Question 1

Which of the following equations can be used to compute a labor price variance? (A = Actual; S = Standard; H = Hour; P = Price)

Accepted Answer

A)  (AH × AP) − (AH × SP) 
B)  (AH × SP) − (SH × SP) 
C)  (AH × AP) − (SH × SP) 
D)  (SH × SP) − (SH × SP) 
A)  (AH × AP) − (AH × SP) 
B)  (AH × SP) − (SH × SP) 
C)  (AH × AP) − (SH × SP) 
D)  (SH × SP) − (SH × SP)

Question 2

When would a cost variance be listed as unfavorable?

Accepted Answer

A)  When actual costs are less than budgeted costs 
B)  When actual costs exceed budgeted costs 
C)  When actual costs are equal to budgeted costs 
D)  When actual sales are less than budgeted sales 
A)  When actual costs are less than budgeted costs 
B)  When actual costs exceed budgeted costs 
C)  When actual costs are equal to budgeted costs 
D)  When actual sales are less than budgeted sales

Question 3

How does the use of standard costs fit with the philosophy of management by exception?

Accepted Answer

Standard cost systems help managers plan

Question 4

The differences between the standard and actual amounts are called variances.

Accepted Answer

A) True 
 B)False

Question 5

What should be the organizational purpose for identifying and calculating variances?

Accepted Answer

The purpose of identifying variances is

Question 6

The Bach Company provides the following standard and actual costs relating to material price and labor usage. $$\begin{array} { l c c } 
\text { Item to Classify } & \text { Standard } & \text { Actual } \
\text { Material Price } & 8.50 \text { per gallon } & 8.35 \text { per gallon } \
\text { Luabor Usage } & 30,000 \text { hours } & 28,500 \text { per hour }
\end{array}$$ Based on the above information,which statement is correct?

Accepted Answer

A)  Both the material price variance and the labor usage variance are unfavorable. 
B)  Both the materials price variance and the labor usage variance are favorable. 
C)  The labor usage variance is unfavorable. 
D)  The materials price variance is unfavorable. 
A)  Both the material price variance and the labor usage variance are unfavorable. 
B)  Both the materials price variance and the labor usage variance are favorable. 
C)  The labor usage variance is unfavorable. 
D)  The materials price variance is unfavorable.

Question 7

If the master budget prepared at a volume level of 10,000 units includes direct materials of $40,000,a flexible budget based on a volume of 12,000 units would include direct materials of $48,000.

Accepted Answer

A) True 
 B)False

Question 8

Indicate whether each of the following statements is true or false.
The total flexible budget materials variance can be broken down into a price variance and a rate variance.______
If the materials price variance was $3,000 unfavorable and the materials usage variance was $2,000 favorable,the flexible budget materials variance was $1,000 unfavorable.______
If the actual quantity of material used was 10,000 pounds,the actual price per pound was $2.40,and the standard price per pound was $2.25,the materials price variance was $1,500 unfavorable.______
The production department normally is considered to be responsible for materials price variances.______
Analyzing both favorable and unfavorable variances can improve efficiency and benefit the entire company.______

Accepted Answer

The total flexible budget materials vari

Question 9

The resources used in the manufacturing process are frequently called:

Accepted Answer

A)  Variances. 
B)  Standards. 
C)  Inputs. 
D)  Outputs. 
A)  Variances. 
B)  Standards. 
C)  Inputs. 
D)  Outputs.

Question 10

The accountant for Dalton Company prepared the following performance report:
 $\begin{array}{|l|c|c|c|}
\hline &\text { Static Budget } & \text { Flexible Budget } & \text { Actual Results } \
\hline \text { Number of units } &  4,000 & 4,500 & 4,500 \
\hline\
\hline \text { Sales } & \$ 200,000 & \$225,000 &\$ 223,000 \
\hline \text { Less variable costs: } & & & \
\hline \text { Materials } & 72,000 & 81,000 & 81,600 \
\hline \text { Labor } & 50,000 & 56,250 & 54,000 \
\hline \text { Overhead } & 16,000 & 18,000 & 17,800 \
\hline \text { Contribution margin } & \$  23,000 & \$  25,875 & \$  21,900 \
\hline \text { Less fixed costs: } & & & \
\hline \text { Manufactuing } & 15,000 & 15,000 & 13,350 \
\hline \text { Selling and admin. } & 6,500 & 6,500 & 6,600 \
\hline \text { Net income } &\$ 1,500 &\$ 4,375 &\$ 1,950 \
\hline 
\end{array}$
 Required:
1)Compute the sales volume variance in units.
2)Compute the percentage increase in revenue generated by the increase in activity.
3)Compute the percentage increase in budgeted profitability that resulted from the increase in revenue.Explain this result.
4)How would differences between planned and actual volume impact companies that use a cost-plus pricing strategy?

Accepted Answer

1)Sales volume variance = 500 units favo

Question 11

Hurst Company's standard variable materials cost per unit was $8.The actual materials cost per unit on production of 10,000 units was $8.22.Based on this information,Hurst Company incurred an unfavorable variable materials price variance of $2,200.

Accepted Answer

A) True 
 B)False

Question 12

The following standard cost card is provided for Navid Company's Product A: $\begin{array}{lr}
\text { Direct material (2 lbs.@\$5.00 per lb.) } & \$ 10.00 \
\text { Direct labor }(1 \mathrm{hr} @ \$ 8.00 \text { per hr.) } & 8.00 \
\text { Variable overhead (1 hr. @\$3.00 per hr.) } & 3.00 \
\text { Fixed overhead (1 hr. @ \$2.00 per hr.) } & \underline{2.00} \
\text { Total standard cost per unit } &  \underline{\$ 23.00} \
\end{array}$  The fixed overhead rate is based on total budgeted fixed overhead of $12,000.During the period,the company produced and sold 5,800 units at the following costs:
Direct material 12,200 pounds @ $4.80 per pound
Direct labor 5,950 hours @ $8.00 per hour
Overhead $29,920
The standard manufacturing cost per unit is $23.00.What is the actual manufacturing cost per unit? (Do not round intermediate calculations.)

Accepted Answer

A)  $23.46. 
B)  $36.16. 
C)  $17.96. 
D)  Cannot be determined from the information provided. 
A)  $23.46. 
B)  $36.16. 
C)  $17.96. 
D)  Cannot be determined from the information provided.

Question 13

Which of the following factors should be considered in establishing standards for use with a standard costing system?

Accepted Answer

A)  Historical data. 
B)  Current and planned technology, plant layout, and operating procedures. 
C)  Behavioral implications. 
D)  All of these answers are correct. 
A)  Historical data. 
B)  Current and planned technology, plant layout, and operating procedures. 
C)  Behavioral implications. 
D)  All of these answers are correct.

Question 14

Multiplying the difference between actual materials price per unit and the standard materials price per unit by actual quantity of materials used is known as the:

Accepted Answer

A)  Sales volume variance. 
B)  Materials price variance. 
C)  Labor price variance. 
D)  Materials usage variance. 
A)  Sales volume variance. 
B)  Materials price variance. 
C)  Labor price variance. 
D)  Materials usage variance.

Question 15

What is the result when the quantity of materials used is less than the standard quantity?

Accepted Answer

A)  A favorable materials usage variance 
B)  A favorable materials price variance 
C)  An unfavorable materials usage variance 
D)  An unfavorable materials price variance 
A)  A favorable materials usage variance 
B)  A favorable materials price variance 
C)  An unfavorable materials usage variance 
D)  An unfavorable materials price variance

Question 16

The Vermont Company has requested a performance report that reports both sales activity variances and flexible budget variances.The following table of information is provided:
   Required:
(1)Compute and enter the variances and label the variances as favorable (F)or unfavorable (U).
(2)Which variances are sales volume variance and which variances are flexible budget variances?
(3)Comment on this company's performance.

Accepted Answer

1)
 @#IMG-DLM& 
2)The sales volume variances are b

Question 17

Indicate whether each of the following statements is true or false.
A company's variable overhead cost represents such inputs as rent and depreciation.______
The variable overhead cost pool is normally assigned to products using many different allocation rates.______
Variable overhead and fixed overhead variances are calculated using the same basic formulas.______
Many companies choose not to calculate price and usage variances for variable overhead costs.______

Accepted Answer

A company's variable overhead cost repre

Question 18

Cruz Company established a direct labor standard of 0.5 hours per unit at $12 per hour for one of its products.In April,Cruz produced 16,000 units and used 8,100 direct labor hours.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Accepted Answer

(a)Labor usage variance
(b)Labor usage v

Question 19

How do differences between planned and actual volume impact companies that use a cost-plus pricing strategy?

Accepted Answer

When a company uses a cost-plus pricing

Question 20

A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:

Accepted Answer

A)  Flexible budget variance. 
B)  Static budget variance. 
C)  Production activity variance. 
D)  Volume variance. 
A)  Flexible budget variance. 
B)  Static budget variance. 
C)  Production activity variance. 
D)  Volume variance.

Which of the following equations can be used to compute a labor price variance? (A = Actual; S = Standard; H = Hour; P = Price)

When would a cost variance be listed as unfavorable?

How does the use of standard costs fit with the philosophy of management by exception?

The differences between the standard and actual amounts are called variances.

What should be the organizational purpose for identifying and calculating variances?

The Bach Company provides the following standard and actual costs relating to material price and labor usage. Item to Classify Standard Actual Material Price 8.50 per gallon 8.35 per gallon Luabor Usage 30,000 hours 28,500 per hour Based on the above information,which statement is correct?

If the master budget prepared at a volume level of 10,000 units includes direct materials of $40,000,a flexible budget based on a volume of 12,000 units would include direct materials of $48,000.

The resources used in the manufacturing process are frequently called:

Hurst Company's standard variable materials cost per unit was $8.The actual materials cost per unit on production of 10,000 units was $8.22.Based on this information,Hurst Company incurred an unfavorable variable materials price variance of $2,200.

Which of the following factors should be considered in establishing standards for use with a standard costing system?

Multiplying the difference between actual materials price per unit and the standard materials price per unit by actual quantity of materials used is known as the:

What is the result when the quantity of materials used is less than the standard quantity?

How do differences between planned and actual volume impact companies that use a cost-plus pricing strategy?

A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 8: Performance Evaluation

Which of the following equations can be used to compute a labor price variance? (A = Actual; S = Standard; H = Hour; P = Price)

When would a cost variance be listed as unfavorable?

How does the use of standard costs fit with the philosophy of management by exception?

The differences between the standard and actual amounts are called variances.

What should be the organizational purpose for identifying and calculating variances?

The Bach Company provides the following standard and actual costs relating to material price and labor usage. Item to Classify Standard Actual Material Price 8.50 per gallon 8.35 per gallon Luabor Usage 30,000 hours 28,500 per hour Based on the above information,which statement is correct?

If the master budget prepared at a volume level of 10,000 units includes direct materials of $40,000,a flexible budget based on a volume of 12,000 units would include direct materials of $48,000.

The resources used in the manufacturing process are frequently called:

Hurst Company's standard variable materials cost per unit was $8.The actual materials cost per unit on production of 10,000 units was $8.22.Based on this information,Hurst Company incurred an unfavorable variable materials price variance of $2,200.

Which of the following factors should be considered in establishing standards for use with a standard costing system?

Multiplying the difference between actual materials price per unit and the standard materials price per unit by actual quantity of materials used is known as the:

What is the result when the quantity of materials used is less than the standard quantity?

How do differences between planned and actual volume impact companies that use a cost-plus pricing strategy?

A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters