Question 1

Since fixed overhead does not vary with volume within the relevant range,the flexible budget will always agree with

Accepted Answer

A) Actual results. 
B) Static budget. 
C) Both actual results and the static budget. 
D) Neither actual results nor the static budget. 
A) Actual results. 
B) Static budget. 
C) Both actual results and the static budget. 
D) Neither actual results nor the static budget.

Question 2

The direct materials quantity variance is calculated using which of the three amounts?

Accepted Answer

A) Actual quantity used,standard quantity allowed for actual production,actual price paid 
B) Actual quantity used,standard quantity allowed for actual production,standard price paid 
C) Standard quantity used,actual price paid,standard price paid 
D) Actual quantity used,actual price paid,standard price paid 
A) Actual quantity used,standard quantity allowed for actual production,actual price paid 
B) Actual quantity used,standard quantity allowed for actual production,standard price paid 
C) Standard quantity used,actual price paid,standard price paid 
D) Actual quantity used,actual price paid,standard price paid

Question 3

Fox Company manufactures decorative fountains used by hotels and restaurants.The company applies fixed overhead based on direct labor hours.Fox Company's fixed overhead spending variance for the year was $6,500 unfavorable.For the current year,the company had budgeted to produce 78,000 fountains.The company's actual fixed overhead for the year was $689,000.Fox produced 75,000 fountains and used 131,250 direct labor hours,which was the standard hours allowed for the number of fountains produced.What was Fox's budgeted fixed overhead rate per direct labor hour for the year if necessary,round your ans to the nearest cent?

Accepted Answer

A)  $5.30/DLH 
B)  $5.00/DLH 
C)  $5.05/DLH 
D)  $5.25/DLH 
A)  $5.30/DLH 
B)  $5.00/DLH 
C)  $5.05/DLH 
D)  $5.25/DLH

Question 4

Which of the following is a method companies use to reduce their labor costs?

Accepted Answer

A) Paying overtime to get a job done in fewer days 
B) Offshoring 
C) Both paying overtime to get a job done in fewer days and offshoring. 
D) None of these ans choices are correct. 
A) Paying overtime to get a job done in fewer days 
B) Offshoring 
C) Both paying overtime to get a job done in fewer days and offshoring. 
D) None of these ans choices are correct.

Question 5

has to do with the efficient use of the activity base rather than the efficient use of the variable overhead itemThe variable overhead spending variance captures

Accepted Answer

A) Whether the company has paid more or less for variable overhead items. 
B) The relative efficiency with which variable overhead items are used. 
C) Whether a company is more or less efficient with respect to the production activity,since variable overhead varies with production activity. 
D) Both whether the company has paid more or less for variable overhead items and the relative efficiency with which variable overhead items are used. 
A) Whether the company has paid more or less for variable overhead items. 
B) The relative efficiency with which variable overhead items are used. 
C) Whether a company is more or less efficient with respect to the production activity,since variable overhead varies with production activity. 
D) Both whether the company has paid more or less for variable overhead items and the relative efficiency with which variable overhead items are used.

Question 6

Melrose Manufacturing produces gourmet blackberry preserves.Melrose based its current year budget on a production level of 540,000 jars of preserves using ½ hour direct labor time for each jar which includes hand-sorting and trimming the berries.Total budgeted variable overhead for the year was $1,242,000.During the year,Melrose used 280,000 direct labor hours to produce 550,000 jars of blackberry preserves.Actual variable overhead for the year was $1,246,000.What is Melrose's variable overhead spending variance?

Accepted Answer

A)  $4,000 unfavorable 
B)  $4,000 favorable 
C)  $23,000 favorable 
D)  $23,000 unfavorable 
A)  $4,000 unfavorable 
B)  $4,000 favorable 
C)  $23,000 favorable 
D)  $23,000 unfavorable

Question 7

Hobart Company manufactures patio umbrellas.The direct labor standard for each umbrella is 1.25 direct labor hours at a standard rate of $12.00 per hour.During June,Hobart used 36,000 direct labor hours to produce 30,000 umbrellas.Hobart's direct labor payroll totaled $428,400.What is Hobart's direct labor efficiency variance for November?

Accepted Answer

A)  $3,600 unfavorable 
B)  $3,600 favorable 
C)  $18,000 favorable 
D)  $18,000 unfavorable 
A)  $3,600 unfavorable 
B)  $3,600 favorable 
C)  $18,000 favorable 
D)  $18,000 unfavorable

Question 8

Ledbetter's Adventures manufactures outdoor camp ovens.In planning for the coming year,the budget committee is considering three different sales targets: 2,000 ovens,2,400 ovens,and 2,600 ovens.Ovens sell for $280 each.The standard cost information for an oven is as follows:
  
Required:

Prepare a flexible budget for the three sales levels under consideration.

Accepted Answer

The answer of Ledbetter's Adventures manufactures outdoor camp ovens.In planning...

Question 9

R&N Manufacturing produces music boxes.The fixed overhead rate is $5.10 per direct labor hour,and the company budgeted for 4,400 direct labor hours for the year.During the year,R&N produced 2,500 music boxes using 4,800 direct labor hours.Actual fixed overhead for the year was $23,000.What is the company's fixed overhead spending variance?

Accepted Answer

A)  $560 favorable 
B)  $560 unfavorable 
C)  $1,480 favorable 
D)  $1,480 unfavorable 
A)  $560 favorable 
B)  $560 unfavorable 
C)  $1,480 favorable 
D)  $1,480 unfavorable

Question 10

The variable overhead spending variance

Accepted Answer

A) Is the difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the actual level of activity base experienced. 
B) Has to do with the efficient use of the activity base rather than the efficient use of the variable overhead item. 
C) Captures whether the company has paid more or less for variable overhead items. 
D) All of these ans choices are correct. 
A) Is the difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the actual level of activity base experienced. 
B) Has to do with the efficient use of the activity base rather than the efficient use of the variable overhead item. 
C) Captures whether the company has paid more or less for variable overhead items. 
D) All of these ans choices are correct.

Question 11

Which of the following is not a factor that could influence worker productivity?

Accepted Answer

A) The level of skill and training workers possess will affect their productivity. 
B) The amount of automation used in the production process. 
C) Workers' level of fatigue will affect the direct labor efficiency variance. 
D) The quality of direct material used. 
A) The level of skill and training workers possess will affect their productivity. 
B) The amount of automation used in the production process. 
C) Workers' level of fatigue will affect the direct labor efficiency variance. 
D) The quality of direct material used.

Question 12

Investigating the cause of a variance is a part of a manager's responsibility under which of the following management functions?

Accepted Answer

A) Planning 
B) Controlling 
C) Evaluating 
D) Decision-making 
A) Planning 
B) Controlling 
C) Evaluating 
D) Decision-making

Question 13

The master budget is an example of a flexible budget.

Accepted Answer

A) True 
 B)False

Question 14

Sometimes you may know only the total dollar amount of direct materials purchased rather than the actual

Accepted Answer

A) The total purchases amount 
B) Dividing the total purchases amount by the actual number of 
C) Both by using the total purchases amount and by dividing the total purchases amount by the actual number of units purchased. 
D) None of these ans choices are correct. 
A) The total purchases amount 
B) Dividing the total purchases amount by the actual number of 
C) Both by using the total purchases amount and by dividing the total purchases amount by the actual number of units purchased. 
D) None of these ans choices are correct.

Question 15

Which of the following is not a reason that actual direct labor costs may differ from the flexible budget amounts?

Accepted Answer

A) The purchasing manager resigned and a higher-paid replacement was hired. 
B) After the company set the standard wage rate,the union reached an agreement that required a pay raise for all factory workers. 
C) Because the air conditioner in the factory was not working properly,workers did not work as efficiently in the hot afternoons as expected. 
D) All of these ans choices are correct. 
A) The purchasing manager resigned and a higher-paid replacement was hired. 
B) After the company set the standard wage rate,the union reached an agreement that required a pay raise for all factory workers. 
C) Because the air conditioner in the factory was not working properly,workers did not work as efficiently in the hot afternoons as expected. 
D) All of these ans choices are correct.

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 12,500 to produce the 6,000 units. Johnson budgeted $0.75 per switch, but because they received a discount for purchasing more than 10,000 switches, they received a discount of $0.05 per switch and paid $0.70 each. What is Johnston’s direct materials price variance for the period?

Accepted Answer

A)  $500 favorable 
B)  600 favorable 
C)  $625 favorable 
D)  $700 favorable 
A)  $500 favorable 
B)  600 favorable 
C)  $625 favorable 
D)  $700 favorable

Question 17

The flexible budget variance is the difference between

Accepted Answer

A) The static budget and the flexible budget. 
B) The flexible budget and actual results. 
C) The actual quantity and budgeted quantity. 
D) The actual price and the standard price. 
A) The static budget and the flexible budget. 
B) The flexible budget and actual results. 
C) The actual quantity and budgeted quantity. 
D) The actual price and the standard price.

Question 18

Nantucket, Inc. uses a standard cost system in which direct material is carried at standard cost. Standards for one unit of product are:  standard quantity of 2 feet, standard price $1.50 per foot. During May, Nantucket purchased 16,000 feet of direct material at a cost of $30,000 and used 15,500 feet in production of 7,500 units.

Required:

Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

Direct material price variance

Question 19

The flexible budget variance reflects how efficiently the company operated in producing a given level of sales.

Accepted Answer

A) True 
 B)False

Question 20

Thrope,Inc.purchased 1,700 pounds of direct material at a price of $1.20 per pound.The standard price of the material is $1.30 per pound.Thrope used 1,500 pounds in production while the standard pounds allowed for actual production was 1,300.

Required:

Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

Direct material price variance

Since fixed overhead does not vary with volume within the relevant range,the flexible budget will always agree with

The direct materials quantity variance is calculated using which of the three amounts?

Which of the following is a method companies use to reduce their labor costs?

has to do with the efficient use of the activity base rather than the efficient use of the variable overhead itemThe variable overhead spending variance captures

The variable overhead spending variance

Which of the following is not a factor that could influence worker productivity?

Investigating the cause of a variance is a part of a manager's responsibility under which of the following management functions?

The master budget is an example of a flexible budget.

Sometimes you may know only the total dollar amount of direct materials purchased rather than the actual

Which of the following is not a reason that actual direct labor costs may differ from the flexible budget amounts?

The flexible budget variance is the difference between

The flexible budget variance reflects how efficiently the company operated in producing a given level of sales.

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

Exam 6: Performance Evaluation: Variance Analysis

Since fixed overhead does not vary with volume within the relevant range,the flexible budget will always agree with

The direct materials quantity variance is calculated using which of the three amounts?

Which of the following is a method companies use to reduce their labor costs?

has to do with the efficient use of the activity base rather than the efficient use of the variable overhead itemThe variable overhead spending variance captures

The variable overhead spending variance

Which of the following is not a factor that could influence worker productivity?

Investigating the cause of a variance is a part of a manager's responsibility under which of the following management functions?

The master budget is an example of a flexible budget.

Sometimes you may know only the total dollar amount of direct materials purchased rather than the actual

Which of the following is not a reason that actual direct labor costs may differ from the flexible budget amounts?

The flexible budget variance is the difference between

The flexible budget variance reflects how efficiently the company operated in producing a given level of sales.

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