Question 1

Variance analysis facilitates the principle of "management by exception."

Accepted Answer

A) True 
 B)False

Question 2

Loomis Company uses both standards and budgets. The company estimates that production for the year will be 250,000 units of Product Fast. To produce these units of Product Fast, the company expects to spend $600,000 for materials and $800,000 for labor.
Instructions
Compute the estimates for (a) a standard cost and (b) a budgeted cost.

Accepted Answer

The answer of Loomis Company uses both standards and budgets....

Question 3

A direct labor price standard is frequently called the direct labor efficiency standard.

Accepted Answer

A) True 
 B)False

Question 4

Fugate Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 2,600 units, although it had planned to make only 2,200 units. Total yards used for production were 2,640. How much is the total materials variance?

Accepted Answer

A)  $32,400 U 
B)  $3,240 U 
C)  $2,640 F 
D)  $600 U

Question 5

In concept, standards and budgets are essentially the same.

Accepted Answer

A) True 
 B)False

Question 6

Standard cost + price variance + quantity variance = Budgeted cost.

Accepted Answer

A) True 
 B)False

Question 7

Keller Company has a materials price standard of $2.00 per pound. Five thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 5,000 pounds, although the standard quantity allowed for the output was 4,500 pounds.
Keller Company's total materials variance is

Accepted Answer

A)  $2,000 U. 
B)  $2,000 F. 
C)  $2,100 U. 
D)  $2,100 F.

Question 8

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $4 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

Accepted Answer

A)  $3,600 favorable. 
B)  $6,000 unfavorable. 
C)  $3,600 unfavorable. 
D)  $6,000 favorable.

Question 9

ToolTime has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, ToolTime used 3,850 hours of labor at a total cost of $46,970. ToolTime's labor quantity variance is

Accepted Answer

A)  $770 U. 
B)  $1,030 F. 
C)  $1,800 F. 
D)  $1,930 F.

Question 10

ToolTime has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, ToolTime used 3,850 hours of labor at a total cost of $46,970. ToolTime's total labor variance is

Accepted Answer

A)  $770 U. 
B)  $800 U. 
C)  $1,030 F. 
D)  $1,930 F.

Question 11

A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity.

Accepted Answer

A) True 
 B)False

Question 12

ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $12,090. ToolTime's materials price variance is

Accepted Answer

A)  $90 U. 
B)  $310 F. 
C)  $400 F. 
D)  $700 F.

Question 13

The per-unit standards for direct materials are 2 pounds at $4 per pound. Last month, 11,200 pounds of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

Accepted Answer

A)  $3,200 favorable. 
B)  $2,400 favorable. 
C)  $3,200 unfavorable. 
D)  $5,600 unfavorable.

Question 14

The following information was taken from the annual manufacturing overhead cost budget of Coen Company.  During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $75,600. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Coen's total overhead variance is

Accepted Answer

A)  $840 U. 
B)  $3,080 U. 
C)  $3,920 U. 
D)  $11,200 U.

Question 15

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the total direct labor variance is

Accepted Answer

A)  $1,200 unfavorable. 
B)  $4,000 favorable. 
C)  $2,500 unfavorable. 
D)  $4,000 unfavorable.

Question 16

A ________________ is expressed as a unit amount, whereas a _________________ is expressed as a total amount.

Accepted Answer

The answer of A ________________ is expressed as a unit...

Question 17

The direct materials price standard should include an amount for all of the following except

Accepted Answer

A)  receiving costs. 
B)  storing costs. 
C)  handling costs. 
D)  normal spoilage costs.

Question 18

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

Accepted Answer

A) True 
 B)False

Question 19

Inventories cannot be valued at standard cost in financial statements.

Accepted Answer

A) True 
 B)False

Question 20

Colt Widgets prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?

Accepted Answer

A)  Sales 
B)  Selling expenses 
C)  Gross profit 
D)  Cost of goods sold

Exam 25: Budgetary Control and Responsibility Accounting

Variance analysis facilitates the principle of "management by exception."

A direct labor price standard is frequently called the direct labor efficiency standard.

In concept, standards and budgets are essentially the same.

Standard cost + price variance + quantity variance = Budgeted cost.

A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $4 per pound. If 12,000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was

ToolTime has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, ToolTime used 3,850 hours of labor at a total cost of $46,970. ToolTime's labor quantity variance is

ToolTime has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, ToolTime used 3,850 hours of labor at a total cost of $46,970. ToolTime's total labor variance is

A debit to the Overhead Volume Variance account indicates that the standard hours allowed for the output produced was greater than the standard hours at normal capacity.

ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $12,090. ToolTime's materials price variance is

The per-unit standards for direct materials are 2 pounds at $4 per pound. Last month, 11,200 pounds of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the total direct labor variance is

A is expressed as a unit amount, whereas a _ is expressed as a total amount.

The direct materials price standard should include an amount for all of the following except

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

Inventories cannot be valued at standard cost in financial statements.

Colt Widgets prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?