Question 1

A static budget is one that

Accepted Answer

A) is based on the actual sales volume achieved during the period. 
B) Is developed for a single level of expected output. 
C) Is one component of the operating budget. 
D) None of these ans choices are correct. 
A) is based on the actual sales volume achieved during the period. 
B) Is developed for a single level of expected output. 
C) Is one component of the operating budget. 
D) None of these ans choices are correct.

Question 2

The direct labor efficiency variance is caused by

Accepted Answer

A) Lack of efficiency in preparing the budget. 
B) Using more of less direct labor than the standard allows. 
C) Setting a higher or lower wage standard than is practical. 
D) None of these ans choices are correct. 
A) Lack of efficiency in preparing the budget. 
B) Using more of less direct labor than the standard allows. 
C) Setting a higher or lower wage standard than is practical. 
D) None of these ans choices are correct.

Question 3

Which of the following employees is typically held accountable for the direct material quantity variance?

Accepted Answer

A) Controller 
B) Purchasing Manager 
C) Production Manager 
D) Engineering Department Manager 
A) Controller 
B) Purchasing Manager 
C) Production Manager 
D) Engineering Department Manager

Question 4

Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August,the company purchased 4,000 yards of artificial pine bough,and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough,and purchased 4 boxes of 5,000 sprigs of holly berries for $7,000 per box.The standard price for artificial pine bough is $2.60 per yard,and the standard price per sprig of holly berry is $1.45.During August,Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials quantity variance for artificial pine boughs for August?

Accepted Answer

A)  $200 favorable 
B)  $200 unfavorable 
C)  $325 favorable 
D)  $325 unfavorable 
A)  $200 favorable 
B)  $200 unfavorable 
C)  $325 favorable 
D)  $325 unfavorable

Question 5

An unfavorable spending variance may be caused by using variable overhead items inefficiently.

Accepted Answer

A) True 
 B)False

Question 6

A favorable variance is a variance that increases the flexible budget amount relative to the static budgeted amount.

Accepted Answer

A) True 
 B)False

Question 7

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable usage variance that is not related to the efficient use of the variable overhead activity driver?

Accepted Answer

Overhead items will cost more or less th

Question 8

The difference between actual results and budgeted,or expected,results is referred to as a

Accepted Answer

A) A variance. 
B) A production flaw. 
C) An unfavorable outcome. 
D) None of these ans choices are correct. 
A) A variance. 
B) A production flaw. 
C) An unfavorable outcome. 
D) None of these ans choices are correct.

Question 9

Since a flexible budget is based on actual sales volume,it cannot be prepared until after the end of the period.

Accepted Answer

A) True 
 B)False

Question 10

The variable overhead efficiency variance is calculated as

Accepted Answer

A) Actual cost - actual quantity x standard price. 
B) Actual cost - standard quantity x standard price. 
C) Standard price - actual quantity x standard quantity. 
D) Actual results minus flexible budget amount. 
A) Actual cost - actual quantity x standard price. 
B) Actual cost - standard quantity x standard price. 
C) Standard price - actual quantity x standard quantity. 
D) Actual results minus flexible budget amount.

Question 11

Academy Awards makes plaques and trophies.Last year the company's workers clocked 600 more direct labor hours than the flexible budget amount of 10,000 hours to complete 30,000 plaques and trophies.All workers were paid $8 per hour,which was $0.50 more than the standard wage rate.
Required:

Calculate Academy Awards’ direct labor efficiency variance for the period.

Accepted Answer

$7.50 x 10,600 - $7.

Question 12

The variable overhead variance is separated into which of the following components?

Accepted Answer

A) Volume variance and efficiency variance 
B) Quantity variance and efficiency variance 
C) Spending variance and efficiency variance 
D) Spending variance and volume variance 
A) Volume variance and efficiency variance 
B) Quantity variance and efficiency variance 
C) Spending variance and efficiency variance 
D) Spending variance and volume variance

Question 13

Backyard Creations purchased 7,000 feet of copper tubing at a price of $2.70 per foot and used 7,200 feet during the period. The standard quantity allowed for the units produced is 7,300 and the standard price of the copper tubing is $2.50 per foot. What is Backyard Creations’ direct materials quantity variance for the period?

Accepted Answer

A) $250 favorable 
B)  $500 favorable 
C)  $750 favorable 
D)  None of these ans choices are correct. 
A) $250 favorable 
B)  $500 favorable 
C)  $750 favorable 
D)  None of these ans choices are correct.

Question 14

Casper Concrete manufactures custom concrete countertops for restaurants and individual homeowners.Casper's actual fixed overhead for the year was $86,600.During the year Casper produced 8,500 square feet of countertop and used 4,420 direct labor hours.Casper had budgeted to produce 9,000 square feet of countertop and had budgeted to use 4,500 direct labor hours.Casper's fixed overhead spending variance was $1,200 unfavorable for the year.What was Casper's budgeted fixed overhead for the year if necessary,round your ans to the nearest dollar?

Accepted Answer

A)  $87,800 
B)  $85,400 
C)  $88,167 
D)  $86,967 
A)  $87,800 
B)  $85,400 
C)  $88,167 
D)  $86,967

Question 15

A favorable variance is a variance that

Accepted Answer

A) Increases cash relative to the budgeted amount. 
B) Decreases cash relative to the budgeted amount. 
C) Increases operating income relative to the budgeted amount. 
D) Decreases operating income relative to the budgeted amount. 
A) Increases cash relative to the budgeted amount. 
B) Decreases cash relative to the budgeted amount. 
C) Increases operating income relative to the budgeted amount. 
D) Decreases operating income relative to the budgeted amount.

Question 16

Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units. The standard allows for 2 switches per unit. The company actually used 14,500 to produce the 6,000 units. Johnson budgeted $0.75 per switch, but had to pay $0.80 per switch. What is Johnston’s direct materials price variance for the period?

Accepted Answer

A)  $500 unfavorable 
B)  $600 unfavorable 
C)  $700 unfavorable 
D)  $725 unfavorable 
A)  $500 unfavorable 
B)  $600 unfavorable 
C)  $700 unfavorable 
D)  $725 unfavorable

Question 17

All differences between the flexible budget and actual performance must result from operations,rather than from differences in sales volume.

Accepted Answer

A) True 
 B)False

Question 18

Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August,the company purchased 4,000 yards of artificial pine bough,and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough,and purchased 4 boxes of 5,000 sprigs of holly berries for $7,000 per box.The standard price for artificial pine bough is $2.60 per yard,and the standard price per sprig of holly berry is $1.45.During August,Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials price variance for artificial pine boughs for August?

Accepted Answer

A)  $200 favorable 
B)  $200 unfavorable 
C)  $325 favorable 
D)  $325 unfavorable 
A)  $200 favorable 
B)  $200 unfavorable 
C)  $325 favorable 
D)  $325 unfavorable

Question 19

R&N Manufacturing produces music boxes.This year's budget was based on the production of 3,000 music boxes using a standard of 3 direct labor hours per music box and $3.10 variable overhead per direct labor hour.R&N incurred 9,500 hours to produce 2,950 music boxes.If actual variable overhead for the year is $32,000,what is R&N's variable overhead spending variance?

Accepted Answer

A)  $2,550 favorable 
B)  $2,550 unfavorable 
C)  $4,100 favorable 
D)  $4,100 unfavorable 
A)  $2,550 favorable 
B)  $2,550 unfavorable 
C)  $4,100 favorable 
D)  $4,100 unfavorable

Question 20

Actual direct labor costs may differ from the flexible budget amounts because

Accepted Answer

A) The company may set a standard wage rate,but the market forces may require a change in that rate. 
B) Employees do not always operate at the desired efficiency level. 
C) The company may set a standard wage rate,but the market forces may require a change in that rate or employees do not always operate at the desired efficiency level. 
D) None of these ans choices are correct. 
A) The company may set a standard wage rate,but the market forces may require a change in that rate. 
B) Employees do not always operate at the desired efficiency level. 
C) The company may set a standard wage rate,but the market forces may require a change in that rate or employees do not always operate at the desired efficiency level. 
D) None of these ans choices are correct.

A static budget is one that

The direct labor efficiency variance is caused by

Which of the following employees is typically held accountable for the direct material quantity variance?

An unfavorable spending variance may be caused by using variable overhead items inefficiently.

A favorable variance is a variance that increases the flexible budget amount relative to the static budgeted amount.

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable usage variance that is not related to the efficient use of the variable overhead activity driver?

The difference between actual results and budgeted,or expected,results is referred to as a

Since a flexible budget is based on actual sales volume,it cannot be prepared until after the end of the period.

The variable overhead efficiency variance is calculated as

The variable overhead variance is separated into which of the following components?

A favorable variance is a variance that

All differences between the flexible budget and actual performance must result from operations,rather than from differences in sales volume.

Actual direct labor costs may differ from the flexible budget amounts because

Accounting As a Tool for Management

Cost Behavior and Cost Estimation Summary of Questions by Objectives and Blooms Taxonomy

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

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Exam 6: Performance Evaluation: Variance Analysis

A static budget is one that

The direct labor efficiency variance is caused by

Which of the following employees is typically held accountable for the direct material quantity variance?

An unfavorable spending variance may be caused by using variable overhead items inefficiently.

A favorable variance is a variance that increases the flexible budget amount relative to the static budgeted amount.

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable usage variance that is not related to the efficient use of the variable overhead activity driver?

The difference between actual results and budgeted,or expected,results is referred to as a

Since a flexible budget is based on actual sales volume,it cannot be prepared until after the end of the period.

The variable overhead efficiency variance is calculated as

The variable overhead variance is separated into which of the following components?

A favorable variance is a variance that

All differences between the flexible budget and actual performance must result from operations,rather than from differences in sales volume.

Actual direct labor costs may differ from the flexible budget amounts because

Accounting As a Tool for Management

Cost Behavior and Cost Estimation Summary of Questions by Objectives and Blooms Taxonomy

Cost-Volume-Profit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting

Activity-Based Costing and Activity Based Management

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralizing and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Statement of Cash Flows

Topic Focus: Process Costing

Topic Focus Variable and Absorption Costing

Topic Focus Standard Costing Systems

Topic Focus Customer Profitability

Filters