Question 1

Which of the following statements would be true if actual units produced exceed the budgeted units to be produced?

Accepted Answer

A) Production volume variance is expected to be unfavorable. 
B) Overhead flexible budget variance is expected to be favorable. 
C) Production volume variance is expected to be favorable. 
D) Overhead flexible budget variance is expected to be unfavorable. 
A) Production volume variance is expected to be unfavorable. 
B) Overhead flexible budget variance is expected to be favorable. 
C) Production volume variance is expected to be favorable. 
D) Overhead flexible budget variance is expected to be unfavorable.

Question 2

The variable overhead rate variance may be affected by both indirect labor and indirect materials.

Accepted Answer

A) True 
 B)False

Question 3

How is the direct labor efficiency variance calculated?

Accepted Answer

A) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate. 
B) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate 
C) The difference between the standard labor hours and the actual labor hours used. 
D) The difference between the standard labor rate and the actual labor rate. 
A) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate. 
B) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate 
C) The difference between the standard labor hours and the actual labor hours used. 
D) The difference between the standard labor rate and the actual labor rate.

Question 4

Shamrock Manufacturing budgeted fixed overhead costs of $2.75 per unit at an anticipated production level of 1,350 units. In July Shamrock incurred actual fixed overhead costs of $4,400 and actually produced 1,300 units. What is Shamrock's fixed overhead budget variance for July?

Accepted Answer

A) $687.50 favorable 
B) $687.50 unfavorable 
C) $825.00 favorable 
D) $825.00 unfavorable 
A) $687.50 favorable 
B) $687.50 unfavorable 
C) $825.00 favorable 
D) $825.00 unfavorable

Question 5

A favorable direct materials quantity variance indicates which of the following?

Accepted Answer

A) The actual cost of direct materials was less than the standard cost of direct materials. 
B) The standard quantity of direct materials for actual output was less than the actual quantity of direct materials used. 
C) The actual quantity of direct materials used was less than the standard quantity for actual output. 
D) The actual quantity of direct materials used was greater than the standard quantity for budgeted output. 
A) The actual cost of direct materials was less than the standard cost of direct materials. 
B) The standard quantity of direct materials for actual output was less than the actual quantity of direct materials used. 
C) The actual quantity of direct materials used was less than the standard quantity for actual output. 
D) The actual quantity of direct materials used was greater than the standard quantity for budgeted output.

Question 6

Jackson Industries has collected the following data for one of its products:   How much is the direct materials price variance?

Accepted Answer

A) $1,750 favorable 
B) $1,750 unfavorable 
C) $1,900 favorable 
D) $1,900 unfavorable 
A) $1,750 favorable 
B) $1,750 unfavorable 
C) $1,900 favorable 
D) $1,900 unfavorable

Question 7

Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows:   During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows:
  What is the direct materials quantity variance for the month?

Accepted Answer

A) $ 4,300 favorable 
B) $ 4,300 unfavorable 
C) $ 3,800 favorable 
D) $ 3,800 unfavorable 
A) $ 4,300 favorable 
B) $ 4,300 unfavorable 
C) $ 3,800 favorable 
D) $ 3,800 unfavorable

Question 8

The variable overhead rate variance may be caused by variances in the following production inputs except

Accepted Answer

A) indirect materials. 
B) indirect labor. 
C) fixed manufacturing overhead. 
D) None of the above impacts the variable overhead rate variance. 
A) indirect materials. 
B) indirect labor. 
C) fixed manufacturing overhead. 
D) None of the above impacts the variable overhead rate variance.

Question 9

Michael Corporation manufactures railroad cars, which is its only product. The standards for railroad cars are as follows:   During the month of March, the company produced 1,650 railroad cars. Related production data for the month follows:
  What is the direct labor efficiency variance for the month?

Accepted Answer

A) $15,000 favorable 
B) $15,000 unfavorable 
C) $10,000 favorable 
D) $10,000 unfavorable 
A) $15,000 favorable 
B) $15,000 unfavorable 
C) $10,000 favorable 
D) $10,000 unfavorable

Question 10

The Chilton Corporation specializes in manufacturing one type of desk lamp. Chilton allocates variable manufacturing overhead costs on the basis of machine hours. Chilton budgeted .5 machine hours per lamp and allocates overhead at a rate of $1.80 per machine hour. Last year Chilton manufactured 23,000 lamps, used 13,800 machine hours and incurred actual overhead costs of $15,180. What was Chilton's variable manufacturing overhead efficiency variance last year?

Accepted Answer

A) $4,140 favorable 
B) $4,140 unfavorable 
C) $9,660 favorable 
D) $9,660 unfavorable 
A) $4,140 favorable 
B) $4,140 unfavorable 
C) $9,660 favorable 
D) $9,660 unfavorable

Question 11

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows:   What is the direct material quantity variance for plastic in the dolls?

Accepted Answer

A) $378 favorable 
B) $1,422 favorable 
C) $378 unfavorable 
D) $1,422 unfavorable 
A) $378 favorable 
B) $1,422 favorable 
C) $378 unfavorable 
D) $1,422 unfavorable

Question 12

Kalanja Designs, which produces earrings, is developing direct material standards. Each earring requires 0.52 kilograms of a special metal. The allowance for waste is 0.03 kilograms per earring, while the allowance for rejects is 0.02 kilograms per earring. What is the standard quantity of metal per earring?

Accepted Answer

A) 0.52 kilograms 
B) 0.55 kilograms 
C) 0.57 kilograms 
D) 0.54 kilograms 
A) 0.52 kilograms 
B) 0.55 kilograms 
C) 0.57 kilograms 
D) 0.54 kilograms

Question 13

The following information describes a company's usage of direct labor in a recent period:   How much is the direct labor rate variance?

Accepted Answer

A) $8,375 favorable 
B) $8,500 favorable 
C) $8,375 unfavorable 
D) $8,500 unfavorable 
A) $8,375 favorable 
B) $8,500 favorable 
C) $8,375 unfavorable 
D) $8,500 unfavorable

Question 14

The standard quantity of direct materials is calculated as

Accepted Answer

A) the budgeted quantity of units less the standard quantity of units. 
B) the standard quantity of input per unit times the number of units budgeted. 
C) the number of units actually made times the direct materials price standard. 
D) the standard quantity of input per unit times the number of units actually made. 
A) the budgeted quantity of units less the standard quantity of units. 
B) the standard quantity of input per unit times the number of units budgeted. 
C) the number of units actually made times the direct materials price standard. 
D) the standard quantity of input per unit times the number of units actually made.

Question 15

Fabian Fabrication machines heavy-duty brake rotors that are used on commercial airliners. Fabian's management developed the following standard costs:   Actual activity for October:
  What is the variable manufacturing overhead rate variance for October?

Accepted Answer

A) $17,550 unfavorable 
B) $8,550 unfavorable 
C) $17,550 favorable 
D) $8,550 favorable 
A) $17,550 unfavorable 
B) $8,550 unfavorable 
C) $17,550 favorable 
D) $8,550 favorable

Question 16

The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $15.50. The direct labor hours allowed per finished unit is 0.5 hour. During the current period, 5,500 units of finished goods were produced using 3,000 direct labor hours. How much is the direct labor efficiency variance?

Accepted Answer

A) $3,875 unfavorable 
B) $3,875 favorable 
C) $4,000 favorable 
D) $4,000 unfavorable 
A) $3,875 unfavorable 
B) $3,875 favorable 
C) $4,000 favorable 
D) $4,000 unfavorable

Question 17

Valley View Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $20.00 per direct labor hour. During the month of May, Valley View Company used 2,500 direct labor hours to produce 2,350 pairs of boots. Total direct labor cost for May was $48,000. What is the labor rate variance for May?

Accepted Answer

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

Question 18

A credit balance means that a variance is unfavorable since it decreases income (just like a revenue).

Accepted Answer

A) True 
 B)False

Question 19

The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which variance would be directly impacted?

Accepted Answer

A) Materials price variance 
B) Materials quantity variance 
C) Labor efficiency variance 
D) Labor rate variance 
A) Materials price variance 
B) Materials quantity variance 
C) Labor efficiency variance 
D) Labor rate variance

Question 20

When deciding whether or not to adopt standard costs and perform variance analysis, management should do which of the following?

Accepted Answer

A) Examine the costs and benefits of a standard costing system 
B) Update inaccurate standard costs 
C) Adopt lean thinking 
D) Increase automation of assembly lines 
A) Examine the costs and benefits of a standard costing system 
B) Update inaccurate standard costs 
C) Adopt lean thinking 
D) Increase automation of assembly lines

Which of the following statements would be true if actual units produced exceed the budgeted units to be produced?

The variable overhead rate variance may be affected by both indirect labor and indirect materials.

How is the direct labor efficiency variance calculated?

Shamrock Manufacturing budgeted fixed overhead costs of $2.75 per unit at an anticipated production level of 1,350 units. In July Shamrock incurred actual fixed overhead costs of $4,400 and actually produced 1,300 units. What is Shamrock's fixed overhead budget variance for July?

A favorable direct materials quantity variance indicates which of the following?

Jackson Industries has collected the following data for one of its products: How much is the direct materials price variance?

Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows: What is the direct materials quantity variance for the month?

The variable overhead rate variance may be caused by variances in the following production inputs except

Michael Corporation manufactures railroad cars, which is its only product. The standards for railroad cars are as follows: During the month of March, the company produced 1,650 railroad cars. Related production data for the month follows: What is the direct labor efficiency variance for the month?

The following information describes a company's usage of direct labor in a recent period: How much is the direct labor rate variance?

The standard quantity of direct materials is calculated as

Fabian Fabrication machines heavy-duty brake rotors that are used on commercial airliners. Fabian's management developed the following standard costs: Actual activity for October: What is the variable manufacturing overhead rate variance for October?

A credit balance means that a variance is unfavorable since it decreases income (just like a revenue).

The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which variance would be directly impacted?

When deciding whether or not to adopt standard costs and perform variance analysis, management should do which of the following?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters

Exam 11: Standard Costs and Variances

Which of the following statements would be true if actual units produced exceed the budgeted units to be produced?

The variable overhead rate variance may be affected by both indirect labor and indirect materials.

How is the direct labor efficiency variance calculated?

Shamrock Manufacturing budgeted fixed overhead costs of $2.75 per unit at an anticipated production level of 1,350 units. In July Shamrock incurred actual fixed overhead costs of $4,400 and actually produced 1,300 units. What is Shamrock's fixed overhead budget variance for July?

A favorable direct materials quantity variance indicates which of the following?

Jackson Industries has collected the following data for one of its products: How much is the direct materials price variance?

Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows: What is the direct materials quantity variance for the month?

The variable overhead rate variance may be caused by variances in the following production inputs except

Michael Corporation manufactures railroad cars, which is its only product. The standards for railroad cars are as follows: During the month of March, the company produced 1,650 railroad cars. Related production data for the month follows: What is the direct labor efficiency variance for the month?

The following information describes a company's usage of direct labor in a recent period: How much is the direct labor rate variance?

The standard quantity of direct materials is calculated as

Fabian Fabrication machines heavy-duty brake rotors that are used on commercial airliners. Fabian's management developed the following standard costs: Actual activity for October: What is the variable manufacturing overhead rate variance for October?

A credit balance means that a variance is unfavorable since it decreases income (just like a revenue).

The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which variance would be directly impacted?

When deciding whether or not to adopt standard costs and perform variance analysis, management should do which of the following?

Introduction to Managerial Accounting

Building Blocks of Managerial Accounting

Job Costing

Activity-Based Costing, Lean Operations, and the Costs of Quality

Process Costing

Cost Behavior

Cost-Volume-Profit Analysis

Relevant Costs for Short-Term Decisions

The Master Budget

Performance Evaluation

Capital Investment Decisions and the Time Value of Money

Statement of Cash Flows

Financial Statement Analysis

Sustainability

Filters