Question 1

-According to the above table.Based on the following,what is the total direct labor variance?

Accepted Answer

A) $50 F 
B) $450 U 
C) $500 F 
D) $50 U 
A) $50 F 
B) $450 U 
C) $500 F 
D) $50 U

Question 2

Which of the following is an example of a direct materials cost standard?

Accepted Answer

A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit 
A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit

Question 3

Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Aquatic uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 5 pounds per unit; $6 per pound
Direct labor: 4 hours per unit; $16 per hour
During the first quarter,Aquatic produced 3000 units of this product.Actual direct materials and direct labor costs were $65,000 and $326,000,respectively.
For the purpose of preparing the flexible budget,calculate the total standard direct materials cost at a production volume of 3000 units.

Accepted Answer

A) $90,000 
B) $65,000 
C) $15,000 
D) $18,000 
A) $90,000 
B) $65,000 
C) $15,000 
D) $18,000

Question 4

A favorable sales volume variance in variable costs suggests a(n)________.

Accepted Answer

A) increase in number of actual units sold when compared to the expected number of units sold 
B) decrease in number of actual units sold when compared to the expected number of units sold 
C) increase in variable cost per unit 
D) decrease in fixed costs 
A) increase in number of actual units sold when compared to the expected number of units sold 
B) decrease in number of actual units sold when compared to the expected number of units sold 
C) increase in variable cost per unit 
D) decrease in fixed costs

Question 5

The purchasing manager was able to bring down the cost of direct materials by purchasing direct materials of a slightly lower grade quality than the company had used previously.The lower grade of direct materials,however,meant a higher defect rate on the assembly line and a higher waste of direct materials during production,which in turn lowered operating income.This situation would lead to a(n)________.

Accepted Answer

A) favorable direct materials cost variance 
B) unfavorable direct labor cost variance 
C) favorable direct labor efficiency variance 
D) favorable direct materials efficiency variance 
A) favorable direct materials cost variance 
B) unfavorable direct labor cost variance 
C) favorable direct labor efficiency variance 
D) favorable direct materials efficiency variance

Question 6

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

Accepted Answer

A) total manufacturing overhead variance 
B) total direct labor variance 
C) fixed overhead cost variance 
D) variable overhead efficiency variance 
A) total manufacturing overhead variance 
B) total direct labor variance 
C) fixed overhead cost variance 
D) variable overhead efficiency variance

Question 7

The difference between a standard and a budget is that ________.

Accepted Answer

A) a budget generally indicates a total amount while a standard indicates a per unit amount 
B) a standard acts as an overall guide for operating the business on a planned course of action 
C) a budget generally indicates a per unit amount while a standard indicates a total amount 
D) a standard projects future costs while a budget examines past costs 
A) a budget generally indicates a total amount while a standard indicates a per unit amount 
B) a standard acts as an overall guide for operating the business on a planned course of action 
C) a budget generally indicates a per unit amount while a standard indicates a total amount 
D) a standard projects future costs while a budget examines past costs

Question 8

The Comfort Foam Products Company completed the flexible budget analysis for the second quarter,which is given below. \(\begin{array}{|l|c|c|c|c|c|c|c|}
\hline && \text { Flexible } & & &\text { Sales } & \
&\text { Actual } &\text { Budget } & &\text { Flexible } & \text { Volume } & &\text { Static } \
&\text { Results } & \text { Variance } & &\text { Budget } & \text { Variance } & &\text { Budget } \
\hline \text { Units } & \underline{12,830} & \underline{0} && \underline{12,830} & \underline{930} &\underline{\mathrm{F}} & \underline{11,900}_{} \
\hline \text { Sales Revenue } & \$ 62,760 & \$ 1983 &\mathrm{U} & \$ 64,743 & \$ 4693 &\mathrm{F} & \$ 60,050 \
\hline \text { Variable Costs } & \underline{27,610} & \underline{397} &\underline{\mathrm{U} } & \underline{27,213} & \underline{\$ 1973} &\underline{\mathrm{U}} & \underline{25,240}_{} \
\hline \text { Contribution Margin } & \$ 35,150 & \$ 2380 &\mathrm{U} & \$ 37,530 & \$ 2720& \mathrm{~F} & \$ 34,810 \
\hline \text { Fixed Costs } & \underline{34,270} & \underline{190} &\underline{\mathrm{U}} & \underline{34,080} & \underline{\$ 0}& & \underline{ 34,080 }_{} \
\hline \begin{array}{l}
\text { Operating } \
\text { income/(Loss) }
\end{array} & \underline{\$ 880} & \underline{\$ 2570} &\underline{\mathrm{U}} & \underline{\$ 3450} & \underline{\$2720} &\underline{\mathrm{F}} & \underline{\$730}\
\hline
\end{array}\) Which of the following would be a correct factor to explain the sales volume variance for variable costs?

Accepted Answer

A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs 
A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs

Question 9

-According to the above table.Based on the following,what is the total product cost flexible budget variance?

Accepted Answer

A) $925 F 
B) $450 U 
C) $725 F 
D) $725 U 
A) $925 F 
B) $450 U 
C) $725 F 
D) $725 U

Question 10

The static budget,at the beginning of the month,for Beacon Banner Company follows: 
$\underline{\text{Static budget:}}$
Sales volume: 1100 units; Sales price: $70.00 per unit
Variable costs: $33.00 per unit; Fixed costs: $37,800 per month
Operating income: $2900
$\underline{\text{Actual results,at the end of the month,follows:}}$
$\underline{\text{Actual results:}}$
Sales volume: 995 units; Sales price: $75.00 per unit
Variable costs: $35.00 per unit; Fixed costs: $35,000 per month
Operating income: $4800
Calculate the sales volume variance for revenue.

Accepted Answer

A) $2800 U 
B) $7350 U 
C) $3885 U 
D) $4975 F 
A) $2800 U 
B) $7350 U 
C) $3885 U 
D) $4975 F

Question 11

Sharp Company manufactures jeans.In June,Sharp made 1200 pairs of jeans,but had budgeted production at 1400 pairs of jeans.The allocation base for overhead costs is direct labor hours.The following additional data is available for the month:
 $\begin{array}{|l|r|}
\hline\text { Variable overhead cost standard } & \$ 0.60 \text { per DLHr } \
\hline \text { Direct labor efficiency standard } & 2,00 \text { DLHr per jean } \
\hline \text { Actual amount of direct labor hours } & 2,520 \text { DLHr } \\hline \text { Actual cost of variable overhead } & \$ 1,512 \
\hline \text { Fixed overhead cost standard } & \$ 0.25 \text { per DLH1 } \
\hline \text { Budgeted fixed overhead } & \$ 700 \
\hline \text { Actual cost of fixed overhead } & \$ 750\
\hline
\end{array}$ Calculate the following variances:
a.Variable overhead cost variance
b.Variable overhead efficiency variance
c.Total variable overhead variance
d.Fixed overhead cost variance
e.Fixed overhead volume variance
f.Total fixed overhead variance

Accepted Answer

a.	Actual variable cost per direct labor

Question 12

Bear Creek Golf Center reported actual operating income for the current year as $65,000.The flexible budget operating income for actual volume is $59,000,while the static budget operating income is $60,000.What is the flexible budget variance for operating income?

Accepted Answer

A) $6000 favorable 
B) $6000 unfavorable 
C) $1000 unfavorable 
D) $1000 favorable 
A) $6000 favorable 
B) $6000 unfavorable 
C) $1000 unfavorable 
D) $1000 favorable

Question 13

The management of Earth Barber Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 37,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 18,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 12,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 3000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 5000 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4000 \mathrm {~F} \
\hline \text { Fixed overhead volume variance } & 2,500 \mathrm {~F} \
\hline
\end{array}$$ When determining the total product cost flexible budget variance,what is the total fixed overhead variance of the company?

Accepted Answer

A) $5000 F 
B) $4000 F 
C) $9000 F 
D) $7000 F 
A) $5000 F 
B) $4000 F 
C) $9000 F 
D) $7000 F

Question 14

The management of Pamela's Pet Supplies has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 40,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 16,500 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 12,500 \mathrm { U } \
\hline \text { Total variable overhead variance } & 8000 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 3500 \mathrm {~F} \
\hline
\end{array}$$ When determining the total product cost flexible budget variance,what is the fixed overhead variance of the company?

Accepted Answer

A) $3500 F 
B) $12,500 U 
C) $8000 U 
D) $11,500 F 
A) $3500 F 
B) $12,500 U 
C) $8000 U 
D) $11,500 F

Question 15

A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost.

Accepted Answer

A) True 
 B)False

Question 16

A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.

Accepted Answer

A) True 
 B)False

Question 17

The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.

Accepted Answer

A) True 
 B)False

Question 18

Favorable variances are contra expenses and therefore decrease Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 19

Marciano Manufacturing uses a standard cost system.Standards for direct materials are as follows: $\begin{array}{|l|r|}
\hline\text { Direct materials (pounds per unit of output) } & 3 \
\hline \text { Cost per pound of direct materials } & \$ 3\\hline
\end{array}$ The company plans to produce 3500 units and has purchased on account 15,000 pounds of direct materials at a net cost of $43,200.What is the journal entry to record this transaction?

Accepted Answer

A)  $$\begin{array}{l}\begin{array} { | l | r | r | } 
\hline\text { Raw Materials Inventory }&45,000\
\hline \text { Direct Materials Cost Variance } & & 1800 \
\hline \text { Accounts Payable } & & 43,200 \
\hline
\end{array}
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 41,400 & \
\hline \text { Direct Materials Cost Variance } & 1800 & \
\hline \text { Accounts Payable } & & 43,200 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 43,200 & \
\hline \text { Direct Materials Cost Variance } & 1800 & \
\hline \text { Accounts Payable } & & 45,000 \
\hline
\end{array}$$ 
D)  $$\begin{array}{l}\begin{array} { | l | r | r | } 
\hline\text { Raw Materials Inventory }&43,200\
\hline \text { Direct Materials Cost Variance } & & 1800 \
\hline \text { Accounts Payable } & & 41,400 \
\hline
\end{array}
\end{array}$$ 
A)  $$\begin{array}{l}\begin{array} { | l | r | r | } 
\hline\text { Raw Materials Inventory }&45,000\
\hline \text { Direct Materials Cost Variance } & & 1800 \
\hline \text { Accounts Payable } & & 43,200 \
\hline
\end{array}
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 41,400 & \
\hline \text { Direct Materials Cost Variance } & 1800 & \
\hline \text { Accounts Payable } & & 43,200 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Raw Materials Inventory } & 43,200 & \
\hline \text { Direct Materials Cost Variance } & 1800 & \
\hline \text { Accounts Payable } & & 45,000 \
\hline
\end{array}$$ 
D)  $$\begin{array}{l}\begin{array} { | l | r | r | } 
\hline\text { Raw Materials Inventory }&43,200\
\hline \text { Direct Materials Cost Variance } & & 1800 \
\hline \text { Accounts Payable } & & 41,400 \
\hline
\end{array}
\end{array}$$

Question 20

The variable overhead efficiency variance measures how well the business ________.

Accepted Answer

A) keeps costs of variable overhead inputs within standard. 
B) uses its variable overhead inputs. 
C) keeps fixed overhead within standard. 
D) explains why fixed overhead is under allocated or overallocated 
A) keeps costs of variable overhead inputs within standard. 
B) uses its variable overhead inputs. 
C) keeps fixed overhead within standard. 
D) explains why fixed overhead is under allocated or overallocated

-According to the above table.Based on the following,what is the total direct labor variance?

Which of the following is an example of a direct materials cost standard?

A favorable sales volume variance in variable costs suggests a(n)________.

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

The difference between a standard and a budget is that ________.

-According to the above table.Based on the following,what is the total product cost flexible budget variance?

Bear Creek Golf Center reported actual operating income for the current year as $65,000.The flexible budget operating income for actual volume is $59,000,while the static budget operating income is $60,000.What is the flexible budget variance for operating income?

A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost.

A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.

The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.

Favorable variances are contra expenses and therefore decrease Cost of Goods Sold.

The variable overhead efficiency variance measures how well the business ________.

Accounting Information Systems

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 23: Flexible Budgets and Standard Cost Systems

-According to the above table.Based on the following,what is the total direct labor variance?

Which of the following is an example of a direct materials cost standard?

A favorable sales volume variance in variable costs suggests a(n)________.

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

The difference between a standard and a budget is that ________.

-According to the above table.Based on the following,what is the total product cost flexible budget variance?

Bear Creek Golf Center reported actual operating income for the current year as $65,000.The flexible budget operating income for actual volume is $59,000,while the static budget operating income is $60,000.What is the flexible budget variance for operating income?

A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost.

A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.

The sales volume variance is the difference between the expected results in the flexible budget for the actual units sold and the static budget.

Favorable variances are contra expenses and therefore decrease Cost of Goods Sold.

The variable overhead efficiency variance measures how well the business ________.

Accounting Information Systems

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Filters