Question 1

The flexible budget 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

Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units.The standard allows for 2 switches per unit.The company actually used 12,500 to produce the 6,000 units.Johnston budgeted $0.75 per switch, but because they received a discount for purchasing more than 10,000 switches, they received a discount of $0.05 per switch and paid $0.70 each.What is Johnston's direct materials price variance for the period?

Accepted Answer

A) $500 favorable 
B) $600 favorable 
C) $625 favorable 
D) $700 favorable 
A) $500 favorable 
B) $600 favorable 
C) $625 favorable 
D) $700 favorable

Question 3

Nora, Inc.manufactures components used by a major cell phone manufacturer.During the year, Nora produced 160,000 components and used 40,500 direct labor hours.Nora based its current year budget on a production level of 150,000 components each of which requires 15 minutes of direct labor time.Total budgeted variable overhead for the year was $131,250.Actual variable overhead for the year was $145,800.What is Nora's flexible budget variable overhead variance?

Accepted Answer

A) $5,800 favorable 
B) $5,800 unfavorable 
C) $4,050 unfavorable 
D) $4,050 favorable 
A) $5,800 favorable 
B) $5,800 unfavorable 
C) $4,050 unfavorable 
D) $4,050 favorable

Question 4

The algebraic equation for the direct materials price variance is

Accepted Answer

A) Direct materials price variance = AQpurch × (AP - SP) 
B) Direct materials price variance = SQpurch × (AP - SP) 
C) Direct materials price variance = SP × (AQpurch - SQpurch) 
D) Direct materials price variance = AP × (AQpurch - SQpurch) 
A) Direct materials price variance = AQpurch × (AP - SP) 
B) Direct materials price variance = SQpurch × (AP - SP) 
C) Direct materials price variance = SP × (AQpurch - SQpurch) 
D) Direct materials price variance = AP × (AQpurch - SQpurch)

Question 5

Amos, Inc.uses a standard cost system with the following labor standards for one unit of product: standard hours 0.2 and standard wage rate $12.During January, Amos incurred 3,700 hours of direct labor and paid $45,325 in wages in production of 18,000 units.
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 6

A material variance is one that is large enough to make a difference in the outcome of a decision.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an explanation for a favorable variable overhead spending variance?

Accepted Answer

A) Paid less than expected for indirect material 
B) Used variable overhead items efficiently 
C) Paid less than expected for indirect labor 
D) Efficient use of the activity base 
A) Paid less than expected for indirect material 
B) Used variable overhead items efficiently 
C) Paid less than expected for indirect labor 
D) Efficient use of the activity base

Question 8

If a company incurs a lot of different variable overhead costs and the activity base is only slightly related to their consumption, which of the following statements is true?

Accepted Answer

A) The variable overhead efficiency variance will be meaningless. 
B) The variable overhead spending variance will be meaningless. 
C) Both the variable overhead efficiency variance and the variable overhead spending variance will be meaningless. 
D) The variable overhead spending variance will be extremely informative. 
A) The variable overhead efficiency variance will be meaningless. 
B) The variable overhead spending variance will be meaningless. 
C) Both the variable overhead efficiency variance and the variable overhead spending variance will be meaningless. 
D) The variable overhead spending variance will be extremely informative.

Question 9

Paula's Peach Preserves produces jars of gourmet peach jam.Paula prepared the following standard cost card for each 18-ounce jar of jam:   During the year Paula produced 153,225 jars of jam and incurred $210,000 in fixed manufacturing overhead.Paul's fixed overhead spending variance was $7,500 unfavorable.What was Paula's budgeted level of production (if necessary, round your answer to the nearest whole jar)?

Accepted Answer

A) 150,000 jars 
B) 161,112 jars 
C) 155,556 jars 
D) 71,854 jars 
A) 150,000 jars 
B) 161,112 jars 
C) 155,556 jars 
D) 71,854 jars

Question 10

Adler Industries uses a standard cost system in which direct material is carried at standard cost.Adler has established the following standards for one unit of product: standard quantity of 8 pounds, standard price $1.80 per pound.During January, Adler purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in production of 18,700 units.
Required:
Calculate the direct materials price variance and indicate whether the variance is favorable or unfavorable.

Accepted Answer

$304,000 - ($1.80 ×

Question 11

If a company's workforce consists of a number of new hires, then their lack of training could lead to an unfavorable direct labor efficiency variance.

Accepted Answer

A) True 
 B)False

Question 12

Because the production managers are the ones to negotiate the purchase price, they are typically held accountable for the direct materials price variance.

Accepted Answer

A) True 
 B)False

Question 13

The major factor in the amount of material used in production is the quality of the material.

Accepted Answer

A) True 
 B)False

Question 14

Adler Industries uses a standard cost system.Adler has established the following standards for one unit of product: standard labor of .25 hour and standard wage rate of $12 per hour.During January, Adler used 5,000 hours of direct labor and paid $62,500 in wages in producing 18,700 units.
Required:
Calculate the direct labor rate variance and indicate whether the variance is favorable or unfavorable.

Accepted Answer

$62,500 -

Question 15

The variable overhead spending variance

Accepted Answer

A) is the difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the actual level of activity base experienced. 
B) relates to the efficient use of the activity base rather than the efficient use of the variable overhead item. 
C) captures whether the company has paid more or less for variable overhead items. 
D) is unfavorable when more variable overhead items are used than allowed at the level of activity achieved. 
A) is the difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the actual level of activity base experienced. 
B) relates to the efficient use of the activity base rather than the efficient use of the variable overhead item. 
C) captures whether the company has paid more or less for variable overhead items. 
D) is unfavorable when more variable overhead items are used than allowed at the level of activity achieved.

Question 16

Which of the following is not used in calculating the direct labor efficiency variance?

Accepted Answer

A) The actual quantity of direct labor hours used 
B) The standard quantity of direct labor hours allowed for actual production 
C) The actual wage rate 
D) The standard wage rate 
A) The actual quantity of direct labor hours used 
B) The standard quantity of direct labor hours allowed for actual production 
C) The actual wage rate 
D) The standard wage rate

Question 17

Assembly line workers at Thompson Manufacturing worked a total of 8,800 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor efficiency variance is

Accepted Answer

A) $2,000 favorable 
B) $2,000 unfavorable 
C) $2,100 favorable 
D) $2,100 unfavorable 
A) $2,000 favorable 
B) $2,000 unfavorable 
C) $2,100 favorable 
D) $2,100 unfavorable

Question 18

R&N Manufacturing produces music boxes.The fixed overhead rate is $5.10 per direct labor hour, and the company budgeted for 4,400 direct labor hours for the year.During the year, R&N produced 2,500 music boxes using 4,800 direct labor hours.Actual fixed overhead for the year was $23,000.What is the company's fixed overhead spending variance?

Accepted Answer

A) $560 favorable 
B) $560 unfavorable 
C) $1,480 favorable 
D) $1,480 unfavorable 
A) $560 favorable 
B) $560 unfavorable 
C) $1,480 favorable 
D) $1,480 unfavorable

Question 19

Adler Industries uses a standard cost system.Adler has established the following standards for one unit of product: standard labor of 0.25 hour and standard wage rate of $12 per hour.During January, Adler used 5,000 hours of direct labor and paid $62,500 in wages in producing 18,700 units.
Required:
Calculate the direct labor efficiency variance and indicate whether the variance is favorable or unfavorable.

Accepted Answer

5,000 - (0.25 × 18,7

Question 20

The difference between actual units sold and the original budgeted units to be sold is the reason for which variance?

Accepted Answer

A) Price variance 
B) Quantity variance 
C) Flexible budget variance 
D) Sales volume variance 
A) Price variance 
B) Quantity variance 
C) Flexible budget variance 
D) Sales volume variance

The flexible budget variance is the difference between

The algebraic equation for the direct materials price variance is

A material variance is one that is large enough to make a difference in the outcome of a decision.

Which of the following is not an explanation for a favorable variable overhead spending variance?

If a company incurs a lot of different variable overhead costs and the activity base is only slightly related to their consumption, which of the following statements is true?

If a company's workforce consists of a number of new hires, then their lack of training could lead to an unfavorable direct labor efficiency variance.

Because the production managers are the ones to negotiate the purchase price, they are typically held accountable for the direct materials price variance.

The major factor in the amount of material used in production is the quality of the material.

The variable overhead spending variance

Which of the following is not used in calculating the direct labor efficiency variance?

Assembly line workers at Thompson Manufacturing worked a total of 8,800 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor efficiency variance is

The difference between actual units sold and the original budgeted units to be sold is the reason for which variance?

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

The flexible budget variance is the difference between

The algebraic equation for the direct materials price variance is

A material variance is one that is large enough to make a difference in the outcome of a decision.

Which of the following is not an explanation for a favorable variable overhead spending variance?

If a company incurs a lot of different variable overhead costs and the activity base is only slightly related to their consumption, which of the following statements is true?

If a company's workforce consists of a number of new hires, then their lack of training could lead to an unfavorable direct labor efficiency variance.

Because the production managers are the ones to negotiate the purchase price, they are typically held accountable for the direct materials price variance.

The major factor in the amount of material used in production is the quality of the material.

The variable overhead spending variance

Which of the following is not used in calculating the direct labor efficiency variance?

Assembly line workers at Thompson Manufacturing worked a total of 8,800 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor efficiency variance is

The difference between actual units sold and the original budgeted units to be sold is the reason for which variance?

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