A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: $\begin{array}{|l|r|} \hline \text { Denominator Level of Activity } & 3,300 \mathrm{MHs} \\ \hline \text { Overhead Costs at the Denominator Activity Level: } & \\ \hline \text { Variable Overhead Cost } & \$ 31,845 \\ \hline \text { Fixed Overhead Cost } & \$ 40,425 \\ \hline \end{array}$ The following data pertain to operations for the most recent period: $\begin{array}{|l|r|} \hline \text { Actual Hours } & 3,400 \mathrm{MHs} \\ \hline \text { Standard Hours Allowed for the Actual Output } & 3,078 \mathrm{MHs} \\ \hline \text { Actual Total Variable Overhead Cost } & \$ 32,980 \\ \hline \text { Actual Total Fixed Overhead Cost } & \$ 38,975 \\ \hline \end{array}$ -What was the total predetermined overhead rate,rounded to the nearest cent?

A) $21.16. B) $21.26. C) $21.80. D) $21.90. A) $21.16. B) $21.26. C) $21.80. D) $21.90.

The Ferris Company applies manufacturing overhead costs to products on the basis of direct labour hours. The standard cost card shows that 3 direct labour hours are required per unit of product. For August, the company budgeted to work 90,000 direct labour hours and to incur the following total manufacturing overhead costs: $\begin{array}{l|r|} \hline \text { Total Variable Overhead Costs } & \$ 99,000 \\ \hline \text { Total Fixed Overhead Costs } & \$ 118,000 \\ \hline \end{array}$ During August, the company completed 28,000 units of product, worked 86,000 direct labour hours, and incurred the following total manufacturing overhead costs: $\begin{array}{|l|r|} \hline \text { Total Variable Overhead Costs } & \$ 98,900 \\ \hline \text { Total Fixed Overhead Costs } & \$ 115,300 \\ \hline \end{array}$ The denominator activity used for the predetermined overhead rate was 90,000 direct labour hours. -For August,what was the fixed overhead volume variance?

A) $4,300 unfavourable. B) $4,980 favourable. C) $4,980 unfavourable. D) $7,920 unfavourable. A) $4,300 unfavourable. B) $4,980 favourable. C) $4,980 unfavourable. D) $7,920 unfavourable.

$\begin{array}{l} \text { The following materials standards have been established for a particular product: }\\ \begin{array} { | l | r | } \hline \text { Standard quantity per unit of output } & 1.9 \text { grams } \\ \hline \text { Standard price } & \$ 18.00 \text { per gram } \\ \hline \end{array} \end{array}$ $\begin{array}{l} \text { The following data pertain to operations concerning the product for the last month: }\\ \begin{array} { | l | r | } \hline \text { Actual materials purchased } & 5,800 \text { grams } \\ \hline \text { Actual cost of materials purchased } & \$ 108,460 \\ \hline \text { Actual materials used in production } & 5,200 \text { grams } \\ \hline \text { Actual output } & 2,700 \text { units } \\ \hline \end{array} \end{array}$ -What was the materials price variance for the month?

A) $3,640 favourable. B) $3,640 unfavourable. C) $4,060 favourable. D) $4,060 unfavourable. A) $3,640 favourable. B) $3,640 unfavourable. C) $4,060 favourable. D) $4,060 unfavourable.

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March: $\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budgeted } \\ \hline \text { Units Produced } & 33,900 & 30,800 \\ \hline \text { Direct Labour Hours } & 161,800 & 154,000 \\ \hline \text { Variable Overhead Costs } & \$ 140,500 & \$ 123,200 \\ \hline \text { Fixed Overhead Costs } & \$ 80,000 & \$ 77,000 \\ \hline \end{array}$ -What was the fixed overhead volume variance for March?

A) $1,550 favourable. B) $3,900 unfavourable. C) $7,750 favourable. D) $7,750 unfavourable. A) $1,550 favourable. B) $3,900 unfavourable. C) $7,750 favourable. D) $7,750 unfavourable.

Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year:$\begin{array} { | l | r | r | r | } \hline & \text { Model X } & \text { Model Y } & \text { Total } \\ \hline \text { Sales in Units: } & & & \\ \hline \text { Budget } & 1,000 & 1,000 & 2,000 \\ \hline \text { Actual } & 1,008 & 1,092 & 2,100 \\ \hline \text { Contribution Margins per Unit: } & & & \\ \hline \text { Budget } & \$ 30 & \$ 40 & \\ \hline \text { Actual } & \$ 25 & \$ 38 & \\ \hline \text { Market Volume in Units: } & & & \\ \hline \text { Budget } & & & 40,000 \\ \hline \text { Actual } & & & 52,500 \\ \hline \end{array}$ - What were the sales mix variances for Model X and Model Y,respectively,for last year?

A) $1,050 unfavourable and $1,596 unfavourable. B) $1,260 favourable and $1,680 unfavourable. C) $1,260 unfavourable and $1,680 favourable. D) $1,500 favourable and $2,000 favourable. A) $1,050 unfavourable and $1,596 unfavourable. B) $1,260 favourable and $1,680 unfavourable. C) $1,260 unfavourable and $1,680 favourable. D) $1,500 favourable and $2,000 favourable.

The following materials standards have been established for a particular product: $\begin{array}{|l|r|} \hline \text { Standard quantity per unit of output } & 4.4 \text { kilograms } \\ \hline \text { Standard price } & \$ 13.20 \text { per kilogram } \\ \hline \end{array}$ The following data pertain to operations concerning the product for the last month: $\begin{array}{|l|r|} \hline \text { Actual materials purchased } & 4,800 \text { kilograms } \\ \hline \text { Actual cost of materials purchased } & \$ 62,880 \\ \hline \text { Actual materials used in production } & 4,300 \text { kilograms } \\ \hline \text { Actual output } & 70 \text { units } \\ \hline \end{array}$ -What was the materials quantity variance for the month?

A) $6,550 unfavourable. B) $6,600 unfavourable. C) $15,982 unfavourable. D) $16,104 unfavourable. A) $6,550 unfavourable. B) $6,600 unfavourable. C) $15,982 unfavourable. D) $16,104 unfavourable.

$\text { The Litton Company has established standards as follows: }$ $\begin{array}{|l|r|} \hline \text { Direct Material } & 3 \mathrm{kgs} @ @ 4 / \mathrm{kg} .=\$ 12 \text { per unit } \\ \hline \text { Direct Labour } & 2 \mathrm{hrs} @ \$ 8 / \mathrm{hr} .=\$ 16 \text { per unit } \\ \hline \text { Variable Manufacturing Overhead } & 2 \text { hrs. @ } \$ 5 / \mathrm{hr} .=\$ 10 \text { per unit } \\ \hline \end{array}$ Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $\begin{array}{|l|r|} \hline \text { Units Produced } & 600 \\ \hline \text { Direct Material Used } & 2,000 \mathrm{kgs} . \\ \hline \text { Direct Material Purcahsed (3,000 kgs.) } & \$ 11,400 \\ \hline \text { Direct Labour Cost }(1,100 \text { hrs. }) & \$ 9,240 \\ \hline \text { Variable Manufacturing Overhead Cost Incurred } & \$ 5,720 \\ \hline \end{array}$ The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the labour rate variance?

A) $480 favourable. B) $480 unfavourable. C) $440 favourable. D) $440 unfavourable. A) $480 favourable. B) $480 unfavourable. C) $440 favourable. D) $440 unfavourable.

Exam 10: Standard Costs and Overhead Analysis

The Lahn Company produces and sells a single product.Standards have been established for the product as follows: Direct Materials 5@\ 3.50/1.=\ 17.50/ unit Direct Labour 3@\ 5.50/=\ 16.50/ unit Actual cost and usage figures for the past month follow: Units Produced 750 Direct Materials Used 4,000 kilograms Direct Materials Purchased \ 14,400(4,500) Direct Labour Cost \ 11,200(2,000) Required: Prepare journal entries to record: a)The purchase of raw materials. b)The usage of raw materials in production. c)The incurrence of direct labour cost.

(Essay)

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Question 21

King Company estimated that it would operate its manufacturing facilities at 800,000 direct labour hours for the year, which served as the denominator activity in the predetermined overhead rate. The total budgeted manufacturing overhead for the year was $2,000,000, of which $1,600,000 was variable and $400,000 was fixed. The standard variable overhead rate was $2 per direct labour hour. The standard direct labour time was 3 direct labour hours per unit. The actual results for the year are presented below: Actual Finished Units 250,000 Actual Direct Labour Hours 764,000 Actual Variable Overhead \ 1,610,000 Actual Fixed Overhead \ 392,000 -What was the fixed overhead budget variance for the year?

(Multiple Choice)

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Question 22

A favourable materials price variance coupled with an unfavourable materials quantity variance would MOST likely result from which of the following?

(Multiple Choice)

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Question 23

A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 3,300 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 31,845 Fixed Overhead Cost \ 40,425 The following data pertain to operations for the most recent period: Actual Hours 3,400 Standard Hours Allowed for the Actual Output 3,078 Actual Total Variable Overhead Cost \ 32,980 Actual Total Fixed Overhead Cost \ 38,975 -What was the total predetermined overhead rate,rounded to the nearest cent?

(Multiple Choice)

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Question 24

The Murray Company makes and sells a single product. The company recorded the following activity and cost data for May: Number of Units Completed 45,000 units Standard Direct Labour Hours Allowed per Unit of Product 1.5 DLHS Budgeted Direct Labour Hours (denominator activity) 72,000 DLHS Actual Fixed Overhead Costs Incurred \ 66,000 Volume Variance \ 4,4275 unfavourable The fixed portion of the predetermined overhead rate is \ 0.95 per direct labour hour. -What was the fixed overhead budget variance for May?

(Multiple Choice)

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Question 25

The Adlake Company makes and sells a single product and uses a standard cost system.During October,the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine hours.At standard,each unit of finished product requires 5 machine hours.The following cost and activity were recorded during October: Total Actual Manufacturing Overhead Cost Incurred \ 294,000 Units of Product Completed 3,800 Actual Machine Hours Worked 19,423 What was the amount of overhead cost that the company applied to work in process for October?

(Multiple Choice)

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Question 26

Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

(True/False)

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Question 27

A reason for keeping a constant denominator activity level is to maintain stability in the amount of overhead cost that is applied to each unit of product manufactured over the period.

(True/False)

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Question 28

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

(Multiple Choice)

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Question 29

The Ferris Company applies manufacturing overhead costs to products on the basis of direct labour hours. The standard cost card shows that 3 direct labour hours are required per unit of product. For August, the company budgeted to work 90,000 direct labour hours and to incur the following total manufacturing overhead costs: Total Variable Overhead Costs \ 99,000 Total Fixed Overhead Costs \ 118,000 During August, the company completed 28,000 units of product, worked 86,000 direct labour hours, and incurred the following total manufacturing overhead costs: Total Variable Overhead Costs \ 98,900 Total Fixed Overhead Costs \ 115,300 The denominator activity used for the predetermined overhead rate was 90,000 direct labour hours. -For August,what was the fixed overhead volume variance?

(Multiple Choice)

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Question 30

The following materials standards have been established for a particular product: Standard quantity per unit of output 1.9 grams Standard price \ 18.00 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 grams Actual cost of materials purchased \ 108,460 Actual materials used in production 5,200 grams Actual output 2,700 units -What was the materials price variance for the month?

(Multiple Choice)

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Question 31

The Tate Company uses a standard costing system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs). The company recorded the following costs and activity for September: Cost: Actual Fixed Overhead Costs Incurred \ 61,400 Volume Variance \ 2,850 unfavourable Fixed Portion of the Predetermined Overhead Rate \ 0.95 per DLH Activity: Number of Units Completed 22,800 Standard Direct Labour Hours Allowed per Unit of Product 2.5 DLHs Denominator Activity 60,000 DLHs -What was the amount of fixed overhead cost contained in the company's flexible budget for manufacturing overhead for September?

(Multiple Choice)

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Question 32

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March: Actual Budgeted Units Produced 33,900 30,800 Direct Labour Hours 161,800 154,000 Variable Overhead Costs \ 140,500 \ 123,200 Fixed Overhead Costs \ 80,000 \ 77,000 -What was the fixed overhead volume variance for March?

(Multiple Choice)

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Question 33

The following labour standards have been established for a particular product: Standard labour hours per unit of output 8.3 hours Standard labour rate \ 12.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 6,100 hours Actual total labour cost \ 71,370 Actual output 900 units What was the labour efficiency variance for the month?

(Multiple Choice)

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Question 34

Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year: Model X Model Y Total Sales in Units: Budget 1,000 1,000 2,000 Actual 1,008 1,092 2,100 Contribution Margins per Unit: Budget \ 30 \ 40 Actual \ 25 \ 38 Market Volume in Units: Budget 40,000 Actual 52,500 - What were the sales mix variances for Model X and Model Y,respectively,for last year?

(Multiple Choice)

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Question 35

The following materials standards have been established for a particular product: Standard quantity per unit of output 4.4 kilograms Standard price \ 13.20 per kilogram The following data pertain to operations concerning the product for the last month: Actual materials purchased 4,800 kilograms Actual cost of materials purchased \ 62,880 Actual materials used in production 4,300 kilograms Actual output 70 units -What was the materials quantity variance for the month?

(Multiple Choice)

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Question 36

Capacity analysis is most affected by the presence of variable costs,NOT fixed costs.

(True/False)

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Question 37

$\text { The Litton Company has established standards as follows: }$ Direct Material 3@@4/.=\ 12 per unit Direct Labour 2@\ 8/.=\ 16 per unit Variable Manufacturing Overhead 2 hrs. @ \ 5/.=\ 10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units Produced 600 Direct Material Used 2,000. Direct Material Purcahsed (3,000 kgs.) \ 11,400 Direct Labour Cost (1,100 hrs. ) \ 9,240 Variable Manufacturing Overhead Cost Incurred \ 5,720 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the labour rate variance?

(Multiple Choice)

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Question 38

A decrease in denominator level of activity will lead to which of the following?

(Multiple Choice)

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Question 39

What does a credit balance in a direct labour efficiency variance account indicate?

(Multiple Choice)

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Question 40

A favourable materials price variance coupled with an unfavourable materials quantity variance would MOST likely result from which of the following?

Because managers want stable unit cost figures,the accountant creates an artificial stability so far as fixed costs are concerned by applying fixed costs to products as if the fixed costs were really variable.

A reason for keeping a constant denominator activity level is to maintain stability in the amount of overhead cost that is applied to each unit of product manufactured over the period.

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

Capacity analysis is most affected by the presence of variable costs,NOT fixed costs.

A decrease in denominator level of activity will lead to which of the following?

What does a credit balance in a direct labour efficiency variance account indicate?

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Budgeting

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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