Question 1

While companies strive to achieve ideal standards,reality implies that some loss of materials usually occurs with any process.

Accepted Answer

A) True 
 B)False

Question 2

The total sales variance can be divided into the sales price variance and the sales volume variance.

Accepted Answer

A) True 
 B)False

Question 3

The variable overhead spending variance,the fixed overhead spending variance,and the variable overhead efficiency variance can be combined to find 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

Naches Co.assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at the standard $8 per hour rate.The direct labor rate variance for the month was $200 favorable and the direct labor efficiency variance was $150 favorable.Prepare the journal entry to charge Work in Process Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor variances.Assuming that the direct labor variances are immaterial,prepare the journal entry that Naches would make to close the variance accounts.

Accepted Answer

The answer of Naches Co.assigned direct labor cost to its...

Question 5

A company uses the following standard costs to produce a single unit of output.   During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.Based on this information,the direct materials price variance for the month was:

Accepted Answer

A) $6,000 unfavorable 
B) $1,800 favorable 
C) $1,000 favorable 
D) $5,800 unfavorable 
E) $1,800 unfavorable 
A) $6,000 unfavorable 
B) $1,800 favorable 
C) $1,000 favorable 
D) $5,800 unfavorable 
E) $1,800 unfavorable

Question 6

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials price variance is:

Accepted Answer

A) $27,500 unfavorable. 
B) $50,000 unfavorable. 
C) $50,000 favorable. 
D) $22,500 unfavorable. 
E) $22,500 favorablE. 
A) $27,500 unfavorable. 
B) $50,000 unfavorable. 
C) $50,000 favorable. 
D) $22,500 unfavorable. 
E) $22,500 favorablE.

Question 7

The following information comes from the records of Barney Co.for the current period.
a.Compute the direct materials price and quantity variances,direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable.
b.Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

Accepted Answer

The answer of The following information comes from the records...

Question 8

The following information relating to a company's overhead costs is available.   Based on this information,the total overhead variance is:

Accepted Answer

A) $7,000 favorable. 
B) $6,000 favorable. 
C) $1,000 unfavorable. 
D) $6,000 unfavorable. 
E) $1,000 favorablE. 
A) $7,000 favorable. 
B) $6,000 favorable. 
C) $1,000 unfavorable. 
D) $6,000 unfavorable. 
E) $1,000 favorablE.

Question 9

If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900,how much standard overhead cost was assigned to the products produced during the period?

Accepted Answer

The answer of If Mercury Company's actual overhead incurred during...

Question 10

A flexible budget performance report compares the differences between:

Accepted Answer

A) Actual performance and budgeted performance based on actual sales volume. 
B) Actual performance over several periods. 
C) Budgeted performance over several periods. 
D) Actual performance and budgeted performance based on budgeted sales volume. 
E) Actual performance and standard costs at the budgeted sales volume. 
A) Actual performance and budgeted performance based on actual sales volume. 
B) Actual performance over several periods. 
C) Budgeted performance over several periods. 
D) Actual performance and budgeted performance based on budgeted sales volume. 
E) Actual performance and standard costs at the budgeted sales volume.

Question 11

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Accepted Answer

A) Controllable management. 
B) Management by variance. 
C) Performance management. 
D) Management by objectives. 
E) Management by exception. 
A) Controllable management. 
B) Management by variance. 
C) Performance management. 
D) Management by objectives. 
E) Management by exception.

Question 12

A fixed budget performance report never provides useful information for evaluating variances.

Accepted Answer

A) True 
 B)False

Question 13

Based on a predicted level of production and sales of 12,000 units,a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000.Based on this information,the budgeted amounts of fixed and variable costs for 15,000 units would be:

Accepted Answer

A) $10,000 of fixed costs and $72,000 of variable costs. 
B) $10,000 of fixed costs and $90,000 of variable costs. 
C) $12,500 of fixed costs and $90,000 of variable costs. 
D) $12,500 of fixed costs and $72,000 of variable costs. 
E) $10,000 of fixed costs and $81,000 of variable costs. 
A) $10,000 of fixed costs and $72,000 of variable costs. 
B) $10,000 of fixed costs and $90,000 of variable costs. 
C) $12,500 of fixed costs and $90,000 of variable costs. 
D) $12,500 of fixed costs and $72,000 of variable costs. 
E) $10,000 of fixed costs and $81,000 of variable costs.

Question 14

Fletcher Company collected the following data regarding production of one of its products.Compute the fixed overhead cost variance.

Accepted Answer

A) $18,300 favorable. 
B) $18,000 favorable. 
C) $18,000 unfavorable. 
D) $18,300 unfavorable. 
E) $14,300 unfavorablE.Actual fixed overhead $338,000 - Applied (40,000 * $8.00 = $320,000)= $18,000 unfavorable. 
A) $18,300 favorable. 
B) $18,000 favorable. 
C) $18,000 unfavorable. 
D) $18,300 unfavorable. 
E) $14,300 unfavorablE.Actual fixed overhead $338,000 - Applied (40,000 * $8.00 = $320,000)= $18,000 unfavorable.

Question 15

Regarding overhead costs,as volume increases:

Accepted Answer

A) Total fixed cost increases,total variable cost remains constant. 
B) Total fixed cost remains constant,total variable cost increases. 
C) Total variable cost decreases,total fixed cost remains constant. 
D) Both total fixed cost and total variable cost increase. 
E) Both total fixed cost and total variable cost remain constant. 
A) Total fixed cost increases,total variable cost remains constant. 
B) Total fixed cost remains constant,total variable cost increases. 
C) Total variable cost decreases,total fixed cost remains constant. 
D) Both total fixed cost and total variable cost increase. 
E) Both total fixed cost and total variable cost remain constant.

Question 16

Sanchez 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 17

Cost variances are ignored under management by exception.

Accepted Answer

A) True 
 B)False

Question 18

The following information describes a company's usage of direct labor in a recent period.The direct labor efficiency variance is:

Accepted Answer

A) $29,000 unfavorable. 
B) $29,000 favorable. 
C) $22,500 unfavorable. 
D) $52,500 favorable. 
E) $52,500 unfavorablE. 
A) $29,000 unfavorable. 
B) $29,000 favorable. 
C) $22,500 unfavorable. 
D) $52,500 favorable. 
E) $52,500 unfavorablE.

Question 19

The following information describes a company's usage of direct labor in a recent period.The direct labor rate variance is:

Accepted Answer

A) $29,000 favorable. 
B) $29,000 unfavorable. 
C) $22,500 unfavorable. 
D) $52,500 favorable. 
E) $52,500 unfavorablE. 
A) $29,000 favorable. 
B) $29,000 unfavorable. 
C) $22,500 unfavorable. 
D) $52,500 favorable. 
E) $52,500 unfavorablE.

Question 20

Based on a predicted level of production and sales of 30,000 units,a company anticipates total contribution margin of $105,000,fixed costs of $40,000,and operating income of $52,000.Based on this information,the budgeted operating income for 28,000 units would be:

Accepted Answer

A) $52,000. 
B) $135,333. 
C) $58,000. 
D) $72,500. 
E) $105,000. 
A) $52,000. 
B) $135,333. 
C) $58,000. 
D) $72,500. 
E) $105,000.

Exam 23: Flexible Budgets and Standard Costs

While companies strive to achieve ideal standards,reality implies that some loss of materials usually occurs with any process.

The total sales variance can be divided into the sales price variance and the sales volume variance.

The variable overhead spending variance,the fixed overhead spending variance,and the variable overhead efficiency variance can be combined to find the:

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials price variance is:

The following information relating to a company's overhead costs is available. Based on this information,the total overhead variance is:

If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900,how much standard overhead cost was assigned to the products produced during the period?

A flexible budget performance report compares the differences between:

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

A fixed budget performance report never provides useful information for evaluating variances.

Based on a predicted level of production and sales of 12,000 units,a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000.Based on this information,the budgeted amounts of fixed and variable costs for 15,000 units would be:

Fletcher Company collected the following data regarding production of one of its products.Compute the fixed overhead cost variance.

Regarding overhead costs,as volume increases:

Sanchez 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?

Cost variances are ignored under management by exception.

The following information describes a company's usage of direct labor in a recent period.The direct labor efficiency variance is:

The following information describes a company's usage of direct labor in a recent period.The direct labor rate variance is:

Based on a predicted level of production and sales of 30,000 units,a company anticipates total contribution margin of $105,000,fixed costs of $40,000,and operating income of $52,000.Based on this information,the budgeted operating income for 28,000 units would be:

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

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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