Question 1

The sales volume variance is the difference between

Accepted Answer

A) the static budget and the flexible budget. 
B) the flexible budget and actual results. 
C) the actual quantity and budgeted quantity. 
D) the actual price and the standard price. 
A) the static budget and the flexible budget. 
B) the flexible budget and actual results. 
C) the actual quantity and budgeted quantity. 
D) the actual price and the standard price.

Question 2

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.   Actual results for the year were 28,000 units, reflected in the following income statement:   What is the sales volume variance for direct labor?

Accepted Answer

A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 unfavorable 
D) $30,000 favorable 
A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 unfavorable 
D) $30,000 favorable

Question 3

The flexible budget breaks down into the rate and efficiency variances for direct labor.
Required:
a.List two reasons why actual wage rates might differ from standard wage rates, resulting in a direct labor rate variance.
b.List two reasons why actual labor hours might differ from standard labor hours, resulting in a direct labor efficiency variance.

Accepted Answer

a.Direct labor rate variances can be cau

Question 4

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.   Actual results for the year were 28,000 units, reflected in the following income statement:   What is the sales volume variance for direct material?

Accepted Answer

A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 unfavorable 
D) $34,000 favorable 
A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 unfavorable 
D) $34,000 favorable

Question 5

The algebraic equation for the direct labor efficiency variance is

Accepted Answer

A) direct labor efficiency variance = AQ × (AP - SP). 
B) direct labor efficiency variance = SQ × (AP - SP). 
C) direct labor efficiency variance = SP × (AQ - SQ). 
D) direct labor efficiency variance = AP × (AQ - SQ). 
A) direct labor efficiency variance = AQ × (AP - SP). 
B) direct labor efficiency variance = SQ × (AP - SP). 
C) direct labor efficiency variance = SP × (AQ - SQ). 
D) direct labor efficiency variance = AP × (AQ - SQ).

Question 6

An unfavorable variance is a variance that decreases operating income relative to the budgeted amount.

Accepted Answer

A) True 
 B)False

Question 7

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable variance that is not related to the efficient use of the variable overhead activity driver?

Accepted Answer

Overhead items will cost more or less th

Question 8

The following labor standards have been set for a product:   The following data pertain to operations for the period.   Required:
Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

Direct labor rate variance = $

Question 9

Which of the following are factors that managers may use in deciding whether to investigate a variance?

Accepted Answer

A) Materiality and the effect of netting large and small variances 
B) The effect of netting large and small variances and whether favorable or unfavorable 
C) Whether the variance will increase or decrease operating income and materiality 
D) Materiality and whether the variance will increase or decrease total costs 
A) Materiality and the effect of netting large and small variances 
B) The effect of netting large and small variances and whether favorable or unfavorable 
C) Whether the variance will increase or decrease operating income and materiality 
D) Materiality and whether the variance will increase or decrease total costs

Question 10

The direct labor efficiency variance is the part of the direct labor flexible budget variance that is caused by using more or less direct labor hours than the standard allows.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following overhead variances is correctly paired with a possible explanation for that variance?

Accepted Answer

A) Favorable spending variance - efficient use of the activity base 
B) Favorable efficiency variance - paid less than expected for variable overhead items 
C) Unfavorable efficiency variance - used more than expected for variable overhead items 
D) Unfavorable spending variance - used variable overhead items inefficiently 
A) Favorable spending variance - efficient use of the activity base 
B) Favorable efficiency variance - paid less than expected for variable overhead items 
C) Unfavorable efficiency variance - used more than expected for variable overhead items 
D) Unfavorable spending variance - used variable overhead items inefficiently

Question 12

An unfavorable variance is a variance that

Accepted Answer

A) increases cash relative to the budgeted amount. 
B) decreases costs relative to the budgeted amount. 
C) increases operating income relative to the budgeted amount. 
D) decreases operating income relative to the budgeted amount. 
A) increases cash relative to the budgeted amount. 
B) decreases costs relative to the budgeted amount. 
C) increases operating income relative to the budgeted amount. 
D) decreases operating income relative to the budgeted amount.

Question 13

Hobart Company manufactures patio umbrellas.The direct labor standard for each umbrella is 1.25 direct labor hours at a standard rate of $12.00 per hour.During June, Hobart used 36,000 direct labor hours to produce 30,000 umbrellas.Hobart's direct labor payroll totaled $428,400.What is Hobart's direct labor efficiency variance for November?

Accepted Answer

A) $3,600 unfavorable 
B) $3,600 favorable 
C) $18,000 favorable 
D) $18,000 unfavorable 
A) $3,600 unfavorable 
B) $3,600 favorable 
C) $18,000 favorable 
D) $18,000 unfavorable

Question 14

Backyard Creations purchased 7,200 feet of copper tubing at a price of $2.60 per foot and used 7,500 feet during the period.The standard price of the copper tubing was $2.70 per foot.What is Backyard Creations' direct materials price variance for the period?

Accepted Answer

A) $720 favorable 
B) $720 unfavorable 
C) $750 favorable 
D) $750 unfavorable 
A) $720 favorable 
B) $720 unfavorable 
C) $750 favorable 
D) $750 unfavorable

Question 15

Melrose Manufacturing produces gourmet blackberry preserves.Melrose based its current year budget on a production level of 540,000 jars of preserves using ½ hour direct labor time for each jar (which includes hand-sorting and trimming the berries).Total budgeted variable overhead for the year was $1,242,000.During the year, Melrose used 280,000 direct labor hours to produce 550,000 jars of blackberry preserves.Actual variable overhead for the year was $1,246,000.What is Melrose's variable overhead spending variance?

Accepted Answer

A) $42,000 favorable 
B) $42,000 unfavorable 
C) $23,000 favorable 
D) $23,000 unfavorable 
A) $42,000 favorable 
B) $42,000 unfavorable 
C) $23,000 favorable 
D) $23,000 unfavorable

Question 16

The direct labor efficiency variance is caused by

Accepted Answer

A) lack of efficiency in preparing the budget. 
B) using more or less direct labor hours than the standard allows. 
C) setting a higher or lower wage standard than is practical. 
D) paying more or less than the standard allows for total labor costs. 
A) lack of efficiency in preparing the budget. 
B) using more or less direct labor hours than the standard allows. 
C) setting a higher or lower wage standard than is practical. 
D) paying more or less than the standard allows for total labor costs.

Question 17

The direct materials price 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 18

The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the variable overhead

Accepted Answer

A) spending variance. 
B) efficiency variance. 
C) volume variance. 
D) activity variance. 
A) spending variance. 
B) efficiency variance. 
C) volume variance. 
D) activity variance.

Question 19

The algebraic equation for the direct labor rate variance is

Accepted Answer

A) direct labor rate variance = AQ × (AP - SP). 
B) direct labor rate variance = SQ × (AP - SP). 
C) direct labor rate variance = SP × (AQ - SQ). 
D) direct labor rate variance = AP × (AQ - SQ). 
A) direct labor rate variance = AQ × (AP - SP). 
B) direct labor rate variance = SQ × (AP - SP). 
C) direct labor rate variance = SP × (AQ - SQ). 
D) direct labor rate variance = AP × (AQ - SQ).

Question 20

Universal Outfitters, Inc.is a manufacturer of aluminum folding picnic tables.The company controller has provided you with the following financial information:   Required:
Prepare a performance report for the period.

Accepted Answer

The answer of Universal Outfitters, Inc.is a manufacturer of aluminum...

The sales volume variance is the difference between

The algebraic equation for the direct labor efficiency variance is

An unfavorable variance is a variance that decreases operating income relative to the budgeted amount.

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable variance that is not related to the efficient use of the variable overhead activity driver?

The following labor standards have been set for a product: The following data pertain to operations for the period. Required: Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Which of the following are factors that managers may use in deciding whether to investigate a variance?

The direct labor efficiency variance is the part of the direct labor flexible budget variance that is caused by using more or less direct labor hours than the standard allows.

Which of the following overhead variances is correctly paired with a possible explanation for that variance?

An unfavorable variance is a variance that

Backyard Creations purchased 7,200 feet of copper tubing at a price of $2.60 per foot and used 7,500 feet during the period.The standard price of the copper tubing was $2.70 per foot.What is Backyard Creations' direct materials price variance for the period?

The direct labor efficiency variance is caused by

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

The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the variable overhead

The algebraic equation for the direct labor rate variance is

Universal Outfitters, Inc.is a manufacturer of aluminum folding picnic tables.The company controller has provided you with the following financial information: Required: Prepare a performance report for the period.

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

Filters

Exam 6: Performance Evaluation: Variance Analysis

The sales volume variance is the difference between

The algebraic equation for the direct labor efficiency variance is

An unfavorable variance is a variance that decreases operating income relative to the budgeted amount.

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable variance that is not related to the efficient use of the variable overhead activity driver?

The following labor standards have been set for a product: The following data pertain to operations for the period. Required: Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Which of the following are factors that managers may use in deciding whether to investigate a variance?

The direct labor efficiency variance is the part of the direct labor flexible budget variance that is caused by using more or less direct labor hours than the standard allows.

Which of the following overhead variances is correctly paired with a possible explanation for that variance?

An unfavorable variance is a variance that

Backyard Creations purchased 7,200 feet of copper tubing at a price of $2.60 per foot and used 7,500 feet during the period.The standard price of the copper tubing was $2.70 per foot.What is Backyard Creations' direct materials price variance for the period?

The direct labor efficiency variance is caused by

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

The variance that captures the effect of efficient use of the activity base on the cost of variable overhead is the variable overhead

The algebraic equation for the direct labor rate variance is

Universal Outfitters, Inc.is a manufacturer of aluminum folding picnic tables.The company controller has provided you with the following financial information: Required: Prepare a performance report for the period.

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

Filters