time frames?

Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Capital Budgeting and Managerial Decisions

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