Question 1

Management by exception focuses on all variances, regardless of size or importance.

Accepted Answer

A) True 
 B)False

Question 2

The variable overhead spending variance has to do with the efficient use of

Accepted Answer

A) the activity base. 
B) the overhead items. 
C) all variable manufacturing costs. 
D) All of these answer choices are correct. 
A) the activity base. 
B) the overhead items. 
C) all variable manufacturing costs. 
D) All of these answer choices are correct.

Question 3

The variable overhead efficiency variance is calculated as

Accepted Answer

A) actual cost − (actual quantity × standard price). 
B) actual cost − (standard quantity × standard price). 
C) standard price × (actual quantity × standard quantity). 
D) actual results minus flexible budget amount. 
A) actual cost − (actual quantity × standard price). 
B) actual cost − (standard quantity × standard price). 
C) standard price × (actual quantity × standard quantity). 
D) actual results minus flexible budget amount.

Question 4

Since a flexible budget is based on actual sales volume, it cannot be prepared until after the end of the period.

Accepted Answer

A) True 
 B)False

Question 5

The direct materials quantity variance is based on the amount of materials

Accepted Answer

A) purchased. 
B) on hand. 
C) used. 
D) budgeted. 
A) purchased. 
B) on hand. 
C) used. 
D) budgeted.

Question 6

R&N Sports has budgeted $57,000 for fixed overhead for the period.This budget was based on the following items: depreciation of $24,000, rent of $4,000, production supervisor salaries of $27,000, and other fixed costs of $2,000.Actual overhead incurred is $52,000.Production was budgeted at 8,000 units while actual production is 8,100.
Required:
Calculate the fixed overhead spending variance.

Accepted Answer

$52,000 ̶

Question 7

New Rock, Inc.sells video games it has purchased from a local distributor.The following static budget is based on sales of 8,000 games.However, New Rock only sold 7,800 games during the year.Fixed costs are 30% of total operating expenses   Required:
Prepare a flexible budget.

Accepted Answer

Selling price per unit = $512,

Question 8

Which of the following is not used in the calculation of the direct labor rate variance?

Accepted Answer

A) Standard wage rate 
B) Actual wage rate 
C) Standard hours worked 
D) Actual hours worked 
A) Standard wage rate 
B) Actual wage rate 
C) Standard hours worked 
D) Actual hours worked

Question 9

Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August, the company purchased 4,000 yards of artificial pine bough, and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough and purchased 4 boxes of holly berries for $7,000 per box, each box containing 5,000 sprigs.The standard price for artificial pine bough is $2.60 per yard, and the standard price per sprig of holly berry is $1.45.During August, Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials price variance for sprigs of holly berries for August?

Accepted Answer

A) $1,000 unfavorable 
B) $1,000 favorable 
C) $362.50 favorable 
D) $362.50 unfavorable 
A) $1,000 unfavorable 
B) $1,000 favorable 
C) $362.50 favorable 
D) $362.50 unfavorable

Question 10

Which of the following variances would not be investigated by a manager following the management by exception principle?

Accepted Answer

A) A 10% favorable variance in raw materials price 
B) A 10% unfavorable variance in direct labor rates 
C) A 10% unfavorable variance in payroll tax expense 
D) An unfavorable variance that has increased by 5% in each of the last five months 
A) A 10% favorable variance in raw materials price 
B) A 10% unfavorable variance in direct labor rates 
C) A 10% unfavorable variance in payroll tax expense 
D) An unfavorable variance that has increased by 5% in each of the last five months

Question 11

The direct labor rate variance arises when

Accepted Answer

A) actual wage rates differ from the standard wage rate. 
B) actual hours worked differ from budgeted hours. 
C) the number of units produced differs from those budgeted. 
D) the total budgeted labor cost differs from the actual labor cost. 
A) actual wage rates differ from the standard wage rate. 
B) actual hours worked differ from budgeted hours. 
C) the number of units produced differs from those budgeted. 
D) the total budgeted labor cost differs from the actual labor cost.

Question 12

Purchasing a higher quality of materials than is specified by the standard will likely result in

Accepted Answer

A) a favorable price variance. 
B) a favorable quantity variance. 
C) an unfavorable quantity variance. 
D) a favorable price variance and an unfavorable quantity variance. 
A) a favorable price variance. 
B) a favorable quantity variance. 
C) an unfavorable quantity variance. 
D) a favorable price variance and an unfavorable quantity variance.

Question 13

If the direct materials purchased costs $200 per unit while the standard price for direct materials is $180, and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 980 units,

Accepted Answer

A) the direct materials quantity variance will be favorable. 
B) the direct materials quantity variance will be unfavorable. 
C) the direct materials price variance will be favorable. 
D) there will be no direct materials price variance. 
A) the direct materials quantity variance will be favorable. 
B) the direct materials quantity variance will be unfavorable. 
C) the direct materials price variance will be favorable. 
D) there will be no direct materials price variance.

Question 14

The flexible budget variance reflects

Accepted Answer

A) how efficiently the company operated in producing a given sales volume. 
B) how effectively the company reached its strategic goals. 
C) a different volume of activity than used in the static budget. 
D) the amount of each resource originally planned for usage in operations. 
A) how efficiently the company operated in producing a given sales volume. 
B) how effectively the company reached its strategic goals. 
C) a different volume of activity than used in the static budget. 
D) the amount of each resource originally planned for usage in operations.

Question 15

Which of the following employees is typically held accountable for the direct material quantity variance?

Accepted Answer

A) Controller 
B) Purchasing manager 
C) Production manager 
D) Engineering department manager 
A) Controller 
B) Purchasing manager 
C) Production manager 
D) Engineering department manager

Question 16

Jensen manufactures speakers for car stereos and applies fixed overhead based on direct labor hours.Jensen's fixed overhead spending variance for the year was $12,500 favorable.For the current year, the company had budgeted to produce 124,000 speakers.Jensen's actual fixed overhead for the year was $378,100.Jensen produced 122,000 speakers and used 183,000 direct labor hours, which was the standard hours allowed for the number of speakers produced.What was Jensen's budgeted fixed overhead rate per direct labor hour for the year (if necessary, round your answer to the nearest cent)?

Accepted Answer

A) $2.00/DLH 
B) $2.10/DLH 
C) $2.07/DLH 
D) $2.03/DLH 
A) $2.00/DLH 
B) $2.10/DLH 
C) $2.07/DLH 
D) $2.03/DLH

Question 17

The difference between actual sales volume and the flexible budget sales volume has no impact on the price and quantity variances.

Accepted Answer

A) True 
 B)False

Question 18

The flexible budget variance for fixed overhead is known as the

Accepted Answer

A) static budget variance. 
B) fixed overhead efficiency variance. 
C) the fixed overhead volume variance. 
D) the fixed overhead spending variance. 
A) static budget variance. 
B) fixed overhead efficiency variance. 
C) the fixed overhead volume variance. 
D) the fixed overhead spending variance.

Question 19

Luckett Company's standards call for two feet of direct materials for each unit.The standard price of one foot is $2.Actual production was 50,000 units requiring 105,000 feet of direct materials.Luckett purchased 107,000 feet at a unit price of $2.10 per foot.
Required:
Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

Direct material price variance

Question 20

When a variable overhead spending variance is identified, managers will want to talk with the purchasing manager about the purchase and use of variable overhead items.

Accepted Answer

A) True 
 B)False

Management by exception focuses on all variances, regardless of size or importance.

The variable overhead spending variance has to do with the efficient use of

The variable overhead efficiency variance is calculated as

Since a flexible budget is based on actual sales volume, it cannot be prepared until after the end of the period.

The direct materials quantity variance is based on the amount of materials

New Rock, Inc.sells video games it has purchased from a local distributor.The following static budget is based on sales of 8,000 games.However, New Rock only sold 7,800 games during the year.Fixed costs are 30% of total operating expenses Required: Prepare a flexible budget.

Which of the following is not used in the calculation of the direct labor rate variance?

Which of the following variances would not be investigated by a manager following the management by exception principle?

The direct labor rate variance arises when

Purchasing a higher quality of materials than is specified by the standard will likely result in

If the direct materials purchased costs $200 per unit while the standard price for direct materials is $180, and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 980 units,

The flexible budget variance reflects

Which of the following employees is typically held accountable for the direct material quantity variance?

The difference between actual sales volume and the flexible budget sales volume has no impact on the price and quantity variances.

The flexible budget variance for fixed overhead is known as the

When a variable overhead spending variance is identified, managers will want to talk with the purchasing manager about the purchase and use of variable overhead items.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

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Exam 6: Performance Evaluation: Variance Analysis

Management by exception focuses on all variances, regardless of size or importance.

The variable overhead spending variance has to do with the efficient use of

The variable overhead efficiency variance is calculated as

Since a flexible budget is based on actual sales volume, it cannot be prepared until after the end of the period.

The direct materials quantity variance is based on the amount of materials

New Rock, Inc.sells video games it has purchased from a local distributor.The following static budget is based on sales of 8,000 games.However, New Rock only sold 7,800 games during the year.Fixed costs are 30% of total operating expenses Required: Prepare a flexible budget.

Which of the following is not used in the calculation of the direct labor rate variance?

Which of the following variances would not be investigated by a manager following the management by exception principle?

The direct labor rate variance arises when

Purchasing a higher quality of materials than is specified by the standard will likely result in

If the direct materials purchased costs $200 per unit while the standard price for direct materials is $180, and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 980 units,

The flexible budget variance reflects

Which of the following employees is typically held accountable for the direct material quantity variance?

The difference between actual sales volume and the flexible budget sales volume has no impact on the price and quantity variances.

The flexible budget variance for fixed overhead is known as the

When a variable overhead spending variance is identified, managers will want to talk with the purchasing manager about the purchase and use of variable overhead items.

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

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