Question 1

The following data is given for the Harry Company:   Overhead is applied on standard labor hours.
The direct labor time variance is:

Accepted Answer

A)  6,000F 
B)  6,000U 
C)  33,000U 
D)  33,000F 
A)  6,000F 
B)  6,000U 
C)  33,000U 
D)  33,000F

Question 2

The direct labor time variance measures the efficiency of the direct labor force.

Accepted Answer

A) True 
 B)False

Question 3

The variance from standard for factory overhead cost resulting from operating at a level above or below 100% of normal capacity is termed volume variance.

Accepted Answer

A) True 
 B)False

Question 4

One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs.

Accepted Answer

A) True 
 B)False

Question 5

The total manufacturing cost variance consists of:

Accepted Answer

A)  Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance 
B)  Direct materials cost variance, direct labor rate variance, and factory overhead cost variance 
C)  Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance 
D)  Direct materials cost variance, direct labor cost variance, factory overhead cost variance 
A)  Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance 
B)  Direct materials cost variance, direct labor rate variance, and factory overhead cost variance 
C)  Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance 
D)  Direct materials cost variance, direct labor cost variance, factory overhead cost variance

Question 6

Define nonfinancial performance measures. What are they used for and what are some common examples?

Accepted Answer

Nonfinancial performance measures evalua

Question 7

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

Accepted Answer

A) True 
 B)False

Question 8

The Finishing Department of Pinnacle Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours:
   During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200.
Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours.)

Accepted Answer

The answer of The Finishing Department of Pinnacle Manufacturing Co....

Question 9

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $5,200 favorable.

Accepted Answer

A) True 
 B)False

Question 10

A favorable cost variance occurs when

Accepted Answer

A)  Actual costs are more than standard costs. 
B)  Standard costs are more than actual costs. 
C)  Standard costs are less than actual costs. 
D)  None of the above. 
A)  Actual costs are more than standard costs. 
B)  Standard costs are more than actual costs. 
C)  Standard costs are less than actual costs. 
D)  None of the above.

Question 11

If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:

Accepted Answer

A)  work in process account only 
B)  cost of goods sold account only 
C)  finished goods account only 
D)  work in process, cost of goods sold, and finished goods accounts 
A)  work in process account only 
B)  cost of goods sold account only 
C)  finished goods account only 
D)  work in process, cost of goods sold, and finished goods accounts

Question 12

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material price variance.

Accepted Answer

A)  0 
B)  59,400U 
C)  59,400F 
D)  6,000U 
A)  0 
B)  59,400U 
C)  59,400F 
D)  6,000U

Question 13

Calculate the fixed factory overhead volume variance using the above information:

Accepted Answer

A)  $1,701 Favorable 
B)  $4,866.75 Unfavorable 
C)  $1,701 Unfavorable 
D)  $4,866.75 Favorable 
A)  $1,701 Favorable 
B)  $4,866.75 Unfavorable 
C)  $1,701 Unfavorable 
D)  $4,866.75 Favorable

Question 14

The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor rate variance.

Accepted Answer

A)  4,920U 
B)  4,920F 
C)  4,560U 
D)  4,560U. 
A)  4,920U 
B)  4,920F 
C)  4,560U 
D)  4,560U.

Question 15

Though favorable volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

Accepted Answer

A) True 
 B)False

Question 16

At the end of the fiscal year, the variances from standard are usually transferred to the finished goods account.

Accepted Answer

A) True 
 B)False

Question 17

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

Accepted Answer

The answer of Oak Company produces a chair that requires...

Question 18

The following data is given for the Bahia Company:   Overhead is applied on standard labor hours.
The factory overhead volume variance is:

Accepted Answer

A)  $65U 
B)  $65F 
C)  $540U 
D)  $540F 
A)  $65U 
B)  $65F 
C)  $540U 
D)  $540F

Question 19

The following data relate to direct labor costs for the current period:   What is the direct labor time variance?

Accepted Answer

A)  $36,000 unfavorable 
B)  $35,000 unfavorable 
C)  $23,000 favorable 
D)  $22,000 favorable 
A)  $36,000 unfavorable 
B)  $35,000 unfavorable 
C)  $23,000 favorable 
D)  $22,000 favorable

Question 20

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Accepted Answer

A) True 
 B)False

Exam 23: Performance Evaluation Using Variances From Standard Costs

The following data is given for the Harry Company: Overhead is applied on standard labor hours. The direct labor time variance is:

The direct labor time variance measures the efficiency of the direct labor force.

The variance from standard for factory overhead cost resulting from operating at a level above or below 100% of normal capacity is termed volume variance.

One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs.

The total manufacturing cost variance consists of:

Define nonfinancial performance measures. What are they used for and what are some common examples?

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $5,200 favorable.

A favorable cost variance occurs when

If at the end of the fiscal year the variances from standard are significant, the variances should be transferred to the:

Calculate the fixed factory overhead volume variance using the above information:

Though favorable volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

At the end of the fiscal year, the variances from standard are usually transferred to the finished goods account.

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The factory overhead volume variance is:

The following data relate to direct labor costs for the current period: What is the direct labor time variance?

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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