Question 1

Using more highly skilled direct labourers might affect which of the following variances?

Accepted Answer

A)  materials usage variance 
B)  labour efficiency variance 
C)  variable manufacturing overhead efficiency variance 
D)  all of the above 
A)  materials usage variance 
B)  labour efficiency variance 
C)  variable manufacturing overhead efficiency variance 
D)  all of the above

Question 2

Figure 17-4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours * £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.
-Refer to Figure 17-4. Shannon's labour efficiency variance was

Accepted Answer

A)  £4,625 unfavourable. 
B)  £4,000 unfavourable. 
C)  £27,750 unfavourable. 
D)  £24,000 unfavourable. 
A)  £4,625 unfavourable. 
B)  £4,000 unfavourable. 
C)  £27,750 unfavourable. 
D)  £24,000 unfavourable.

Question 3

Figure 17-2
Rax Company has developed the following standards for one of its products:   The following activities occurred during the month of October:   The company records materials price variances at the time of purchase.
-Refer to Figure 17-2. Rax's variable standard cost per unit would be

Accepted Answer

A)  £78. 
B)  £192. 
C)  £246. 
D)  £222. 
A)  £78. 
B)  £192. 
C)  £246. 
D)  £222.

Question 4

Figure 17-8
The following information was extracted from the accounting records of Noelle Company:   Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period:  
-Franklin Company expected sales were 2,000 units at £100 per unit. During 2011, it had actual sales of 1,800 units at £110 per unit. Budgeted variable costs were £60 per unit. What is Franklin's sales price variance?

Accepted Answer

A)  £8,000 (U) 
B)  £20,000 (U) 
C)  £18,000 (F) 
D)  £2,000 (U) 
A)  £8,000 (U) 
B)  £20,000 (U) 
C)  £18,000 (F) 
D)  £2,000 (U)

Question 5

The volume variance is caused by:

Accepted Answer

A)  the difference between the activity allowed for the actual output and the budgeted activity used in computing the fixed overhead rate. 
B)  the difference between total budgeted fixed overhead and total standard fixed overhead assigned to production. 
C)  the difference between the activity allowed for the actual output and the total standard fixed overhead assigned to production. 
D)  the difference between the standard fixed overhead rate and the actual fixed overhead rate. 
A)  the difference between the activity allowed for the actual output and the budgeted activity used in computing the fixed overhead rate. 
B)  the difference between total budgeted fixed overhead and total standard fixed overhead assigned to production. 
C)  the difference between the activity allowed for the actual output and the total standard fixed overhead assigned to production. 
D)  the difference between the standard fixed overhead rate and the actual fixed overhead rate.

Question 6

Figure 17-6  
-Refer to Figure 17-6. The variable overhead spending variance would be

Accepted Answer

A)  £2,000 favourable. 
B)  £1,200 favourable. 
C)  £400 favourable. 
D)  £200 favourable. 
A)  £2,000 favourable. 
B)  £1,200 favourable. 
C)  £400 favourable. 
D)  £200 favourable.

Question 7

Efficiency variances focus on the difference between

Accepted Answer

A)  actual quantity used and standard quantity allowed for estimated activity. 
B)  actual quantity used and standard quantity allowed for units actually produced. 
C)  quantity allowed for estimated production and standard quantity allowed for units actually produced. 
D)  none of the above. 
A)  actual quantity used and standard quantity allowed for estimated activity. 
B)  actual quantity used and standard quantity allowed for units actually produced. 
C)  quantity allowed for estimated production and standard quantity allowed for units actually produced. 
D)  none of the above.

Question 8

Figure 17-5
Ebola Company has developed the following standards for one of its products:   The following activities occurred during the month of October:   The company records materials price variances at the time of purchase.
-Refer to Figure 17-5. Ebola's labour efficiency variance would be

Accepted Answer

A)  £18,000 favourable. 
B)  £18,000 unfavourable. 
C)  £17,700 unfavourable. 
D)  £17,700 favourable. 
A)  £18,000 favourable. 
B)  £18,000 unfavourable. 
C)  £17,700 unfavourable. 
D)  £17,700 favourable.

Question 9

Figure 17-5
Ebola Company has developed the following standards for one of its products:   The following activities occurred during the month of October:   The company records materials price variances at the time of purchase.
-Refer to Figure 17-5. Ebola's materials price variance would be

Accepted Answer

A)  £46,000 favourable. 
B)  £46,000 unfavourable. 
C)  £44,000 favourable. 
D)  £44,000 unfavourable. 
A)  £46,000 favourable. 
B)  £46,000 unfavourable. 
C)  £44,000 favourable. 
D)  £44,000 unfavourable.

Question 10

Figure 17-7
Orient Company has developed the following standards for one of its products:   The following activities occurred during the month of November:   The company records materials price variances at the time of purchase.
-Refer to Figure 17-7. Orient's materials price variance would be

Accepted Answer

A)  £22,000 unfavourable. 
B)  £18,000 unfavourable. 
C)  £6,000 unfavourable. 
D)  £4,000 unfavourable. 
A)  £22,000 unfavourable. 
B)  £18,000 unfavourable. 
C)  £6,000 unfavourable. 
D)  £4,000 unfavourable.

Question 11

Figure 17-8
The following information was extracted from the accounting records of Noelle Company:   Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period:  
-A sales volume variance will be favourable when:

Accepted Answer

A)  actual units sold is greater than budgeted sales volume. 
B)  actual units sold is less than budgeted sales volume. 
C)  actual selling price is greater than budgeted selling price. 
D)  actual contribution margin is greater than budgeted contribution margin. 
A)  actual units sold is greater than budgeted sales volume. 
B)  actual units sold is less than budgeted sales volume. 
C)  actual selling price is greater than budgeted selling price. 
D)  actual contribution margin is greater than budgeted contribution margin.

Question 12

An unfavourable materials price variance may be caused by

Accepted Answer

A)  excessive rework. 
B)  a special price offered by suppliers. 
C)  use of experienced workers. 
D)  none of the above. 
A)  excessive rework. 
B)  a special price offered by suppliers. 
C)  use of experienced workers. 
D)  none of the above.

Question 13

The standard fixed overhead rate is calculated as

Accepted Answer

A)  Actual fixed overhead/Actual activity. 
B)  Budgeted fixed overhead/Budgeted activity. 
C)  Budgeted fixed overhead/Actual activity. 
D)  Budgeted overhead/Budgeted activity. 
A)  Actual fixed overhead/Actual activity. 
B)  Budgeted fixed overhead/Budgeted activity. 
C)  Budgeted fixed overhead/Actual activity. 
D)  Budgeted overhead/Budgeted activity.

Question 14

Figure 17-8
The following information was extracted from the accounting records of Noelle Company:   Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period:  
-Refer to Figure 17-8. Noelle's fixed overhead volume variance would be

Accepted Answer

A)  £10,000 unfavourable. 
B)  £11,000 unfavourable. 
C)  £21,000 favourable. 
D)  £31,000 favourable. 
A)  £10,000 unfavourable. 
B)  £11,000 unfavourable. 
C)  £21,000 favourable. 
D)  £31,000 favourable.

Question 15

Figure 17-7
Orient Company has developed the following standards for one of its products:   The following activities occurred during the month of November:   The company records materials price variances at the time of purchase.
-Refer to Figure 17-7. Orient's variable overhead efficiency variance would be

Accepted Answer

A)  £1,200 unfavourable. 
B)  £3,600 unfavourable. 
C)  £4,800 unfavourable. 
D)  £4,800 favourable. 
A)  £1,200 unfavourable. 
B)  £3,600 unfavourable. 
C)  £4,800 unfavourable. 
D)  £4,800 favourable.

Question 16

To determine the unit standard cost for a particular input, a company must decide how much

Accepted Answer

A)  input should be used per unit of output and how much should be paid for the quantity of the input to be used. 
B)  input should be used per unit of output and how much output should be produced. 
C)  output should be produced and how much should be paid for each unit produced. 
D)  should be paid for the quantity of the input to be used and how much input should be purchased. 
A)  input should be used per unit of output and how much should be paid for the quantity of the input to be used. 
B)  input should be used per unit of output and how much output should be produced. 
C)  output should be produced and how much should be paid for each unit produced. 
D)  should be paid for the quantity of the input to be used and how much input should be purchased.

Question 17

Fortensky Construction planned to produce 275,000 units using 34,375 machine hours. Actual output was 290,000 units using 37,425 machine hours. Fortensky's volume variance

Accepted Answer

A)  was favourable. 
B)  was unfavourable. 
C)  was zero. 
D)  cannot be determined from the information given. 
A)  was favourable. 
B)  was unfavourable. 
C)  was zero. 
D)  cannot be determined from the information given.

Question 18

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favourable materials price variance of £900 for December, the standard cost per pound must be

Accepted Answer

A)  £2.75. 
B)  £2.60. 
C)  £2.45. 
D)  none of the above. 
A)  £2.75. 
B)  £2.60. 
C)  £2.45. 
D)  none of the above.

Question 19

A favourable materials usage variance may be caused by

Accepted Answer

A)  excessive rework. 
B)  a special price offered by suppliers. 
C)  use of experienced workers. 
D)  none of the above. 
A)  excessive rework. 
B)  a special price offered by suppliers. 
C)  use of experienced workers. 
D)  none of the above.

Question 20

The labour rate variance is calculated as

Accepted Answer

A)  (Actual hourly wage rate - Standard hourly wage rate) *Actual direct labour hours used. 
B)  (Actual hourly wage rate - Standard hourly wage rate) * Standard direct labour hours that should have been used. 
C)  (Actual direct labour hours used - Standard direct labour hours that should have been used) * Actual hourly wage rate. 
D)  (Actual direct labour hours used - Standard direct labour hours that should have been used) *Standard hourly wage rate. 
A)  (Actual hourly wage rate - Standard hourly wage rate) *Actual direct labour hours used. 
B)  (Actual hourly wage rate - Standard hourly wage rate) * Standard direct labour hours that should have been used. 
C)  (Actual direct labour hours used - Standard direct labour hours that should have been used) * Actual hourly wage rate. 
D)  (Actual direct labour hours used - Standard direct labour hours that should have been used) *Standard hourly wage rate.

Exam 17: Standard Costing and Variance Analysis 1

Using more highly skilled direct labourers might affect which of the following variances?

Figure 17-4 Shannon Ltd.'s standard cost card contained the following information: Direct labour: 1.25 hours * £8.00 per hour = £10.00 Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours. -Refer to Figure 17-4. Shannon's labour efficiency variance was

Figure 17-2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 17-2. Rax's variable standard cost per unit would be

The volume variance is caused by:

Figure 17-6 -Refer to Figure 17-6. The variable overhead spending variance would be

Efficiency variances focus on the difference between

Figure 17-5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 17-5. Ebola's labour efficiency variance would be

Figure 17-5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 17-5. Ebola's materials price variance would be

Figure 17-7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 17-7. Orient's materials price variance would be

An unfavourable materials price variance may be caused by

The standard fixed overhead rate is calculated as

To determine the unit standard cost for a particular input, a company must decide how much

Fortensky Construction planned to produce 275,000 units using 34,375 machine hours. Actual output was 290,000 units using 37,425 machine hours. Fortensky's volume variance

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favourable materials price variance of £900 for December, the standard cost per pound must be

A favourable materials usage variance may be caused by

The labour rate variance is calculated as

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost Assignment

Accounting Entries for a Job Costing System

Process Costing

Joint and By-Product Costing

Income Effects of Alternative Cost Accumulation Systems

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Activity-Based Costing

Pricing Decisions and Profitability Analysis

Decision-Making Under Conditions of Risk and Uncertainty

Capital Investment Decisions: Appraisal Methods

Capital Investment Decisions: the Impact of Capital Rationing, Taxation, Inflation and Risk

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis 2: Further Aspects

Divisional Financial Performance Measures

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Management Accounting

Cost Estimation and Cost Behaviour

Quantitative Models for the Planning and Control of Stocks

The Application of Linear Programming to Management Accounting

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