Question 1

Which of the following is a factor in the amount of material used in production, resulting in a direct materials quantity variance?

Accepted Answer

A) The quality of the material 
B) The number of production workers 
C) The supervision provided by the production manager 
D) The quantity of materials on hand 
A) The quality of the material 
B) The number of production workers 
C) The supervision provided by the production manager 
D) The quantity of materials on hand

Question 2

Chillcott Manufacturing produces ceiling fans.A master budget was prepared by the controller based on sales of 19,500 fans for the month of May.The budgeted income statement for the period follows:   During May, Chillcott produced and sold 23,400 fans and had the following actual results:   Required: 
a.Prepare a flexible budget for May.
b.Calculate Chillcott's static budget variance for May.
c.Will the static budget variance that you calculated in part (b) be useful to management? Why or why not?
d.Based on the available information, prepare a performance report for management.
e.Comment on the results of your report.

Accepted Answer

@#IMG-DLM& b. @#IMG-DLM& @#IMG-DLM& c.No, the static budget variance i

Question 3

Which of the following is not a reason variable overhead costs might differ from the flexible budget costs?

Accepted Answer

A) Executives' salaries may increase or decrease. 
B) The prices paid to acquire variable overhead items can increase or decrease. 
C) Variable overhead items can be used more or less efficiently than planned. 
D) When the company is less efficient with respect to that production activity, variable overhead is used more or less efficiently. 
A) Executives' salaries may increase or decrease. 
B) The prices paid to acquire variable overhead items can increase or decrease. 
C) Variable overhead items can be used more or less efficiently than planned. 
D) When the company is less efficient with respect to that production activity, variable overhead is used more or less efficiently.

Question 4

Which of the following is a possible reason why actual prices might differ from standard prices, resulting in a direct materials price variance?

Accepted Answer

A) The company may order more materials than it expects to use. 
B) The company may receive more materials than ordered. 
C) The vendors may change their prices as a result of changes in the market. 
D) The company may purchase fewer materials than used. 
A) The company may order more materials than it expects to use. 
B) The company may receive more materials than ordered. 
C) The vendors may change their prices as a result of changes in the market. 
D) The company may purchase fewer materials than used.

Question 5

Backyard Creations purchased 7,000 feet of copper tubing at a price of $2.70 per foot and used 7,200 feet during the period.The standard quantity allowed for the units produced is 7,300 and the standard price of the copper tubing is $2.50 per foot.What is Backyard Creations' direct materials quantity variance for the period?

Accepted Answer

A) $250 favorable 
B) $500 favorable 
C) $750 favorable 
D) $250 unfavorable. 
A) $250 favorable 
B) $500 favorable 
C) $750 favorable 
D) $250 unfavorable.

Question 6

If the actual price of direct materials is $200 and the standard price of the direct materials is $180,

Accepted Answer

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

Question 7

The static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

Accepted Answer

A) $1,000 favorable 
B) $1,000 unfavorable 
C) $6,000 favorable 
D) $6,500 unfavorable 
A) $1,000 favorable 
B) $1,000 unfavorable 
C) $6,000 favorable 
D) $6,500 unfavorable

Question 8

To identify a variance without indicating whether it is favorable (F) or unfavorable (U) does not indicate

Accepted Answer

A) the impact of the variance on operating income. 
B) the amount of the variance. 
C) whether the amount relates to price or quantity. 
D) whether the amount relates to rate or efficiency. 
A) the impact of the variance on operating income. 
B) the amount of the variance. 
C) whether the amount relates to price or quantity. 
D) whether the amount relates to rate or efficiency.

Question 9

The flexible budget variance is influenced most heavily by actions of the

Accepted Answer

A) budget committee. 
B) operations personnel. 
C) sales personnel. 
D) executives of the company. 
A) budget committee. 
B) operations personnel. 
C) sales personnel. 
D) executives of the company.

Question 10

Which of the following is not a factor that could influence worker productivity?

Accepted Answer

A) The level of skill and training workers possess 
B) The amount of automation used in the production process 
C) Workers' level of fatigue will affect the direct labor efficiency variance 
D) The quality of direct material used 
A) The level of skill and training workers possess 
B) The amount of automation used in the production process 
C) Workers' level of fatigue will affect the direct labor efficiency variance 
D) The quality of direct material used

Question 11

Why do variances have little meaning until their causes are identified?

Accepted Answer

A) Because they cannot be calculated correctly until the causes are known 
B) Because identifying their causes allows managers to take correct action 
C) Because identifying their causes will immediately increase net income 
D) Because identifying their causes will immediately decrease net income 
A) Because they cannot be calculated correctly until the causes are known 
B) Because identifying their causes allows managers to take correct action 
C) Because identifying their causes will immediately increase net income 
D) Because identifying their causes will immediately decrease net income

Question 12

If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance, the variable overhead efficiency variance will be

Accepted Answer

A) unfavorable. 
B) favorable. 
C) zero. 
D) Undeterminable based on the given information. 
A) unfavorable. 
B) favorable. 
C) zero. 
D) Undeterminable based on the given information.

Question 13

The variable overhead spending variance captures

Accepted Answer

A) whether the company has paid more or less for variable overhead items. 
B) the relative efficiency with which variable overhead items are used. 
C) whether the company is more or less efficient with respect to the production activity, since variable overhead varies with production activity. 
D) whether the company used more or fewer variable overhead items and the relative efficiency with which variable overhead items are used. 
A) whether the company has paid more or less for variable overhead items. 
B) the relative efficiency with which variable overhead items are used. 
C) whether the company is more or less efficient with respect to the production activity, since variable overhead varies with production activity. 
D) whether the company used more or fewer variable overhead items and the relative efficiency with which variable overhead items are used.

Question 14

The master budget is an example of a

Accepted Answer

A) static budget. 
B) flexible budget. 
C) pro-forma budget. 
D) cash budget. 
A) static budget. 
B) flexible budget. 
C) pro-forma budget. 
D) cash budget.

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 flexible budget variable overhead variance?

Accepted Answer

A) $27,000 unfavorable 
B) $19,000 favorable 
C) $4,000 unfavorable 
D) $23,000 unfavorable 
A) $27,000 unfavorable 
B) $19,000 favorable 
C) $4,000 unfavorable 
D) $23,000 unfavorable

Question 16

Culver, Inc.manufactures motors used in electric toothbrushes and other small appliances.Culver's fixed overhead rate is $7.60 and the company budgeted 165,000 direct labor hours for the year.During the year Culver produced 320,000 motors and used 164,000 direct labor hours.Culver's fixed overhead spending variance was $3,500 unfavorable for the year.What was Culver's actual fixed overhead for the year?

Accepted Answer

A) $1,250,500 
B) $1,257,500 
C) $1,246,400 
D) $1,249,900 
A) $1,250,500 
B) $1,257,500 
C) $1,246,400 
D) $1,249,900

Question 17

While the sales manager may be ecstatic to learn he has exceeded his sales goal, the production manager may not share that enthusiasm, because having more sales than anticipated requires overtime for workers and additional maintenance on some machinery.Managers use budgeting to control and evaluate their operations.Two types of budgets that are discussed in this chapter are the static budget and the flexible budget.How do the two budgets differ and explain how the flexible budget is used in evaluating performance.

Accepted Answer

A static budget variance presents only t

Question 18

Hunter Company produces personalized towel wraps.During May, the company's actual wage rate was $12.50.The standard wage rate is $12 per hour, and the standard hours allowed for actual production was 9,000.The favorable direct labor efficiency variance for May was $1,200.
Required:
How many hours were actually worked during May?

Accepted Answer

($12 × 9,000) ̶ $1,2

Question 19

Jasmine Manufacturing produces the glass vases used by florists.Each vase requires 15 minutes of direct labor time for which glass blowers are budgeted $30 per hour.During November, Jasmine produced 10,000 glass vases which required 2,550 hours of direct labor.Jasmine paid wages to the glass blowers of $74,500 during November.What is Jasmine's direct labor efficiency variance for November?

Accepted Answer

A) $2,000 unfavorable 
B) $2,000 favorable 
C) $1,500 favorable 
D) $1,500 unfavorable 
A) $2,000 unfavorable 
B) $2,000 favorable 
C) $1,500 favorable 
D) $1,500 unfavorable

Question 20

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 5,000 sprigs of holly berries for $7,000 per box.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 quantity 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

Which of the following is a factor in the amount of material used in production, resulting in a direct materials quantity variance?

Which of the following is not a reason variable overhead costs might differ from the flexible budget costs?

Which of the following is a possible reason why actual prices might differ from standard prices, resulting in a direct materials price variance?

If the actual price of direct materials is $200 and the standard price of the direct materials is $180,

The static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

To identify a variance without indicating whether it is favorable (F) or unfavorable (U) does not indicate

The flexible budget variance is influenced most heavily by actions of the

Which of the following is not a factor that could influence worker productivity?

Why do variances have little meaning until their causes are identified?

If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance, the variable overhead efficiency variance will be

The variable overhead spending variance captures

The master budget is an example of a

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

Which of the following is a factor in the amount of material used in production, resulting in a direct materials quantity variance?

Which of the following is not a reason variable overhead costs might differ from the flexible budget costs?

Which of the following is a possible reason why actual prices might differ from standard prices, resulting in a direct materials price variance?

If the actual price of direct materials is $200 and the standard price of the direct materials is $180,

The static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

To identify a variance without indicating whether it is favorable (F) or unfavorable (U) does not indicate

The flexible budget variance is influenced most heavily by actions of the

Which of the following is not a factor that could influence worker productivity?

Why do variances have little meaning until their causes are identified?

If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance, the variable overhead efficiency variance will be

The variable overhead spending variance captures

The master budget is an example of a

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