Question 1

An unfavorable flexible budget variance in operating income might be due to a(n)________.

Accepted Answer

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

Question 2

The management of Lawnshark Lawnmowers has calculated the following variances: $$\begin{array} { | l | r | } 
\hline \text { Direct materials cost variance } & \$ 11,000 \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 37,000 \mathrm {~F} \
\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \
\hline \text { Direct labor efficiency variance } & 13,000 \mathrm { U } \
\hline \text { Variable overhead cost variance } & 2000 \mathrm {~F} \
\hline \text { Variable overhead efficiency variance } & 6000 \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 4500 \mathrm {~F}\\hline 
\end{array}$$ What is the total variable overhead variance of the company?

Accepted Answer

A) $4000 F 
B) $12,500 F 
C) $8000 F 
D) $4500 F 
A) $4000 F 
B) $12,500 F 
C) $8000 F 
D) $4500 F

Question 3

Top Half produces and sells two types of t-shirts-Fancy and Plain.The company provides the following data:
 $$\begin{array} { l l l } 
& \textbf { Budget } & \textbf { Actual } \
\text { Urit sales price } - \text { Fancy } & \$ 24 & \$ 25 \
\text { Unit sales price } - \text { Plain } & \$ 18 & \$ 17 \
\text { Unit sales } - \text { Fancy } & 1,370 & 1,250 \
\text { Unit sales } - \text { Plain } & 977 & \text { 875 }
\end{array}$$ Compute the flexible budget variance for Fancy t-shirts for sales revenue.

Accepted Answer

\[\begin{array} { | l | r | r | r | r |

Question 4

Which of the following is an example of a direct labor efficiency standard?

Accepted Answer

A) $20 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit 
A) $20 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit

Question 5

For each of the following cost standards,indicate which manager is responsible for the standard,and list one factor that should be used in setting the standard.
 $$\begin{array} { | l | l | l | } 
\hline \text { Cost standard } & \text { Responsible manager } & \text { Factor used in setting the standard } \
\hline \text { Direct materials } & & \
\hline \text { Direct labor } & & \
\hline
\end{array}$$

Accepted Answer

None

Question 6

What does a favorable direct materials cost variance indicate?

Accepted Answer

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

Question 7

Trull Company uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Trull had a favorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Accepted Answer

A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours. 
A) The actual number of direct labor hours was lower than the budgeted hours. 
B) The actual variable overhead costs were higher than the budgeted costs. 
C) The actual variable overhead costs were lower than the budgeted costs. 
D) The actual number of direct labor hours was higher than the budgeted hours.

Question 8

Which of the following should be considered when analyzing manufacturing overhead variances?

Accepted Answer

A) whether costs incurred are product costs or period costs 
B) whether direct materials costs are higher than standard costs 
C) whether certain manufacturing overhead costs are controllable 
D) whether direct labor costs can be reduced 
A) whether costs incurred are product costs or period costs 
B) whether direct materials costs are higher than standard costs 
C) whether certain manufacturing overhead costs are controllable 
D) whether direct labor costs can be reduced

Question 9

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

Accepted Answer

A) True 
 B)False

Question 10

$\underline{\text{Static budget:}}$
Sales volume: 2000 units; Sales price: $50.00 per unit
Variable costs: $13.00 per unit; Fixed costs: $25,500 per month
Operating income: $48,500

$\underline{\text{Actual results, at the end of the month, follows:}}$
$\underline{\text{Actual results:}}$
Sales volume: 1900 units; Sales price: $58.50 per unit
Variable costs: $16.00 per unit; Fixed costs: $34,300 per month
Operating income: $46,450
Calculate the flexible budget variance for variable costs.

Accepted Answer

A) $30,400 U 
B) $1650 U 
C) $5700 U 
D) $24,700 F 
A) $30,400 U 
B) $1650 U 
C) $5700 U 
D) $24,700 F

Question 11

Andrea,a production manager for Akim Manufacturing,is investigating variances that are greater than 10% of the budgeted amounts.Andrea is engaging in ________.

Accepted Answer

A) management by exception 
B) benchmarking 
C) ABC costing 
D) lean accounting 
A) management by exception 
B) benchmarking 
C) ABC costing 
D) lean accounting

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 0.5 direct labor hours per unit 
A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 0.5 direct labor hours per unit

Question 14

An efficiency variance measures how well the business uses its materials or human resources.

Accepted Answer

A) True 
 B)False

Question 15

Home Decor Company manufactures special metallic materials for luxury homes that require highly skilled labor.Home Decor 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: 3 pounds per unit; $3 per pound
Direct labor: 4 hours per unit; $16 per hour
Home Decor produced 4000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $372,000.What is the direct labor cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A) $28,000 Favorable 
B) $256,000 Favorable 
C) $256,000 Unfavorable 
D) $28,000 Unfavorable 
A) $28,000 Favorable 
B) $256,000 Favorable 
C) $256,000 Unfavorable 
D) $28,000 Unfavorable

Question 16

Which of the following best describes a standard?

Accepted Answer

A) a sales price,cost,or quantity that is expected under normal conditions 
B) costs incurred to produce a product 
C) cost variance 
D) actual sales price,cost,or quantity 
A) a sales price,cost,or quantity that is expected under normal conditions 
B) costs incurred to produce a product 
C) cost variance 
D) actual sales price,cost,or quantity

Question 17

Beacon Novelties manufactures frisbees that it sells to other companies for customizing with their own logos.Beacon prepares flexible budgets and uses a standard cost system to control manufacturing costs.The standard unit cost of a frisbee is based on static budget volume of 60,000 frisbees per month:
 $$\begin{array} { | l | r | r | } 
\hline \text { Direct Materials (.2 @ \$.30 per lb.) } & & .06 \
\hline \text { Direct Labor (4 mins. @ \$.15 per min.) } & & .60 \
\hline \text { Manufacturing Overhead: } & & \
\hline \text { Variable } ( 4 \text { mins. } @ .07 \text { per min.) } & .28 & \
\hline \text { Fixed (4 mins. } \$ .16 \text { per min.) } & .64 &\underline{.92} \
\hline \text { Total cost per unit } & & \underline{\underline{\$ 1.58 }}\
\hline
\end{array}$$ Actual cost and production information for June 2019 follows:
a.There were no beginning or ending inventory balances.All expenditures were on account.
b.Actual production and sales were 62,000 frisbees.
c.Actual direct materials usage was 10,000 lbs.at an actual cost of $0.24 per lb.
d.Actual direct labor usage was 208,000 minutes at a total cost of $37,440.
e.Actual overhead cost was $8,000 variable and $30,000 fixed.
f.Selling and administrative costs were $130,000.
Requirements
1.Compute the cost and efficiency variances for direct materials and direct labor.
2.Journalize the purchase and usage of direct materials and the assignment of direct labor,including the related variances.

Accepted Answer

Requirement 1:
\[\begin{array} { | l | l

Question 18

The Dear Dairy Cheese Company completed the flexible budget analysis for the second quarter,which is given below. \(\begin{array}{|l|c|c|c|c|c|c|c|}
\hline & \begin{array}{l}
\text { Actual } \
\text { Results }
\end{array} & \begin{array}{c}
\text { Flexible } \
\text { Budget } \
\text { Variance }
\end{array} && \begin{array}{l}
\text { Flexible } \
\text { Budget }
\end{array} & \begin{array}{c}
\text { Sales } \
\text { Volume } \
\text { Variance }
\end{array} && \begin{array}{c}
\text { Static } \
\text { Budget }
\end{array} \
\hline \text { Units } & \underline{12,800}_{} & \underline{0} && \underline{12,800} & \underline{1000} &\underline{\mathrm{F}} & \underline{11,800} \
\hline \text { Sales Revenue } & \$ 62,750 & \$ 2422 &\mathrm{U} & \$ 65,172 & \$ 5092 &\mathrm{~F} & \$ 60,080 \
\hline \text { Variable Costs } & \underline{27,550}_{} & \underline{182}&\underline{\mathrm{U}}  & \underline{27,368} & \underline{\$ 2138} &\underline{\mathrm{U}} & \underline{25,230} \
\hline \text { Contribution Margin } & \$ 35,200 & \$ 2604& \mathrm{U} & \$ 37,804 & \$ 2954& \mathrm{F} & \$ 34,850 \
\hline \text { Fixed Costs } & \underline{34,200}_{} & \underline{200 }&\underline{\mathrm{U}} & \underline{34,000} & \underline{\$ 0} && \underline{34,000} \
\hline \begin{array}{l}
\text {Operating } \
\text { Income/(Loss) }
\end{array} & \underline{\$ 1000} & \underline{\$2804}&\underline{\mathrm{U}} & \underline{\$ 3804} & \underline{\$ 2954} &\underline{\mathrm{F}} & \underline{\$850}\
\hline
\end{array}\) Which of the following statements would be a correct factor to explain the flexible budget variance for fixed 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 19

When a manufacturing company uses a standard cost system,the direct materials cost variance is recorded at the time direct materials are issued in production.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about management by exception is incorrect?

Accepted Answer

A) Managers concentrate on results that are outside the accepted parameters. 
B) There is no need to investigate variances that are less than 20% of the budgeted amount. 
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D) Many companies use a combination of percentages and dollar amounts. 
A) Managers concentrate on results that are outside the accepted parameters. 
B) There is no need to investigate variances that are less than 20% of the budgeted amount. 
C) Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D) Many companies use a combination of percentages and dollar amounts.

An unfavorable flexible budget variance in operating income might be due to a(n)________.

Which of the following is an example of a direct labor efficiency standard?

For each of the following cost standards,indicate which manager is responsible for the standard,and list one factor that should be used in setting the standard. Cost standard Responsible manager Factor used in setting the standard Direct materials Direct labor

What does a favorable direct materials cost variance indicate?

Trull Company uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Trull had a favorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Which of the following should be considered when analyzing manufacturing overhead variances?

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

Andrea,a production manager for Akim Manufacturing,is investigating variances that are greater than 10% of the budgeted amounts.Andrea is engaging in ________.

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

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

An efficiency variance measures how well the business uses its materials or human resources.

Which of the following best describes a standard?

When a manufacturing company uses a standard cost system,the direct materials cost variance is recorded at the time direct materials are issued in production.

Which of the following statements about management by exception is incorrect?

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

An unfavorable flexible budget variance in operating income might be due to a(n)________.

Which of the following is an example of a direct labor efficiency standard?

For each of the following cost standards,indicate which manager is responsible for the standard,and list one factor that should be used in setting the standard. Cost standard Responsible manager Factor used in setting the standard Direct materials Direct labor

What does a favorable direct materials cost variance indicate?

Trull Company uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Trull had a favorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Which of the following should be considered when analyzing manufacturing overhead variances?

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

Andrea,a production manager for Akim Manufacturing,is investigating variances that are greater than 10% of the budgeted amounts.Andrea is engaging in ________.

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

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

An efficiency variance measures how well the business uses its materials or human resources.

Which of the following best describes a standard?

When a manufacturing company uses a standard cost system,the direct materials cost variance is recorded at the time direct materials are issued in production.

Which of the following statements about management by exception is incorrect?

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