Question 1

(Appendix 11A) For organizations that sell multiple products, contribution margin and sales mix variances are often useful for decision making.

Accepted Answer

A) True 
 B)False

Question 2

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 cost of direct materials added to work in process would be

Accepted Answer

A)  $540,000 
B)  $585,000 
C)  $600,000 
D)  $650,000 
A)  $540,000 
B)  $585,000 
C)  $600,000 
D)  $650,000

Question 3

Overhead efficiency variances

Accepted Answer

A)  Provide managers with useful information for cost management 
B)  Do not provide marginal information for cost management because they involve estimates 
C)  Do not provide new cost management information because direct cost efficiency variances provide the same information 
D)  Provide useful information for financial reporting purposes 
A)  Provide managers with useful information for cost management 
B)  Do not provide marginal information for cost management because they involve estimates 
C)  Do not provide new cost management information because direct cost efficiency variances provide the same information 
D)  Provide useful information for financial reporting purposes

Question 4

Unattainable standards are likely to lead to I. Errors in the accounting information system
II. Favorable variances
III. Unfavorable variances

Accepted Answer

A)  I only 
B)  II only 
C)  III only 
D)  I and III only 
A)  I only 
B)  II only 
C)  III only 
D)  I and III only

Question 5

A contract with a new supplier may cause an unfavorable materials price variance.

Accepted Answer

A) True 
 B)False

Question 6

(Appendix 11A) The sales price variance is calculated as (actual price - standard price) X actual volume sold.

Accepted Answer

A) True 
 B)False

Question 7

Use the following information for the next 2 questions.
Keyport, Inc. uses a standard job cost system. The standard price for direct material is $15 per ounce, and Keyport used 60,000 ounces this period. The standard quantity allowed for direct materials this period was 58,000 ounces. The standard price for direct labor is $9 per hour, and Keyport used 5,000 direct labor hours, at an actual cost of $10 per hour this period. The standard quantity allowed for direct labor this period was 5,200 hours.
-The entry to record the usage of direct labor would include a

Accepted Answer

A)  Debit to Direct labor efficiency variance for $1,800 
B)  Credit to Work in process inventory for $3,200 
C)  Debit to Direct labor price variance for $5,000 
D)  Debit to Accrued payroll for $3,200 
A)  Debit to Direct labor efficiency variance for $1,800 
B)  Credit to Work in process inventory for $3,200 
C)  Debit to Direct labor price variance for $5,000 
D)  Debit to Accrued payroll for $3,200

Question 8

Variances can be caused by I. Out-of-control operations
II. Better-than-expected operations
III. Inappropriate benchmarks

Accepted Answer

A)  I and III only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III 
A)  I and III only 
B)  II and III only 
C)  I and II only 
D)  I, II, and III

Question 9

Use the following information for the next 7 questions.
Paris Perfumery sells two perfumes, L'Amor and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows:  
-(Appendix 11A) The contribution margin sales volume variance was

Accepted Answer

A)  $204,500 U 
B)  $204,500 F 
C)  $147,600 U 
D)  $0 
A)  $204,500 U 
B)  $204,500 F 
C)  $147,600 U 
D)  $0

Question 10

Which of the following is a possible cause of an unfavorable materials efficiency variance?

Accepted Answer

A)  Using materials that do not meet specifications 
B)  Using a higher class of labor than called for 
C)  Using a higher quality of material than called for 
D)  Using fewer hours of labor than labor specifications call for 
A)  Using materials that do not meet specifications 
B)  Using a higher class of labor than called for 
C)  Using a higher quality of material than called for 
D)  Using fewer hours of labor than labor specifications call for

Question 11

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 direct labor price variance was

Accepted Answer

A)  $2,000 F 
B)  $2,800 U 
C)  $1,000 U 
D)  $1,000 F 
A)  $2,000 F 
B)  $2,800 U 
C)  $1,000 U 
D)  $1,000 F

Question 12

Because managers use estimates in calculating overhead allocation rates, they are likely to experience

Accepted Answer

A)  Fixed overhead production volume variances 
B)  No fixed or variable overhead variances 
C)  Direct labor price variances 
D)  Lower than expected profits 
A)  Fixed overhead production volume variances 
B)  No fixed or variable overhead variances 
C)  Direct labor price variances 
D)  Lower than expected profits

Question 13

Which of the following statements regarding tradeoffs among variances is true?

Accepted Answer

A)  Managers generally do not need to consider tradeoffs in variance analysis 
B)  Managers may sometimes make tradeoffs between favorable and unfavorable variances 
C)  Unfavorable direct material price variances often lead to unfavorable direct labor efficiency variances 
D)  Favorable direct material price variances often lead to favorable direct material efficiency variances 
A)  Managers generally do not need to consider tradeoffs in variance analysis 
B)  Managers may sometimes make tradeoffs between favorable and unfavorable variances 
C)  Unfavorable direct material price variances often lead to unfavorable direct labor efficiency variances 
D)  Favorable direct material price variances often lead to favorable direct material efficiency variances

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.
-(Appendix 11A) The revenue sales quantity variance will be unfavorable when the

Accepted Answer

A)  Actual sales in total units is less than total unit sales in the static budget 
B)  Actual contribution margin is less than the static budget contribution margin 
C)  Actual sales mix includes a lower proportion of the product with the highest contribution margin per unit than its proportion in the static budget sales mix 
D)  Actual average selling price is less than the average selling price in the static budget 
A)  Actual sales in total units is less than total unit sales in the static budget 
B)  Actual contribution margin is less than the static budget contribution margin 
C)  Actual sales mix includes a lower proportion of the product with the highest contribution margin per unit than its proportion in the static budget sales mix 
D)  Actual average selling price is less than the average selling price in the static budget

Question 15

Use the following information for the next 3 questions.
Vashon Corporation had the following activity during a recent period:  
-The direct materials price variance was

Accepted Answer

A)  $2,200 unfavorable 
B)  $2,600 unfavorable 
C)  $2,000 favorable 
D)  $2,200 favorable 
A)  $2,200 unfavorable 
B)  $2,600 unfavorable 
C)  $2,000 favorable 
D)  $2,200 favorable

Question 16

Use the following information for the next 2 questions.
Keyport, Inc. uses a standard job cost system. The standard price for direct material is $15 per ounce, and Keyport used 60,000 ounces this period. The standard quantity allowed for direct materials this period was 58,000 ounces. The standard price for direct labor is $9 per hour, and Keyport used 5,000 direct labor hours, at an actual cost of $10 per hour this period. The standard quantity allowed for direct labor this period was 5,200 hours.
-The entry to record the usage of direct materials would include a

Accepted Answer

A)  Debit to Work in process inventory for $900,000 
B)  Debit to Direct materials efficiency variance for $30,000 
C)  Credit to Raw materials inventory for $870,000 
D)  Credit to Work in process inventory for $60,000 
A)  Debit to Work in process inventory for $900,000 
B)  Debit to Direct materials efficiency variance for $30,000 
C)  Credit to Raw materials inventory for $870,000 
D)  Credit to Work in process inventory for $60,000

Question 17

Variance analysis includes which of the following processes? I. Calculating variances
II. Analyzing the reasons variances occurred
III. Predicting variances in future periods

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 18

Use the following information for the next 4 questions.
Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were:  
-The variable overhead spending variance was

Accepted Answer

A)  $10,000 F 
B)  $50,000 U 
C)  $35,000 U 
D)  $15,000 U 
A)  $10,000 F 
B)  $50,000 U 
C)  $35,000 U 
D)  $15,000 U

Question 19

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 fixed overhead production volume 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 20

Use the following information for the next 3 questions.
Dem Mfg. has gathered the following data in preparing to record their direct labor payroll costs for the week:  
-The standard direct labor price was

Accepted Answer

A)  $8.00 
B)  $8.20 
C)  $3.07 
D)  $3.05 
A)  $8.00 
B)  $8.20 
C)  $3.07 
D)  $3.05

(Appendix 11A) For organizations that sell multiple products, contribution margin and sales mix variances are often useful for decision making.

Overhead efficiency variances

Unattainable standards are likely to lead to I. Errors in the accounting information system II. Favorable variances III. Unfavorable variances

A contract with a new supplier may cause an unfavorable materials price variance.

(Appendix 11A) The sales price variance is calculated as (actual price - standard price) X actual volume sold.

Variances can be caused by I. Out-of-control operations II. Better-than-expected operations III. Inappropriate benchmarks

Which of the following is a possible cause of an unfavorable materials efficiency variance?

Because managers use estimates in calculating overhead allocation rates, they are likely to experience

Which of the following statements regarding tradeoffs among variances is true?

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The direct materials price variance was

Variance analysis includes which of the following processes? I. Calculating variances II. Analyzing the reasons variances occurred III. Predicting variances in future periods

Use the following information for the next 4 questions. Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: -The variable overhead spending variance was

Use the following information for the next 3 questions. Dem Mfg. has gathered the following data in preparing to record their direct labor payroll costs for the week: -The standard direct labor price was

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

(Appendix 11A) For organizations that sell multiple products, contribution margin and sales mix variances are often useful for decision making.

Overhead efficiency variances

Unattainable standards are likely to lead to I. Errors in the accounting information system II. Favorable variances III. Unfavorable variances

A contract with a new supplier may cause an unfavorable materials price variance.

(Appendix 11A) The sales price variance is calculated as (actual price - standard price) X actual volume sold.

Variances can be caused by I. Out-of-control operations II. Better-than-expected operations III. Inappropriate benchmarks

Which of the following is a possible cause of an unfavorable materials efficiency variance?

Because managers use estimates in calculating overhead allocation rates, they are likely to experience

Which of the following statements regarding tradeoffs among variances is true?

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The direct materials price variance was

Variance analysis includes which of the following processes? I. Calculating variances II. Analyzing the reasons variances occurred III. Predicting variances in future periods

Use the following information for the next 4 questions. Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: -The variable overhead spending variance was

Use the following information for the next 3 questions. Dem Mfg. has gathered the following data in preparing to record their direct labor payroll costs for the week: -The standard direct labor price was

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