Question 1

Which department is customarily responsible for an unfavorable material price variance?

Accepted Answer

A)  Sales 
B)  Purchasing 
C)  Engineering 
D)  Production 
A)  Sales 
B)  Purchasing 
C)  Engineering 
D)  Production

Question 2

Use the following information for the next 3 questions.
Vashon Corporation had the following activity during a recent period:  
-The variance over which management probably has the least control is the

Accepted Answer

A)  Direct labor efficiency variance 
B)  Direct materials price variance 
C)  Variable overhead efficiency variance 
D)  Production volume variance 
A)  Direct labor efficiency variance 
B)  Direct materials price variance 
C)  Variable overhead efficiency variance 
D)  Production volume variance

Question 3

The variable overhead budget variance is the difference between allocated variable overhead cost and actual variable overhead cost.

Accepted Answer

A) True 
 B)False

Question 4

Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.  
-The budget variance for variable overhead was

Accepted Answer

A)  $2,800 U 
B)  $7,000 U 
C)  $4,400 U 
D)  $9,000 U 
A)  $2,800 U 
B)  $7,000 U 
C)  $4,400 U 
D)  $9,000 U

Question 5

Use the following information for the next 3 questions.
Vashon Corporation had the following activity during a recent period:  
-The actual price per pound was

Accepted Answer

A)  $12.00 
B)  $12.25 
C)  $12.50 
D)  $13.00 
A)  $12.00 
B)  $12.25 
C)  $12.50 
D)  $13.00

Question 6

Use the following information for the next 6 questions.
Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.  
-The fixed overhead production volume variance was

Accepted Answer

A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U 
A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U

Question 7

Use the following information for the next 5 questions.
Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include:  
-The direct labor price variance is

Accepted Answer

A)  $30,000 Favorable 
B)  $30,000 Unfavorable 
C)  $75,000 Unfavorable 
D)  $78,000 Unfavorable 
A)  $30,000 Favorable 
B)  $30,000 Unfavorable 
C)  $75,000 Unfavorable 
D)  $78,000 Unfavorable

Question 8

Use the following information for the next 4 questions.
Hogle Mfg. Co. uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 3,000 units monthly. Overhead costs were estimated to be $135,000. The standard variable overhead rate is $5 per machine hour. During April the following results were recorded:  
-The fixed overhead production volume variance was

Accepted Answer

A)  $1,000 U 
B)  $2,500 F 
C)  $1,500 F 
D)  $5,000 U 
A)  $1,000 U 
B)  $2,500 F 
C)  $1,500 F 
D)  $5,000 U

Question 9

During the middle of the fiscal year, AWR Corporation unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Accepted Answer

A)  No variance, since the plant asset's cost is sunk 
B)  Fixed overhead spending variance 
C)  Fixed overhead production volume variance 
D)  Variable overhead spending variance 
A)  No variance, since the plant asset's cost is sunk 
B)  Fixed overhead spending variance 
C)  Fixed overhead production volume variance 
D)  Variable overhead spending variance

Question 10

Use the following information for the next 7 questions.
A small accounting firm budgets 200 hours of billings for the next month, and 60% of these hours are expected to be for tax return preparation services, with the remaining 40% for bookkeeping services. Tax work is billed at $50 per hour, and bookkeeping work is billed at $40 per hour. The variable costs for both types of services are $10 per hour. During the month 180 hours were billed, 90 of which were for tax work.
-(Appendix 11A) The sales price variance was

Accepted Answer

A)  $720 unfavorable 
B)  $540 favorable 
C)  $0 
D)  $1,200 unfavorable 
A)  $720 unfavorable 
B)  $540 favorable 
C)  $0 
D)  $1,200 unfavorable

Question 11

Use the following information for the next 3 questions.
Anacortes, Inc. uses a standard cost system. At the beginning of the year, it budgeted $50,000 for fixed overhead. The estimated variable overhead allocation rate was $3.30 per machine hour, and machine hours is the cost allocation base for both variable and fixed overhead. The static budget was based on 16,000 units of production and sales, and each unit was expected to use 2.5 machine hours. Actual total overhead was $170,000, and Anacortes produced and sold 15,000 units during the year. Actual machine hours for the year were 36,000.
-The variable overhead efficiency variance was

Accepted Answer

A)  $4,950 favorable 
B)  $3,750 favorable 
C)  $1,200 unfavorable 
D)  $3,125 unfavorable 
A)  $4,950 favorable 
B)  $3,750 favorable 
C)  $1,200 unfavorable 
D)  $3,125 unfavorable

Question 12

Use the following information for the next 4 questions.
White, Inc. produces a chemical product whose primary component is purchased on credit and any discounts are always taken. The following material and labor elements make up the costs of the product:   Each container of the chemical product contains 5.7 quarts of material. During the process 5% of the material is lost due to waste. Each container of product also requires 1.2 hours of labor. Each day 2 hours are taken for set-up, cleaning, and breaks. Also, the wage rate is $15 per hour and fringes/payroll taxes are 20% of wages. Clients can take a 3% discount if they pay invoices within 10 days; otherwise, the entire invoice amount is due within 30 days. 1 gallon equals 4 quarts.
-The standard price per quart for materials is

Accepted Answer

A)  $7.825 
B)  $7.50 
C)  $8.05 
D)  $7.60 
A)  $7.825 
B)  $7.50 
C)  $8.05 
D)  $7.60

Question 13

Use the following information for the next 2 questions.
Thurston Corp. uses a standard job cost system with the following standards:   Thurston actually used 2,000 pounds of direct material that cost $10,000 and 500 direct labor hours that cost $7,500.
-The entry to record the usage of direct materials would include a

Accepted Answer

A)  Debit to Work in process inventory for $9,600 
B)  Credit to Raw material inventory for $10,000 
C)  Debit to Work in process inventory for $10,500 
D)  Credit to Direct materials efficiency variance for $480 
A)  Debit to Work in process inventory for $9,600 
B)  Credit to Raw material inventory for $10,000 
C)  Debit to Work in process inventory for $10,500 
D)  Credit to Direct materials efficiency variance for $480

Question 14

Use the following information for the next 3 questions.
Anacortes, Inc. uses a standard cost system. At the beginning of the year, it budgeted $50,000 for fixed overhead. The estimated variable overhead allocation rate was $3.30 per machine hour, and machine hours is the cost allocation base for both variable and fixed overhead. The static budget was based on 16,000 units of production and sales, and each unit was expected to use 2.5 machine hours. Actual total overhead was $170,000, and Anacortes produced and sold 15,000 units during the year. Actual machine hours for the year were 36,000.
-The combined fixed and variable spending variance was

Accepted Answer

A)  $4,950 favorable 
B)  $3,750 favorable 
C)  $1,200 unfavorable 
D)  $3,125 unfavorable 
A)  $4,950 favorable 
B)  $3,750 favorable 
C)  $1,200 unfavorable 
D)  $3,125 unfavorable

Question 15

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

Accepted Answer

A)  Do not exist in most organizations 
B)  Exist only if production volume is higher than anticipated 
C)  Exist only if production volume is lower than expected 
D)  Exist because of estimates in the calculation of the overhead allocation rate 
A)  Do not exist in most organizations 
B)  Exist only if production volume is higher than anticipated 
C)  Exist only if production volume is lower than expected 
D)  Exist because of estimates in the calculation of the overhead allocation rate

Question 16

Use the following information for the next 7 questions.
A small accounting firm budgets 200 hours of billings for the next month, and 60% of these hours are expected to be for tax return preparation services, with the remaining 40% for bookkeeping services. Tax work is billed at $50 per hour, and bookkeeping work is billed at $40 per hour. The variable costs for both types of services are $10 per hour. During the month 180 hours were billed, 90 of which were for tax work.
-(Appendix 11A) The contribution margin sales volume variance was

Accepted Answer

A)  $720 unfavorable 
B)  $540 favorable 
C)  $900 unfavorable 
D)  $1,200 unfavorable 
A)  $720 unfavorable 
B)  $540 favorable 
C)  $900 unfavorable 
D)  $1,200 unfavorable

Question 17

If a variance is unfavorable, it should be closed directly to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 18

In a traditional manufacturing accounting system, the standard cost of a unit of output is the sum of the standard costs of

Accepted Answer

A)  Direct material, direct labor, and variable overhead 
B)  Direct material, direct labor ,and fixed overhead 
C)  Direct material, direct labor, and period costs 
D)  Direct material, direct labor, variable overhead, and fixed overhead 
A)  Direct material, direct labor, and variable overhead 
B)  Direct material, direct labor ,and fixed overhead 
C)  Direct material, direct labor, and period costs 
D)  Direct material, direct labor, variable overhead, and fixed overhead

Question 19

Use the following information for the next 2 questions.
Bellingham, Inc. incurred the following during a recent period:  
-The variable overhead efficiency variance equals

Accepted Answer

A)  $75 Favorable 
B)  $150 Favorable 
C)  $0 
D)  $75 Unfavorable 
A)  $75 Favorable 
B)  $150 Favorable 
C)  $0 
D)  $75 Unfavorable

Question 20

Identifying the reasons for variances is usually a quick and easy process.

Accepted Answer

A) True 
 B)False

Which department is customarily responsible for an unfavorable material price variance?

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The variance over which management probably has the least control is the

The variable overhead budget variance is the difference between allocated variable overhead cost and actual variable overhead cost.

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The actual price per pound was

During the middle of the fiscal year, AWR Corporation unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

If a variance is unfavorable, it should be closed directly to cost of goods sold.

In a traditional manufacturing accounting system, the standard cost of a unit of output is the sum of the standard costs of

Use the following information for the next 2 questions. Bellingham, Inc. incurred the following during a recent period: -The variable overhead efficiency variance equals

Identifying the reasons for variances is usually a quick and easy process.

The Role of Accounting Information in Management Decision Making

The Cost Function

Cost-Volume-Profit Analysis

Relevant Costs for Nonroutine Operating Decision

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Strategic Investment Decisions

Joint Management of Revenues and Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Strategic Performance Measurement

Sustainability Accounting

Filters

Exam 11: Standard Costs and Variance Analysis

Which department is customarily responsible for an unfavorable material price variance?

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The variance over which management probably has the least control is the

The variable overhead budget variance is the difference between allocated variable overhead cost and actual variable overhead cost.

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The actual price per pound was

During the middle of the fiscal year, AWR Corporation unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

If a variance is unfavorable, it should be closed directly to cost of goods sold.

In a traditional manufacturing accounting system, the standard cost of a unit of output is the sum of the standard costs of

Use the following information for the next 2 questions. Bellingham, Inc. incurred the following during a recent period: -The variable overhead efficiency variance equals

Identifying the reasons for variances is usually a quick and easy process.

The Role of Accounting Information in Management Decision Making

The Cost Function

Cost-Volume-Profit Analysis

Relevant Costs for Nonroutine Operating Decision

Job Costing

Process Costing

Activity-Based Costing and Management

Measuring and Assigning Support Department Costs

Joint Product and By-Product Costing

Static and Flexible Budgets

Strategic Investment Decisions

Joint Management of Revenues and Costs

Measuring and Assigning Costs for Income Statements

Performance Evaluation and Compensation

Strategic Performance Measurement

Sustainability Accounting

Filters