Question 1

If a variance is unfavorable, it should be closed directly to cost of goods sold.

Accepted Answer

A) True 
 B)False  False

Question 2

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were:   The fixed overhead production volume variance was

Accepted Answer

A)  $15,000 F 
B)  $20,000 U 
C)  $10,000 F 
D)  $10,000 U 
A)  $15,000 F 
B)  $20,000 U 
C)  $10,000 F 
D)  $10,000 U B

Question 3

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were:   The over- or underapplied overhead was

Accepted Answer

A)  $50,000 under 
B)  $10,000 over 
C)  $55,000 under 
D)  $20,000 over 
A)  $50,000 under 
B)  $10,000 over 
C)  $55,000 under 
D)  $20,000 over C

Question 4

Everett Ltd budgeted $1,488,000 for total overhead. The standard variable overhead rate was $2 per direct labor hour, or $6 per unit, based on an anticipated activity level of 600,000 direct labor hours. During the year 220,000 units were produced. Fixed overhead costs incurred were $300,000. The variable overhead budget variance was $19,800 unfavorable, and the actual variable overhead rate was $2.10 per direct labor hour. The fixed overhead allocated was

Accepted Answer

A)  $300,000 
B)  $316,800 
C)  $288,000 
D)  $330,000 
A)  $300,000 
B)  $316,800 
C)  $288,000 
D)  $330,000

Question 5

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Accepted Answer

A) True 
 B)False

Question 6

Favorable price variances can occur because of

Accepted Answer

A)  Rising prices of finished goods 
B)  Increases in raw materials efficiency 
C)  Price decreases in raw materials 
D)  Efficiency in the production department 
A)  Rising prices of finished goods 
B)  Increases in raw materials efficiency 
C)  Price decreases in raw materials 
D)  Efficiency in the production department

Question 7

Managers investigate

Accepted Answer

A)  All variances 
B)  All unfavorable variances 
C)  Variances they consider important 
D)  Variances that are reported in the financial statements 
A)  All variances 
B)  All unfavorable variances 
C)  Variances they consider important 
D)  Variances that are reported in the financial statements

Question 8

Variance analysis includes which of the following processes?

Accepted Answer

A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III 
A)  I and II only 
B)  I and III only 
C)  II and III only 
D)  I, II, and III

Question 9

Pardee Ltd completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following:Efficiency variance   The standard quantity of direct materials allowed for the month was

Accepted Answer

A)  10,450 
B)  9,000 
C)  10,000 
D)  9,550 
A)  10,450 
B)  9,000 
C)  10,000 
D)  9,550

Question 10

Brodie Co. uses a standard job cost system and a denominator volume of 25,000 direct labor hours for allocating overhead. The actual output was 12,000 units, which cost $185,700 for direct labor (23,000 hours), $27,525 for variable overhead, and $136,400 for fixed overhead. The standard variable overhead per unit is $2 (2 hours @ $1 per hour), and the standard fixed overhead per unit is $10 (2 hours @ $5 per hour). All variances are immaterial and are closed to Cost of Goods Sold at the end of the period. The entry to close the variable overhead variances includes a

Accepted Answer

A)  Credit to the variable overhead spending variance for $4,525 
B)  Credit to work in process for $24,000 
C)  Credit to the variable overhead efficiency variance for $1,000 
D)  Debit to Cost of Goods Sold for $5,525 
A)  Credit to the variable overhead spending variance for $4,525 
B)  Credit to work in process for $24,000 
C)  Credit to the variable overhead efficiency variance for $1,000 
D)  Debit to Cost of Goods Sold for $5,525

Question 11

The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.

Accepted Answer

A) True 
 B)False

Question 12

The direct materials price variance is the actual direct materials purchased at standard price less the actual direct materials purchased at actual price.

Accepted Answer

A) True 
 B)False

Question 13

The direct labour efficiency variance is the difference between the standard amount of labour hours that should have been used and the amount actually used, multiplied by the standard labour price per hour.

Accepted Answer

A) True 
 B)False

Question 14

Overhead efficiency variances

Accepted Answer

A)  Provide managers with useful information for cost management 
B)  Do not provide marginal information for cost management because they involve estimates 
C)  Do not provide new cost management information because direct cost efficiency variances provide the same information 
D)  Provide useful information for financial reporting purposes 
A)  Provide managers with useful information for cost management 
B)  Do not provide marginal information for cost management because they involve estimates 
C)  Do not provide new cost management information because direct cost efficiency variances provide the same information 
D)  Provide useful information for financial reporting purposes

Question 15

Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The direct labor price variance is

Accepted Answer

A)  $30,000 Favorable 
B)  $30,000 Unfavorable 
C)  $75,000 Unfavorable 
D)  $78,000 Unfavorable 
A)  $30,000 Favorable 
B)  $30,000 Unfavorable 
C)  $75,000 Unfavorable 
D)  $78,000 Unfavorable

Question 16

If a variance analysis shows that operations are better than expected, managers should

Accepted Answer

A)  Do nothing 
B)  Revise standard costs to make them harder to achieve 
C)  Distribute extra dividends to shareholders 
D)  Monitor quality to ensure it was maintained 
A)  Do nothing 
B)  Revise standard costs to make them harder to achieve 
C)  Distribute extra dividends to shareholders 
D)  Monitor quality to ensure it was maintained

Question 17

The direct materials price variance is often based on materials purchased, rather than on materials used.

Accepted Answer

A) True 
 B)False

Question 18

Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include:   The purchase of direct materials would be recorded in direct materials inventory at

Accepted Answer

A)  $540,000 
B)  $585,000 
C)  $600,000 
D)  $650,000 
A)  $540,000 
B)  $585,000 
C)  $600,000 
D)  $650,000

Question 19

Pardee Ltd completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following:   The standard cost of the direct materials used was

Accepted Answer

A)  $90,000 
B)  $95,500 
C)  $100,000 
D)  $94,000 
A)  $90,000 
B)  $95,500 
C)  $100,000 
D)  $94,000

Question 20

If a variance is considered material, it should be allocated to work in process inventory, finished goods inventory, and cost of goods sold.

Accepted Answer

A) True 
 B)False

If a variance is unfavorable, it should be closed directly to cost of goods sold.

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: The fixed overhead production volume variance was

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: The over- or underapplied overhead was

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Favorable price variances can occur because of

Managers investigate

Variance analysis includes which of the following processes?

The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.

The direct materials price variance is the actual direct materials purchased at standard price less the actual direct materials purchased at actual price.

The direct labour efficiency variance is the difference between the standard amount of labour hours that should have been used and the amount actually used, multiplied by the standard labour price per hour.

Overhead efficiency variances

Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The direct labor price variance is

If a variance analysis shows that operations are better than expected, managers should

The direct materials price variance is often based on materials purchased, rather than on materials used.

If a variance is considered material, it should be allocated to work in process inventory, finished goods inventory, and cost of goods sold.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 10: Standard Costs, Flexible Budgets and Variance Analysis

If a variance is unfavorable, it should be closed directly to cost of goods sold.

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: The fixed overhead production volume variance was

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: The over- or underapplied overhead was

The fixed overhead budget variance can be broken down into two parts: the spending variance and the production volume variance.

Favorable price variances can occur because of

Managers investigate

Variance analysis includes which of the following processes?

The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.

The direct materials price variance is the actual direct materials purchased at standard price less the actual direct materials purchased at actual price.

The direct labour efficiency variance is the difference between the standard amount of labour hours that should have been used and the amount actually used, multiplied by the standard labour price per hour.

Overhead efficiency variances

Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The direct labor price variance is

If a variance analysis shows that operations are better than expected, managers should

The direct materials price variance is often based on materials purchased, rather than on materials used.

If a variance is considered material, it should be allocated to work in process inventory, finished goods inventory, and cost of goods sold.

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters