Question 1

How are standards developed? What is the difference between ideal and currently attainable standards?

Accepted Answer

Historical experience, engineering studi

Question 2

Figure 7
Orient Company has developed the following standards for one of its products:
The following activities occurred during the month of November:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 7. Orient's variable overhead spending (expenditure) variance would be

Accepted Answer

A)  £4,800 favorable 
B)  £4,800 unfavorable 
C)  £3,600 unfavorable 
D)  £1,200 unfavorable 
A)  £4,800 favorable 
B)  £4,800 unfavorable 
C)  £3,600 unfavorable 
D)  £1,200 unfavorable

Question 3

The following standard costs were developed for one of the products of Ferrars Company:
Budgeted fixed overhead for the period was £600,000, and expected capacity for the period was 20,000 direct labour hours.
During the period just ended, Ferrars produced 15,000 units using 80,000 pounds of material and 23,000 direct labour hours. Total payroll cost was £288,000. The materials cost £3.70 per pound. Actual variable overhead cost was £220,000 and actual fixed overhead cost was £640,000.
Required:
   
a.
Calculate the variable overhead spending (expenditure)variance and indicate whether it is favorable or unfavorable.
b.
Calculate the variable overhead efficiency variance and indicate whether it is favorable or unfavorable.
c.
Calculate the fixed overhead spending (expenditure) variance and indicate whether it is favorable or unfavorable.

Accepted Answer

The answer of The following standard costs were developed for...

Question 4

An unfavorable materials usage variance may be caused by

Accepted Answer

A)  excessive rework 
B)  a special price offered by suppliers 
C)  use of experienced workers 
D)  none of the above 
A)  excessive rework 
B)  a special price offered by suppliers 
C)  use of experienced workers 
D)  none of the above

Question 5

If actual fixed overhead was £120,000 and there was a £2,600 favorable spending (expenditure) variance and a £2,000 unfavorable volume variance, budgeted fixed overhead must have been

Accepted Answer

A)  £124,600 
B)  £122,000 
C)  £120,000 
D)  £122,600 
A)  £124,600 
B)  £122,000 
C)  £120,000 
D)  £122,600

Question 6

Figure 4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours x £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.
-Refer to Figure 4. Shannon's standard hours allowed for production was

Accepted Answer

A)  12,500 
B)  15,000 
C)  16,250 
D)  13,000 
A)  12,500 
B)  15,000 
C)  16,250 
D)  13,000

Question 7

Figure 7
Orient Company has developed the following standards for one of its products:
The following activities occurred during the month of November:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 7. Orient's materials usage variance would be

Accepted Answer

A)  £22,000 unfavorable 
B)  £12,000 favorable 
C)  £10,000 unfavorable 
D)  £4,000 unfavorable 
A)  £22,000 unfavorable 
B)  £12,000 favorable 
C)  £10,000 unfavorable 
D)  £4,000 unfavorable

Question 8

Figure 6
  
-Refer to Figure 6. The fixed overhead spending (expenditure) variance would be

Accepted Answer

A)  £2,500 unfavorable 
B)  £2,500 favorable 
C)  £1,000 unfavorable 
D)  £1,000 favorable 
A)  £2,500 unfavorable 
B)  £2,500 favorable 
C)  £1,000 unfavorable 
D)  £1,000 favorable

Question 9

Figure 7
Orient Company has developed the following standards for one of its products:
The following activities occurred during the month of November:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 7. Orient's variable overhead efficiency variance would be

Accepted Answer

A)  £1,200 unfavorable 
B)  £3,600 unfavorable 
C)  £4,800 unfavorable 
D)  £4,800 favorable 
A)  £1,200 unfavorable 
B)  £3,600 unfavorable 
C)  £4,800 unfavorable 
D)  £4,800 favorable

Question 10

A sales volume variance will be favorable when:

Accepted Answer

A)  actual units sold is greater than budgeted sales volume. 
B)  actual units sold is less than budgeted sales volume. 
C)  actual selling price is greater than budgeted selling price. 
D)  actual contribution margin is greater than budgeted contribution margin. 
A)  actual units sold is greater than budgeted sales volume. 
B)  actual units sold is less than budgeted sales volume. 
C)  actual selling price is greater than budgeted selling price. 
D)  actual contribution margin is greater than budgeted contribution margin.

Question 11

The following standard costs were developed for one of Commodore Company's products:
STANDARD COST CARD
PER UNIT
The following information is available regarding the company's operations for the period:
   Budgeted fixed overhead for the period is £600,000, and expected capacity for the period is 20,000 direct labour hours.
Required:
   
a.
Calculate the standard fixed overhead rate.
b.
Complete the standard cost card for the product.

Accepted Answer

a. £30 per

Question 12

Figure 5
Ebola Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 5. Ebola's labour efficiency variance would be

Accepted Answer

A)  £18,000 favorable 
B)  £18,000 unfavorable 
C)  £17,700 unfavorable 
D)  £17,700 favorable 
A)  £18,000 favorable 
B)  £18,000 unfavorable 
C)  £17,700 unfavorable 
D)  £17,700 favorable

Question 13

Figure 8
The following information was extracted from the accounting records of Noelle Company:
Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period:
    
-Refer to Figure 8. Noelle's variable overhead efficiency variance would be

Accepted Answer

A)  £7,000 favorable 
B)  £8,000 unfavorable 
C)  £15,000 favorable 
D)  £23,000 unfavorable 
A)  £7,000 favorable 
B)  £8,000 unfavorable 
C)  £15,000 favorable 
D)  £23,000 unfavorable

Question 14

Figure 5
Ebola Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 5. Ebola's labour rate variance would be

Accepted Answer

A)  £15,000 unfavorable 
B)  £15,000 favorable 
C)  £15,300 unfavorable 
D)  £15,300 favorable 
A)  £15,000 unfavorable 
B)  £15,000 favorable 
C)  £15,300 unfavorable 
D)  £15,300 favorable

Question 15

Taylor Company's budgeted sales were 10,000 units at £200 per unit. Actual sales were 9,200 units at £210 per unit. Taylor's sales price variance is

Accepted Answer

A)  £68,000 (U). 
B)  £100,000 (U). 
C)  £8,000 (U). 
D)  £92,000 (F). 
A)  £68,000 (U). 
B)  £100,000 (U). 
C)  £8,000 (U). 
D)  £92,000 (F).

Question 16

Figure 1
Max Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 1. Max's labour efficiency variance would be

Accepted Answer

A)  £7,200 unfavorable 
B)  £7,200 favorable 
C)  £6,280 unfavorable 
D)  £6,280 favorable 
A)  £7,200 unfavorable 
B)  £7,200 favorable 
C)  £6,280 unfavorable 
D)  £6,280 favorable

Question 17

Figure 2
Rax Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 2. Rax's labour rate variance would be

Accepted Answer

A)  £4,300 favorable 
B)  £4,300 unfavorable 
C)  £2,500 favorable 
D)  £2,500 unfavorable 
A)  £4,300 favorable 
B)  £4,300 unfavorable 
C)  £2,500 favorable 
D)  £2,500 unfavorable

Question 18

Figure 2
Rax Company has developed the following standards for one of its products:
The following activities occurred during the month of October:
   The company records materials price variances at the time of purchase.
  
-Refer to Figure 2. Rax's materials usage variance would be

Accepted Answer

A)  £8,400 unfavorable 
B)  £8,400 favorable 
C)  £5,600 unfavorable 
D)  £5,600 favorable 
A)  £8,400 unfavorable 
B)  £8,400 favorable 
C)  £5,600 unfavorable 
D)  £5,600 favorable

Question 19

Georgia Manufacturing Company has developed the following standards for one of its products:
The company records materials price variances at the time of purchase.
The following activities occurred during the month of April:
   Required:
   
a.
Calculate the materials price variance and indicate whether it is favorable or unfavorable.
b.
Calculate the materials usage variance and indicate whether it is favorable or unfavorable.
c.
Calculate the labour rate variance and indicate whether it is favorable or unfavorable.
d.
Calculate the labour efficiency variance and indicate whether it is favorable or unfavorable.

Accepted Answer

The answer of Georgia Manufacturing Company has developed the following...

Question 20

To determine the unit standard cost for a particular input, a company must decide how much

Accepted Answer

A)  input should be used per unit of output and how much should be paid for the quantity of the input to be used 
B)  input should be used per unit of output and how much output should be produced 
C)  output should be produced and how much should be paid for each unit produced 
D)  should be paid for the quantity of the input to be used and how much input should be purchased 
A)  input should be used per unit of output and how much should be paid for the quantity of the input to be used 
B)  input should be used per unit of output and how much output should be produced 
C)  output should be produced and how much should be paid for each unit produced 
D)  should be paid for the quantity of the input to be used and how much input should be purchased

How are standards developed? What is the difference between ideal and currently attainable standards?

An unfavorable materials usage variance may be caused by

If actual fixed overhead was £120,000 and there was a £2,600 favorable spending (expenditure) variance and a £2,000 unfavorable volume variance, budgeted fixed overhead must have been

Figure 4 Shannon Ltd.'s standard cost card contained the following information: Direct labour: 1.25 hours x £8.00 per hour = £10.00 Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours. -Refer to Figure 4. Shannon's standard hours allowed for production was

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's materials usage variance would be

Figure 6 -Refer to Figure 6. The fixed overhead spending (expenditure) variance would be

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's variable overhead efficiency variance would be

A sales volume variance will be favorable when:

Figure 5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 5. Ebola's labour efficiency variance would be

Figure 5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 5. Ebola's labour rate variance would be

Taylor Company's budgeted sales were 10,000 units at £200 per unit. Actual sales were 9,200 units at £210 per unit. Taylor's sales price variance is

Figure 1 Max Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 1. Max's labour efficiency variance would be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's labour rate variance would be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's materials usage variance would be

To determine the unit standard cost for a particular input, a company must decide how much

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters

Exam 11: Standard Costing and Variance Analysis

How are standards developed? What is the difference between ideal and currently attainable standards?

An unfavorable materials usage variance may be caused by

If actual fixed overhead was £120,000 and there was a £2,600 favorable spending (expenditure) variance and a £2,000 unfavorable volume variance, budgeted fixed overhead must have been

Figure 4 Shannon Ltd.'s standard cost card contained the following information: Direct labour: 1.25 hours x £8.00 per hour = £10.00 Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours. -Refer to Figure 4. Shannon's standard hours allowed for production was

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's materials usage variance would be

Figure 6 -Refer to Figure 6. The fixed overhead spending (expenditure) variance would be

Figure 7 Orient Company has developed the following standards for one of its products: The following activities occurred during the month of November: The company records materials price variances at the time of purchase. -Refer to Figure 7. Orient's variable overhead efficiency variance would be

A sales volume variance will be favorable when:

Figure 5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 5. Ebola's labour efficiency variance would be

Figure 5 Ebola Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 5. Ebola's labour rate variance would be

Taylor Company's budgeted sales were 10,000 units at £200 per unit. Actual sales were 9,200 units at £210 per unit. Taylor's sales price variance is

Figure 1 Max Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 1. Max's labour efficiency variance would be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's labour rate variance would be

Figure 2 Rax Company has developed the following standards for one of its products: The following activities occurred during the month of October: The company records materials price variances at the time of purchase. -Refer to Figure 2. Rax's materials usage variance would be

To determine the unit standard cost for a particular input, a company must decide how much

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Pricing Decisions and Profitability Analysis

Capital Investment Decisions

Cost Assignment

Activity-Based Costing

The Budgeting Process

Management Control Systems

Divisional Financial Performance Measurement

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Performance Management

Filters