Question 1

What does a favorable direct materials cost variance indicate?

Accepted Answer

A)  The actual quantity of direct materials used was less than the standard quantity. 
B)  The actual cost of direct materials purchased was less than the standard cost of direct materials purchased. 
C)  The actual cost of direct materials purchased was greater than the standard cost of direct materials purchased. 
D)  The actual quantity of direct materials used was greater than the standard quantity. 
A)  The actual quantity of direct materials used was less than the standard quantity. 
B)  The actual cost of direct materials purchased was less than the standard cost of direct materials purchased. 
C)  The actual cost of direct materials purchased was greater than the standard cost of direct materials purchased. 
D)  The actual quantity of direct materials used was greater than the standard quantity. B

Question 2

The direct materials cost and efficiency variances make up the total direct materials variance.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following statements about management by exception is incorrect?

Accepted Answer

A)  Managers concentrate on results that are outside the accepted parameters. 
B)  There is no need to investigate variances that are less than 10%. 
C)  Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D)  Many companies use a combination of percentages and dollar amounts. 
A)  Managers concentrate on results that are outside the accepted parameters. 
B)  There is no need to investigate variances that are less than 10%. 
C)  Exceptions can be expressed as a percentage of a budgeted amount or a dollar amount. 
D)  Many companies use a combination of percentages and dollar amounts. B

Question 4

The California Fitness Company completed the flexible budget analysis for the second quarter,which is given below.   Which of the following statements would be a correct analysis of the flexible budget variance for variable costs?

Accepted Answer

A)  decrease in sales price per unit 
B)  increase in variable cost per unit 
C)  increase in sales volume 
D)  increase in fixed costs 
A)  decrease in sales price per unit 
B)  increase in variable cost per unit 
C)  increase in sales volume 
D)  increase in fixed costs

Question 5

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

Accepted Answer

A)  standard quantity for actual production times standard cost per unit of direct materials 
B)  standard quantity for actual production times actual cost per unit of direct materials 
C)  actual quantity times standard cost per unit of direct materials 
D)  actual quantity times actual cost per unit of direct materials 
A)  standard quantity for actual production times standard cost per unit of direct materials 
B)  standard quantity for actual production times actual cost per unit of direct materials 
C)  actual quantity times standard cost per unit of direct materials 
D)  actual quantity times actual cost per unit of direct materials

Question 6

What does the variable overhead efficiency variance measure?

Accepted Answer

The variable overhead efficien

Question 7

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $5 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $17 per hour.Payroll taxes are approximately 22% of wages.Benefits amount to $4 per hour.How much is the direct materials cost standard per square foot?

Accepted Answer

A)  $5.40 
B)  $5.00 
C)  $21.00 
D)  $26.00 
A)  $5.40 
B)  $5.00 
C)  $21.00 
D)  $26.00

Question 8

The static budget,at the beginning of the month,for Helloise Décor Company follows: Static budget:
Sales volume: 2,100 units: Sales price: $58.00 per unit
Variable cost: $14.00 per unit: Fixed costs: $27,000 per month
Operating income: $65,400
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 1,850 units: Sales price: $59.00 per unit
Variable cost: $18.00 per unit: Fixed costs $35,000 per month
Operating income: $40,850
Calculate the sales volume variance for variable costs.

Accepted Answer

A)  $11,000 U 
B)  $3,500 F 
C)  $250 U 
D)  $11,000 F 
A)  $11,000 U 
B)  $3,500 F 
C)  $250 U 
D)  $11,000 F

Question 9

Fixed overhead volume variance is a flexible budget variance.

Accepted Answer

A) True 
 B)False

Question 10

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

Accepted Answer

A) True 
 B)False

Question 11

Pierce Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Pierce uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pounds per unit; $3 per pound
Direct labor: 5 hours per unit; $16 per hour
Pierce produced 5,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $381,000.What is the direct labor efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Accepted Answer

A)  $80,000 U 
B)  $80,000 F 
C)  $19,000 F 
D)  $19,000 U 
A)  $80,000 U 
B)  $80,000 F 
C)  $19,000 F 
D)  $19,000 U

Question 12

When evaluating variances,exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.

Accepted Answer

A) True 
 B)False

Question 13

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

Accepted Answer

A) True 
 B)False

Question 14

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n)________.

Accepted Answer

A)  favorable flexible budget variance for variable costs 
B)  favorable sales volume variance for variable costs 
C)  unfavorable flexible budget variance for variable costs 
D)  unfavorable sales volume variance for variable costs 
A)  favorable flexible budget variance for variable costs 
B)  favorable sales volume variance for variable costs 
C)  unfavorable flexible budget variance for variable costs 
D)  unfavorable sales volume variance for variable costs

Question 15

When using management by exception,managers investigate only those variances that are unfavorable.

Accepted Answer

A) True 
 B)False

Question 16

Global Engineering's actual operating income for the current year is $57,000.The flexible budget operating income for actual sales volume is $32,000,while the static budget operating income is $56,000.What is the sales volume variance for operating income?

Accepted Answer

A)  $24,000 favorable 
B)  $1,000 unfavorable 
C)  $24,000 unfavorable 
D)  $1,000 favorable 
A)  $24,000 favorable 
B)  $1,000 unfavorable 
C)  $24,000 unfavorable 
D)  $1,000 favorable

Question 17

A favorable sales volume variance in sales revenue suggests a(n)________.

Accepted Answer

A)  increase in actual sales price per unit as compared to budgeted sales price 
B)  increase in number of actual units sold when compared to the expected number of units sold 
C)  increase in actual variable cost per unit as compared to expected variable cost per unit 
D)  decrease in actual fixed costs 
A)  increase in actual sales price per unit as compared to budgeted sales price 
B)  increase in number of actual units sold when compared to the expected number of units sold 
C)  increase in actual variable cost per unit as compared to expected variable cost per unit 
D)  decrease in actual fixed costs

Question 18

The fixed overhead volume variance is a volume variance,not a cost variance.

Accepted Answer

A) True 
 B)False

Question 19

Alpine Productions uses a standard cost system for recording transactions.Alpine reported the following data for the year ended December 31: Sales revenues: $550,000
Cost of goods sold (standard costing): $382,000
Selling & admin expenses: $90,000
Variances:
$$\begin{array} { | l | r | c | } 
\hline \text { Sales revenue variance } & \$ 4,100 & \mathrm {~F} \
\hline \text { Direct materials cost variance } & 10 & \mathrm { U } \
\hline \text { Direct materials efficiency variance } & 250 & \mathrm {~F} \
\hline \text { Direct labor cost variance } & 65 & \mathrm { U } \
\hline \text { Direct labor efficiency variance } & 30 & \mathrm {~F} \
\hline \text { Variable overhead cost variance } & 225 & \mathrm { U } \
\hline \text { Variable overhead efficiency variance } & 95 & \mathrm {~F} \
\hline \text { Fixed overhead cost variance } & 410 & \mathrm { U } \
\hline \text { Fixed overhead volume variance } & 130 & \mathrm {~F} \
\hline
\end{array}$$ What is the standard net operating income?

Accepted Answer

A)  $77,795 
B)  $81,895 
C)  $171,895 
D)  $78,000 
A)  $77,795 
B)  $81,895 
C)  $171,895 
D)  $78,000

Question 20

The flexible budget variance is the difference between the ________.

Accepted Answer

A)  actual results and the expected results in the flexible budget for the actual units sold 
B)  expected results in the flexible budget for the units expected to be sold and the static budget 
C)  flexible budget and actual amounts due to differences in volumes 
D)  flexible budget and static budget due to differences in fixed costs 
A)  actual results and the expected results in the flexible budget for the actual units sold 
B)  expected results in the flexible budget for the units expected to be sold and the static budget 
C)  flexible budget and actual amounts due to differences in volumes 
D)  flexible budget and static budget due to differences in fixed costs

What does a favorable direct materials cost variance indicate?

The direct materials cost and efficiency variances make up the total direct materials variance.

Which of the following statements about management by exception is incorrect?

The California Fitness Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct analysis of the flexible budget variance for variable costs?

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

What does the variable overhead efficiency variance measure?

Fixed overhead volume variance is a flexible budget variance.

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

When evaluating variances,exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n)________.

When using management by exception,managers investigate only those variances that are unfavorable.

Global Engineering's actual operating income for the current year is $57,000.The flexible budget operating income for actual sales volume is $32,000,while the static budget operating income is $56,000.What is the sales volume variance for operating income?

A favorable sales volume variance in sales revenue suggests a(n)________.

The fixed overhead volume variance is a volume variance,not a cost variance.

The flexible budget variance is the difference between the ________.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 23: Flexible Budgets and Standard Cost Systems

What does a favorable direct materials cost variance indicate?

The direct materials cost and efficiency variances make up the total direct materials variance.

Which of the following statements about management by exception is incorrect?

The California Fitness Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct analysis of the flexible budget variance for variable costs?

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

What does the variable overhead efficiency variance measure?

Fixed overhead volume variance is a flexible budget variance.

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

When evaluating variances,exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n)________.

When using management by exception,managers investigate only those variances that are unfavorable.

Global Engineering's actual operating income for the current year is $57,000.The flexible budget operating income for actual sales volume is $32,000,while the static budget operating income is $56,000.What is the sales volume variance for operating income?

A favorable sales volume variance in sales revenue suggests a(n)________.

The fixed overhead volume variance is a volume variance,not a cost variance.

The flexible budget variance is the difference between the ________.

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters