Question 1

Variances can be caused by

Accepted Answer

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

Question 2

The cost categories that are measured and monitored in a given organisation depend, in part, on the costs that managers consider important.

Accepted Answer

A) True 
 B)False

Question 3

ELM introduced a new automated production process that has reduced the amount of labour needed, but not affected the use of materials. The standard cost system has not been changed yet to reflect this new process. Assuming the machinery is functioning properly and that workers were properly trained in its use, which of the following variances is most likely to result?

Accepted Answer

A)  Favorable variable overhead spending variance 
B)  Favorable direct labor efficiency variance 
C)  Unfavorable direct labor efficiency variance 
D)  Favorable direct materials price variance 
A)  Favorable variable overhead spending variance 
B)  Favorable direct labor efficiency variance 
C)  Unfavorable direct labor efficiency variance 
D)  Favorable direct materials price variance

Question 4

During the middle of the fiscal year, AWR unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Accepted Answer

A)  No variance, since the plant asset's cost is sunk 
B)  Fixed overhead spending variance 
C)  Fixed overhead production volume variance 
D)  Variable overhead spending variance 
A)  No variance, since the plant asset's cost is sunk 
B)  Fixed overhead spending variance 
C)  Fixed overhead production volume variance 
D)  Variable overhead spending variance

Question 5

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

Accepted Answer

A) True 
 B)False

Question 6

Hyteck Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget.   The fixed overhead spending variance was

Accepted Answer

A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U 
A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U

Question 7

The fixed overhead spending variance is often zero because fixed costs are constant within a relevant range of activity.

Accepted Answer

A) True 
 B)False

Question 8

Normal fluctuations in labor hours may cause a favorable direct labor efficiency variance.

Accepted Answer

A) True 
 B)False

Question 9

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week:   The actual direct labor price was

Accepted Answer

A)  $8.00 
B)  $8.20 
C)  $9.10 
D)  $7.80 
A)  $8.00 
B)  $8.20 
C)  $9.10 
D)  $7.80

Question 10

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week:   The actual direct labor costs were

Accepted Answer

A)  $144,300 
B)  $148,000 
C)  $160,000 
D)  $151,700 
A)  $144,300 
B)  $148,000 
C)  $160,000 
D)  $151,700

Question 11

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

Accepted Answer

A) True 
 B)False

Question 12

Hyteck Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget. The fixed overhead production volume variance was

Accepted Answer

A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U 
A)  $9,000 U 
B)  $2,000 F 
C)  $7,000 U 
D)  $2,800 U

Question 13

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

Accepted Answer

A)  Do not exist in most organisations 
B)  Exist only if production volume is higher than anticipated 
C)  Exist only if production volume is lower than expected 
D)  Exist because of estimates in the calculation of the overhead allocation rate 
A)  Do not exist in most organisations 
B)  Exist only if production volume is higher than anticipated 
C)  Exist only if production volume is lower than expected 
D)  Exist because of estimates in the calculation of the overhead allocation rate

Question 14

Hyteck Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget. The direct labor price variance was

Accepted Answer

A)  $2,000 F 
B)  $2,800 U 
C)  $1,000 U 
D)  $1,000 F 
A)  $2,000 F 
B)  $2,800 U 
C)  $1,000 U 
D)  $1,000 F

Question 15

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 standard direct labor hours allowed were

Accepted Answer

A)  744,000 
B)  600,000 
C)  660,000 
D)  545,600 
A)  744,000 
B)  600,000 
C)  660,000 
D)  545,600

Question 16

Which of the following statements regarding trade-offs among variances is true?

Accepted Answer

A)  Managers generally do not need to consider trade-offs in variance analysis 
B)  Managers may sometimes make trade-offs between favorable and unfavorable variances 
C)  Unfavorable direct material price variances often lead to unfavorable direct labor efficiency variances 
D)  Favorable direct material price variances often lead to favorable direct material efficiency variances 
A)  Managers generally do not need to consider trade-offs in variance analysis 
B)  Managers may sometimes make trade-offs between favorable and unfavorable variances 
C)  Unfavorable direct material price variances often lead to unfavorable direct labor efficiency variances 
D)  Favorable direct material price variances often lead to favorable direct material efficiency variances

Question 17

If a variance is investigated and determined to be random, managers should

Accepted Answer

A)  Write off the variance against cost of goods sold 
B)  Do nothing 
C)  Identify and discipline the employee(s) responsible 
D)  Write off the variance against work in process 
A)  Write off the variance against cost of goods sold 
B)  Do nothing 
C)  Identify and discipline the employee(s) responsible 
D)  Write off the variance against work in process

Question 18

Which of the following variances is least likely to provide useful information for making decisions, if calculated as part of a comprehensive set of variances?

Accepted Answer

A)  Variable overhead spending 
B)  Production volume variance 
C)  Direct material price 
D)  Direct labor efficiency 
A)  Variable overhead spending 
B)  Production volume variance 
C)  Direct material price 
D)  Direct labor efficiency

Question 19

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 variable overhead spending variance was

Accepted Answer

A)  $10,000 F 
B)  $50,000 U 
C)  $35,000 U 
D)  $15,000 U 
A)  $10,000 F 
B)  $50,000 U 
C)  $35,000 U 
D)  $15,000 U

Question 20

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 budget variance was

Accepted Answer

A)  $-0- 
B)  $12,000 U 
C)  $240,000 F 
D)  $69,600 F 
A)  $-0- 
B)  $12,000 U 
C)  $240,000 F 
D)  $69,600 F

Variances can be caused by

The cost categories that are measured and monitored in a given organisation depend, in part, on the costs that managers consider important.

During the middle of the fiscal year, AWR unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

The fixed overhead spending variance is often zero because fixed costs are constant within a relevant range of activity.

Normal fluctuations in labor hours may cause a favorable direct labor efficiency variance.

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week: The actual direct labor price was

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week: The actual direct labor costs were

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

Which of the following statements regarding trade-offs among variances is true?

If a variance is investigated and determined to be random, managers should

Which of the following variances is least likely to provide useful information for making decisions, if calculated as part of a comprehensive set of variances?

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 variable overhead spending variance was

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

Variances can be caused by

The cost categories that are measured and monitored in a given organisation depend, in part, on the costs that managers consider important.

During the middle of the fiscal year, AWR unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to

Unreasonable standards may be the cause of direct materials variances, but not of direct labor variances.

The fixed overhead spending variance is often zero because fixed costs are constant within a relevant range of activity.

Normal fluctuations in labor hours may cause a favorable direct labor efficiency variance.

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week: The actual direct labor price was

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week: The actual direct labor costs were

If the total variances in the accounting information system are favorable, accountants must adjust some accounts by decreasing costs during the closing process.

Fixed overhead costs are not expected to vary with production volumes. Therefore, production volume variances

Which of the following statements regarding trade-offs among variances is true?

If a variance is investigated and determined to be random, managers should

Which of the following variances is least likely to provide useful information for making decisions, if calculated as part of a comprehensive set of variances?

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 variable overhead spending variance was

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