Question 1

Which of the following is not a reason as to why companies use standard costs?

Accepted Answer

A)  To establish performance standards 
B)  To prepare the budget 
C)  To expand the role of the accounting department 
D)  To set the sales prices of their products and services 
A)  To establish performance standards 
B)  To prepare the budget 
C)  To expand the role of the accounting department 
D)  To set the sales prices of their products and services C

Question 2

The standard cost of direct labor per hour is $8.00. Four standard direct labor hours are allowed per finished good. During the current period, 350 finished goods were produced using 1,350 direct labor hours. The direct labor price variance is $405, unfavorable. Calculate the actual cost of direct labor per hour.

Accepted Answer

A)  $7.70 
B)  $8.30 
C)  $8.00 
D)  Impossible to determine using the given data 
A)  $7.70 
B)  $8.30 
C)  $8.00 
D)  Impossible to determine using the given data B

Question 3

Which of the following actions would not help avoid an unfavorable sales volume variance?

Accepted Answer

A)  Design more attractive products to increase demand. 
B)  Provide additional advertising to increase the number of units sold. 
C)  Provide incentives to the sales force to increase the number of units sold. 
D)  Increase the unit selling price in order to generate additional revenue. 
A)  Design more attractive products to increase demand. 
B)  Provide additional advertising to increase the number of units sold. 
C)  Provide incentives to the sales force to increase the number of units sold. 
D)  Increase the unit selling price in order to generate additional revenue. D

Question 4

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } 
\hline & \text { Standard Total Cost } & \text { Actual Total Cost } \
\hline \text { Direct materials: } & & \
\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \
\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \
\hline \text { Direct labor: } & & \
\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \
\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \
\hline
\end{array}$$ What is the direct labor price variance?

Accepted Answer

A)  $270 unfavorable 
B)  $270 favorable 
C)  $120 favorable 
D)  $120 unfavorable 
A)  $270 unfavorable 
B)  $270 favorable 
C)  $120 favorable 
D)  $120 unfavorable

Question 5

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
 recent month, Regal manufactured 1,000 bags of premium dog food; 54,000 pounds of direct
 materials were actually used at a cost of $29,160. How much was the direct materials quantity
 variance?

Accepted Answer

A)  $2,000 unfavorable 
B)  $2,000 favorable 
C)  $2,700 favorable 
D)  $2,700 unfavorable 
A)  $2,000 unfavorable 
B)  $2,000 favorable 
C)  $2,700 favorable 
D)  $2,700 unfavorable

Question 6

Which of the following statements is correct?

Accepted Answer

A)  An unfavorable direct labor efficiency variance should always be attributed to the production manager. 
B)  A favorable direct materials price variance is always beneficial. 
C)  Variances should be used to raise questions and direct attention, rather than to blame. 
D)  An unfavorable variance is always the fault of the supervisor. 
A)  An unfavorable direct labor efficiency variance should always be attributed to the production manager. 
B)  A favorable direct materials price variance is always beneficial. 
C)  Variances should be used to raise questions and direct attention, rather than to blame. 
D)  An unfavorable variance is always the fault of the supervisor.

Question 7

Which of the following does not need to be known in order to create a flexible budget?

Accepted Answer

A)  The variable cost per unit 
B)  The fixed cost per unit 
C)  The budgeted selling price 
D)  Different volume levels within the relevant range 
A)  The variable cost per unit 
B)  The fixed cost per unit 
C)  The budgeted selling price 
D)  Different volume levels within the relevant range

Question 8

A flexible budget is prepared to allow:

Accepted Answer

A)  actual and budgeted results to be compared at almost any level of activity. 
B)  costs and revenues to be compared at a particular level of activity only. 
C)  management discretion and flexibility. 
D)  flexibility in determining standard costs. 
A)  actual and budgeted results to be compared at almost any level of activity. 
B)  costs and revenues to be compared at a particular level of activity only. 
C)  management discretion and flexibility. 
D)  flexibility in determining standard costs.

Question 9

Which of the following is correct regarding a static budget?

Accepted Answer

A)  A static budget is a budget that stays the same from one period to the next. 
B)  A static budget is also known as a fixed budget. 
C)  A static budget is prepared for only one level of activity. 
D)  A static budget is adjusted for changes in the level of activity. 
A)  A static budget is a budget that stays the same from one period to the next. 
B)  A static budget is also known as a fixed budget. 
C)  A static budget is prepared for only one level of activity. 
D)  A static budget is adjusted for changes in the level of activity.

Question 10

When recording the use of direct materials in the production process, work in process inventory is debited for which of the following?

Accepted Answer

A)  Standard quantity for actual production times standard cost per pound 
B)  Standard quantity for actual production times actual cost per pound 
C)  Actual quantity times standard cost per pound 
D)  Actual quantity times actual cost per pound 
A)  Standard quantity for actual production times standard cost per pound 
B)  Standard quantity for actual production times actual cost per pound 
C)  Actual quantity times standard cost per pound 
D)  Actual quantity times actual cost per pound

Question 11

Which of the following would cause an unfavorable production volume variance?

Accepted Answer

A)  If actual production exceeds budgeted production 
B)  If actual fixed overhead costs exceeds budgeted fixed overhead costs 
C)  If budgeted fixed overhead costs exceed actual fixed overhead costs 
D)  If actual production is less than budgeted production 
A)  If actual production exceeds budgeted production 
B)  If actual fixed overhead costs exceeds budgeted fixed overhead costs 
C)  If budgeted fixed overhead costs exceed actual fixed overhead costs 
D)  If actual production is less than budgeted production

Question 12

Rice Corporation has provided the following information:
Direct material standard per unit: 3 pounds
Standard price per pound: $3.50
Actual number of pounds purchased and used: 1,575
Actual cost of materials purchased: $5,355
Actual number of units produced: 500
What is the direct materials quantity variance?

Accepted Answer

A)  $262.50 unfavorable 
B)  $262.50 favorable 
C)  $255.00 favorable 
D)  $255.00 unfavorable 
A)  $262.50 unfavorable 
B)  $262.50 favorable 
C)  $255.00 favorable 
D)  $255.00 unfavorable

Question 13

The direct materials price variance should be calculated:

Accepted Answer

A)  when the materials are purchased. 
B)  when the materials are requisitioned for use. 
C)  at the end of the reporting period. 
D)  when the actual quantity of materials used is known. 
A)  when the materials are purchased. 
B)  when the materials are requisitioned for use. 
C)  at the end of the reporting period. 
D)  when the actual quantity of materials used is known.

Question 14

A sales volume variance is a function of which of the following?

Accepted Answer

A)  Actual sales volume and normal sales volume 
B)  Actual results and amounts in the flexible budget 
C)  Amounts in the flexible budget and the static budget 
D)  Number of units actually sold and number of units expected to be sold according to the static budget 
A)  Actual sales volume and normal sales volume 
B)  Actual results and amounts in the flexible budget 
C)  Amounts in the flexible budget and the static budget 
D)  Number of units actually sold and number of units expected to be sold according to the static budget

Question 15

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } 
\hline & \text { Direct materials } & \
\hline & \text { Product X } & \text { Product } \mathbf { Y } \
\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \
\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \
\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \
\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \
\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \
\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \
\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \
\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \
\hline
\end{array}$$ What is the direct materials flexible budget variance for Product X?

Accepted Answer

A)  $200 unfavorable 
B)  $400 favorable 
C)  $600 favorable 
D)  $200 favorable 
A)  $200 unfavorable 
B)  $400 favorable 
C)  $600 favorable 
D)  $200 favorable

Question 16

Daub, Inc. gathered the following information for the month ended March 31, 2009:
$$\begin{array} { | l | c | c | c | } 
\hline \text { The static budget volume is 4,500 units: } & & & \
\hline \text { Overhead flexible budget: } & & & \
\hline \text { Number of units } & 4,000 & 4,500 & 5,000 \
\hline \text { Standard machine hours } & 12,000 & 13,500 & 15,000 \
\hline \text { Budgeted overhead costs: } & & & \
\hline \text { Variable } & \$ 24,000 & \$ 27,000 & \$ 30,000 \
\hline \text { Fixed } & \$ 33,750 & \$ 33,750 & \$ 33,750 \
\hline
\end{array}$$ Actual production was 5,000 units. Actual overhead costs were $26,000 for variable costs and $35,000 for fixed costs. Actual machine hours worked were 14,100 hours. What is the standard rate of variable overhead per machine hour?

Accepted Answer

A)  $1.84 
B)  $2.50 
C)  $2.00 
D)  $1.50 
A)  $1.84 
B)  $2.50 
C)  $2.00 
D)  $1.50

Question 17

Martin Racing Company gathered the following actual results for the current month:
$$\begin{array} { | l | r | } 
\hline \text { Actual amounts: } & \
\hline \text { Units produced } & 3,000 \
\hline \text { Direct materials purchased and used (5,400 pounds } ) & \$ 21,600 \
\hline \text { Direct labor cost } ( 4,600 \text { hours } ) & \$ 36,800 \
\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \
\hline
\end{array}$$ Budgeted production and standard costs were:
$$\begin{array} { | l | l | } 
\hline \text { Budgeted production } & 3,500 \text { units } \
\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \
\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \
\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \
\hline \text { Fixed manufacturing overhead } & \$ 21,000 \
\hline
\end{array}$$ What is the direct labor price variance?

Accepted Answer

A)  $2,250 unfavorable 
B)  $1,500 favorable 
C)  $2,300 unfavorable 
D)  $3,050 favorable 
A)  $2,250 unfavorable 
B)  $1,500 favorable 
C)  $2,300 unfavorable 
D)  $3,050 favorable

Question 18

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?

Accepted Answer

A)  $8,400 unfavorable 
B)  $3,200 favorable 
C)  $8,750 favorable 
D)  $5,200 unfavorable 
A)  $8,400 unfavorable 
B)  $3,200 favorable 
C)  $8,750 favorable 
D)  $5,200 unfavorable

Question 19

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar amount?

Accepted Answer

A)  $100,000 
B)  $130,000 
C)  $180,000 
D)  $160,000 
A)  $100,000 
B)  $130,000 
C)  $180,000 
D)  $160,000

Question 20

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
 recent month, Regal manufactured 1,200 bags of premium dog food; the direct materials efficiency
 variance for the month was $3,000 unfavorable. How many pounds of direct materials were used
 during the month?

Accepted Answer

A)  60,000 
B)  66,000 
C)  54,000 
D)  63,000 
A)  60,000 
B)  66,000 
C)  54,000 
D)  63,000

Which of the following is not a reason as to why companies use standard costs?

Which of the following actions would not help avoid an unfavorable sales volume variance?

Which of the following statements is correct?

Which of the following does not need to be known in order to create a flexible budget?

A flexible budget is prepared to allow:

Which of the following is correct regarding a static budget?

When recording the use of direct materials in the production process, work in process inventory is debited for which of the following?

Which of the following would cause an unfavorable production volume variance?

The direct materials price variance should be calculated:

A sales volume variance is a function of which of the following?

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar amount?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities, Payroll, and Long-Term Liabilities

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Appendix: Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Performance Evaluation and the Balanced Scorecard

Filters

Exam 22: Flexible Budgets and Standard Costs

Which of the following is not a reason as to why companies use standard costs?

Which of the following actions would not help avoid an unfavorable sales volume variance?

Which of the following statements is correct?

Which of the following does not need to be known in order to create a flexible budget?

A flexible budget is prepared to allow:

Which of the following is correct regarding a static budget?

When recording the use of direct materials in the production process, work in process inventory is debited for which of the following?

Which of the following would cause an unfavorable production volume variance?

The direct materials price variance should be calculated:

A sales volume variance is a function of which of the following?

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar amount?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities, Payroll, and Long-Term Liabilities

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Appendix: Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Performance Evaluation and the Balanced Scorecard

Filters