Question 1

Variance analysis can be used for both costs and revenues.

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:  
-Given the following account balances at the end of the first year of operations:   Assuming that variances are considered material, the entry and amount of direct labor variances allocated to the Finished Goods Inventory is

Accepted Answer

A)  Credit $3,740 
B)  Debit $2,160 
C)  Credit $770 
D)  Debit $3,960 
A)  Credit $3,740 
B)  Debit $2,160 
C)  Credit $770 
D)  Debit $3,960

Question 3

Standard costs should be reviewed

Accepted Answer

A)  Daily 
B)  Monthly 
C)  Annually 
D)  As often as managers and accountants deem necessary 
A)  Daily 
B)  Monthly 
C)  Annually 
D)  As often as managers and accountants deem necessary

Question 4

The budget that reflects the level of activity management expects to attain is the

Accepted Answer

A)  Flexible budget 
B)  Standard budget 
C)  Master budget 
D)  Expected budget 
A)  Flexible budget 
B)  Standard budget 
C)  Master budget 
D)  Expected budget

Question 5

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Accepted Answer

A) True 
 B)False

Question 6

Use the following information for the next 5 questions.
During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is:  
-The budgeted fixed overhead was

Accepted Answer

A)  $25,000 
B)  $24,000 
C)  $24,500 
D)  $23,000 
A)  $25,000 
B)  $24,000 
C)  $24,500 
D)  $23,000

Question 7

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 combined fixed and variable overhead spending variance was

Accepted Answer

A)  $1,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $3,000 F 
A)  $1,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $3,000 F

Question 8

Use the following information for the next 5 questions.
During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is:  
-The variable overhead allocated was

Accepted Answer

A)  $29,600 
B)  $30,000 
C)  $29,900 
D)  $30,400 
A)  $29,600 
B)  $30,000 
C)  $29,900 
D)  $30,400

Question 9

Use the following information for the next 3 questions.
Vashon Corporation had the following activity during a recent period:  
-A favorable direct materials price variance could be caused by

Accepted Answer

A)  The purchasing manager acquiring an excessive quantity of direct materials 
B)  The purchasing manager acquiring materials of higher quality 
C)  The purchasing manager acquiring materials of lower quality 
D)  Either (a) or (c) 
A)  The purchasing manager acquiring an excessive quantity of direct materials 
B)  The purchasing manager acquiring materials of higher quality 
C)  The purchasing manager acquiring materials of lower quality 
D)  Either (a) or (c)

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 contribution margin sales quantity variance was

Accepted Answer

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

Question 11

The production volume variance provides information about

Accepted Answer

A)  Capacity utilization 
B)  Variable overhead costs which vary with volume 
C)  Fixed overhead costs which vary with volume 
D)  Sales levels 
A)  Capacity utilization 
B)  Variable overhead costs which vary with volume 
C)  Fixed overhead costs which vary with volume 
D)  Sales levels

Question 12

Errors in the accounting records related to actual production output could lead to a fixed overhead production volume variance.

Accepted Answer

A) True 
 B)False

Question 13

Standard costing allows management to I. Measure performance
II. Identify inefficiencies
III. Control costs

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 14

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 efficiency 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 15

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

Accepted Answer

A) True 
 B)False

Question 16

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

Accepted Answer

A) True 
 B)False

Question 17

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 quantity variance was

Accepted Answer

A)  $204,500 U 
B)  $156,750 U 
C)  $175.500 U 
D)  $204,500 F 
A)  $204,500 U 
B)  $156,750 U 
C)  $175.500 U 
D)  $204,500 F

Question 18

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 spending 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 19

If a variance analysis shows that operations are better than expected, managers should

Accepted Answer

A)  Do nothing 
B)  Revise standard costs to make them harder to achieve 
C)  Distribute extra dividends to shareholders 
D)  Monitor quality to ensure it was maintained 
A)  Do nothing 
B)  Revise standard costs to make them harder to achieve 
C)  Distribute extra dividends to shareholders 
D)  Monitor quality to ensure it was maintained

Question 20

Variable overhead spending variances can result from unattainable variable allocation rates. In turn, those rates may be caused by I. Inappropriate allocation bases
II. Poor estimates of total overhead costs
III. Change in estimated life of depreciable assets

Accepted Answer

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

Variance analysis can be used for both costs and revenues.

Standard costs should be reviewed

The budget that reflects the level of activity management expects to attain is the

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Use the following information for the next 5 questions. During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: -The budgeted fixed overhead was

Use the following information for the next 5 questions. During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: -The variable overhead allocated was

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -A favorable direct materials price variance could be caused by

The production volume variance provides information about

Errors in the accounting records related to actual production output could lead to a fixed overhead production volume variance.

Standard costing allows management to I. Measure performance II. Identify inefficiencies III. Control costs

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 efficiency variance was

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

If a variance analysis shows that operations are better than expected, managers should

Variable overhead spending variances can result from unattainable variable allocation rates. In turn, those rates may be caused by I. Inappropriate allocation bases II. Poor estimates of total overhead costs III. Change in estimated life of depreciable assets

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

Variance analysis can be used for both costs and revenues.

Standard costs should be reviewed

The budget that reflects the level of activity management expects to attain is the

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Use the following information for the next 5 questions. During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: -The budgeted fixed overhead was

Use the following information for the next 5 questions. During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: -The variable overhead allocated was

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -A favorable direct materials price variance could be caused by

The production volume variance provides information about

Errors in the accounting records related to actual production output could lead to a fixed overhead production volume variance.

Standard costing allows management to I. Measure performance II. Identify inefficiencies III. Control costs

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 efficiency variance was

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

If a variance analysis shows that operations are better than expected, managers should

Variable overhead spending variances can result from unattainable variable allocation rates. In turn, those rates may be caused by I. Inappropriate allocation bases II. Poor estimates of total overhead costs III. Change in estimated life of depreciable assets

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