Question 1

An unfavourable direct materials mix variance results when cheaper direct materials are substituted for more expensive direct materials.

Accepted Answer

A) True 
 B)False

Question 2

Mayberry Company had the following journal entries recorded for the end of June. Unfortunately, the company's only accountant quit on July 10 and the president is at a loss as to the company's performance for the month of June.
       Required:
a. What kind of performance did the company have for June? Explain each variance.
b. Why is Direct Materials given in two entries?

Accepted Answer

a. The first entry is for materials purc

Question 3

It's year-end and you have the task of clearing up the final accounting entries for management accounting. There is an unfavourable direct materials price variance of $25,000 which needs to be closed from the manufacturing overhead account. The company uses the proration approach in this situation, and it has been determined that half of the variance should be charged to finished goods and half to cost of goods sold.
   Prepare the necessary entry for the end of period adjustment.

Accepted Answer

The answer of It's year-end and you have the task...

Question 4

Use the information below to answer the following question(s).
A company makes table lamps, for which the following standards have been developed:
   During January, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-What is the All Good Things Ltd. direct labour input-efficiency variance?

Accepted Answer

A)  $4,200 U 
B)  $4,200 F 
C)  $5,000 U 
D)  $5,000 F 
E)  $200 U 
A)  $4,200 U 
B)  $4,200 F 
C)  $5,000 U 
D)  $5,000 F 
E)  $200 U

Question 5

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

Accepted Answer

A)  only the efficiency variance. 
B)  only the price variance. 
C)  the difference between the actual wage rate and the budgeted rate, times the actual hours. 
D)  the difference between the actual wage rate and the budgeted rate, times the budget hours. 
E)  the total of the price and efficiency labour variances. 
A)  only the efficiency variance. 
B)  only the price variance. 
C)  the difference between the actual wage rate and the budgeted rate, times the actual hours. 
D)  the difference between the actual wage rate and the budgeted rate, times the budget hours. 
E)  the total of the price and efficiency labour variances.

Question 6

A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not adjusted at the end of the budgeted period.

Accepted Answer

A) True 
 B)False

Question 7

The following data for the Alma Company pertain to the production of 1,000 urns during August.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per kilogram.
Total actual cost: $5,600.
Standard cost allowed for units produced was $6,000.
Materials efficiency variance was $120 unfavourable.
Direct Manufacturing Labour:
Standard cost is 2 urns per hour at $24.00 per hour.
Actual cost per hour was $24.50.
Labour efficiency variance was $336 favourable.
Required:
a. What is standard direct material cost and quantity per urn?
b. What is the direct material price variance?
c. What is the total actual cost of direct manufacturing labour?
d. What is the labour price variance for direct manufacturing labour?

Accepted Answer

a.
 @#IMG-DLM& @#IMG-DLM& b.

Question 8

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
   Direct Manufacturing Labour:
  
-What is the direct manufacturing labour price variance?

Accepted Answer

A)  $186 favourable 
B)  $486 unfavourable 
C)  $486 favourable 
D)  $672 unfavourable 
E)  $672 favourable 
A)  $186 favourable 
B)  $486 unfavourable 
C)  $486 favourable 
D)  $672 unfavourable 
E)  $672 favourable

Question 9

Explain the difference between a static budget and a flexible budget. Explain what is meant by a static
budget variance and a flexible budget variance.

Accepted Answer

A static budget is one based on the leve

Question 10

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors. The company uses the following direct cost categories:
   Actual performance and budgeted performance for the company is shown below:
   Direct Materials:
   Direct Manufacturing Labour:
   Direct Marketing Labour:
  
-What is the price variance of the direct manufacturing labour, and the direct marketing labour, respectively?

Accepted Answer

A)  $4,750 favourable; $12,500 favourable 
B)  $8,000 favourable; $10,000 favourable 
C)  $3,500 unfavourable; $6,750 unfavourable 
D)  3,500 favourable; $6,750 favourable 
E)  $4,750 unfavourable; $12,500 unfavourable 
A)  $4,750 favourable; $12,500 favourable 
B)  $8,000 favourable; $10,000 favourable 
C)  $3,500 unfavourable; $6,750 unfavourable 
D)  3,500 favourable; $6,750 favourable 
E)  $4,750 unfavourable; $12,500 unfavourable

Question 11

The direct materials mix variance will be favourable when

Accepted Answer

A)  the flexible-budget contribution margin is greater than the actual contribution margin. 
B)  the actual direct materials input mix is less expensive than the budgeted direct materials input mix. 
C)  the actual quantity of total inputs used is greater than the flexible budget for total inputs. 
D)  actual unit sales are less than budgeted unit sales. 
E)  the input-efficiency variance is favourable. 
A)  the flexible-budget contribution margin is greater than the actual contribution margin. 
B)  the actual direct materials input mix is less expensive than the budgeted direct materials input mix. 
C)  the actual quantity of total inputs used is greater than the flexible budget for total inputs. 
D)  actual unit sales are less than budgeted unit sales. 
E)  the input-efficiency variance is favourable.

Question 12

Explain how variance analysis is used in conjunction with activity-based costing.

Accepted Answer

Activity-based costing systems focus on

Question 13

An input-price variance is the difference between actual quantity of input used and the budgeted quantity of input that should have been used, multiplied by the budgeted price.

Accepted Answer

A) True 
 B)False

Question 14

Use the information below to answer the following question(s).
Bates Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit.
  
-What is the static-budget variance of revenues?

Accepted Answer

A)  $50,000 favourable 
B)  $50,000 unfavourable 
C)  $5,000 favourable 
D)  $5,000 unfavourable 
E)  $25,000 unfavourable 
A)  $50,000 favourable 
B)  $50,000 unfavourable 
C)  $5,000 favourable 
D)  $5,000 unfavourable 
E)  $25,000 unfavourable

Question 15

Which of the following statements about benchmarks is true?

Accepted Answer

A)  They may be financial or nonfinancial. 
B)  They are used to compute variances. 
C)  Broad benchmarks have more relevance. 
D)  Obtaining benchmarks has no legal or ethical issues. 
E)  Benchmarks are the main driver of strategic planning. 
A)  They may be financial or nonfinancial. 
B)  They are used to compute variances. 
C)  Broad benchmarks have more relevance. 
D)  Obtaining benchmarks has no legal or ethical issues. 
E)  Benchmarks are the main driver of strategic planning.

Question 16

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
   Direct Manufacturing Labour:
  
-What is the direct manufacturing labour efficiency variance?

Accepted Answer

A)  $672 unfavourable 
B)  $500 favourable 
C)  $672 favourable 
D)  $500 unfavourable 
E)  $28 favourable 
A)  $672 unfavourable 
B)  $500 favourable 
C)  $672 favourable 
D)  $500 unfavourable 
E)  $28 favourable

Question 17

What is benchmarking, and how is it useful to a company?

Accepted Answer

Benchmarking is the continuous process o

Question 18

Use the information below to answer the following question(s).
Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container.
   During June, RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
-June's direct material flexible-budget variance is

Accepted Answer

A)  $980 unfavourable. 
B)  $300 favourable. 
C)  $680 favourable. 
D)  $980 favourable. 
E)  $680 unfavourable. 
A)  $980 unfavourable. 
B)  $300 favourable. 
C)  $680 favourable. 
D)  $980 favourable. 
E)  $680 unfavourable.

Question 19

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors. The company uses the following direct cost categories:
   Actual performance and budgeted performance for the company is shown below:
   Direct Materials:
   Direct Manufacturing Labour:
   Direct Marketing Labour:
  
-What is the efficiency variance for direct materials?

Accepted Answer

A)  $47,350 favourable 
B)  $36,000 unfavourable 
C)  $36,000 favourable 
D)  $37,500 unfavourable 
E)  $23,750 unfavourable 
A)  $47,350 favourable 
B)  $36,000 unfavourable 
C)  $36,000 favourable 
D)  $37,500 unfavourable 
E)  $23,750 unfavourable

Question 20

Use the information below to answer the following question(s).
Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.
   During July, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct material flexible-budget variance is

Accepted Answer

A)  $2,800 unfavourable. 
B)  $2,200 favourable. 
C)  $5,000 unfavourable. 
D)  $2,200 unfavourable. 
E)  $2,800 favourable. 
A)  $2,800 unfavourable. 
B)  $2,200 favourable. 
C)  $5,000 unfavourable. 
D)  $2,200 unfavourable. 
E)  $2,800 favourable.

An unfavourable direct materials mix variance results when cheaper direct materials are substituted for more expensive direct materials.

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not adjusted at the end of the budgeted period.

Explain the difference between a static budget and a flexible budget. Explain what is meant by a static budget variance and a flexible budget variance.

The direct materials mix variance will be favourable when

Explain how variance analysis is used in conjunction with activity-based costing.

An input-price variance is the difference between actual quantity of input used and the budgeted quantity of input that should have been used, multiplied by the budgeted price.

Use the information below to answer the following question(s). Bates Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. -What is the static-budget variance of revenues?

Which of the following statements about benchmarks is true?

What is benchmarking, and how is it useful to a company?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 7: Flexible Budgets, Variances, and Management Control: I

An unfavourable direct materials mix variance results when cheaper direct materials are substituted for more expensive direct materials.

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not adjusted at the end of the budgeted period.

Explain the difference between a static budget and a flexible budget. Explain what is meant by a static budget variance and a flexible budget variance.

The direct materials mix variance will be favourable when

Explain how variance analysis is used in conjunction with activity-based costing.

An input-price variance is the difference between actual quantity of input used and the budgeted quantity of input that should have been used, multiplied by the budgeted price.

Use the information below to answer the following question(s). Bates Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. -What is the static-budget variance of revenues?

Which of the following statements about benchmarks is true?

What is benchmarking, and how is it useful to a company?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Quantitative Analyses of Cost Functions

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Spoilage, Rework, and Scrap

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters