Exam 17: Additional Topics in Variance Analysis
Exam 1: Cost Accounting: Information for Decision Making144 Questions
Exam 3: Fundamentals of Cost-Volume-Profit Analysis161 Questions
Exam 4: Fundamentals of Cost Analysis for Decision Making140 Questions
Exam 5: Cost Estimation130 Questions
Exam 6: Fundamentals of Product and Service Costing148 Questions
Exam 7: Job Costing147 Questions
Exam 8: Process Costing149 Questions
Exam 9: Activity-Based Costing149 Questions
Exam 10: Fundamentals of Cost Management142 Questions
Exam 11: Service Department and Joint Cost Allocation151 Questions
Exam 12: Fundamentals of Management Control Systems160 Questions
Exam 13: Planning and Budgeting146 Questions
Exam 14: Business Unit Performance Measurement144 Questions
Exam 15: Transfer Pricing138 Questions
Exam 16: Fundamentals of Variance Analysis147 Questions
Exam 17: Additional Topics in Variance Analysis134 Questions
Exam 18: Performance Measurement to Support Business Strategy148 Questions
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Using the abbreviations listed below,what is the formula for the industry volume variance? AMS = actual market share
BMS = budgeted market share
BCM = budgeted contribution margin per unit
ACM = actual contribution margin per unit
ATM = actual total market
BTM = budgeted total market
(Multiple Choice)
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The next year's budget for Alton,Inc. ,is given below:
Procuct 1 Procuct 2 Sales \ 945,000 \ 688,500 Variable costs 459,900 297,000 Fixed costs 300,000 Net income Units 126,000 54,000 Market share 12\% 20.0\% At the end of the year,the total fixed costs and the variable costs per unit were exactly as budgeted,but the following units per product line were sold: Product Line Units Sales Mkt share 1 126,200 \ 958,579 16.0\% 2 56,800 \ 721,010 14.2\%
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the sales activity variance for each product.b.Compute the market share variance for each product.c.Compute the industry volume variance for each product.
(Essay)
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The Stangle Company had the following expectations: Total market for the product 360,000 units Stangle's budgeted sales 108,500 Contribution margin per unit \ 12.00 Actual results for the year were: Total market for the product 332,500 units Stangle's actual sales 113,050
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute Stangle's sales activity variance.b.Compute Stangle's market share variance.c.Computer Stangle's industry volume variance.
(Essay)
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Which of the following income statement items is analyzed using the sales mix and the sales quantity variances?
(Multiple Choice)
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When deciding how many variances to calculate,what two items need to be considered? Be sure to define your terms.
(Essay)
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Maxine Watters,the managerial accountant has been asked by the Coolare Ceiling Fan Company president to prepare an analysis of the effectiveness of the new management team.They manufacture paper fans.2016 standards:
Budget
Direct materials - 4 parts @ $2 per part
Direct labor - one half hour (0.5)@ $10 per hour
Variable overhead - 2 machine hours @ $3 per hour
Fixed overhead - $900,000
Estimated production - 100,000
Actual results 2016:
Direct materials - 585,000 parts at a total cost of $1,462,500 were purchased and used
Direct labor - 51,000 hours at a cost of $561,000
Variable overhead - 240,000 machine hours at a cost of $840,000
Fixed overhead - $870,000
Actual production - 130,000 fans
Required:
Requirement 1: Compute the direct material and direct labor budget variances.Requirement 2: Compute the variable and fixed overhead variances.
(Essay)
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The sales quantity variance is the same as the sales activity variance on a flexible budget performance report.
(True/False)
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Output is usually defined as sales units in merchandising,but service organizations use measures of activity units,like patient days.
(True/False)
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Xi Company currently uses a traditional standard costing system.During the past two years the company has been modernizing its plant and has tried to keep the old standard costing system in place by changing some of the features to reflect the more automated situation.It has now come to a point,however,where the old system just isn't providing useful information for product costing,pricing,decision making,etc.The CEO,Ms.Chang,has set up a team to look into the situation and come up with reasons why the old system isn't working anymore.Required:
What are the problems with traditional standard costing under the current manufacturing environment?
(Essay)
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Prince Inc.has the following information:
Total payroll \ 165,300 Standard direct labor hours 45,000 Labor rate variance \ 8,700 Labor mix variance \ 4,000 Labor yield variance \ 2,000 What was Prince's actual direct labor rate?
(Multiple Choice)
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Labor variances are more important than material variances in service organizations.
(True/False)
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Which of the following statements is(are)true? (A)If variances are prorated at the end of the accounting period,an unfavorable direct materials price variance will,when prorated,increase the value of the Finished Goods Inventory.
(B)Insignificant variances are not generally prorated at the end of the accounting period and are closed to the Cost of Goods Sold.
(Multiple Choice)
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Which of the following statements is(are)true?
(A)The market share variance is more controllable by the marketing department than the industry volume variance.
(B)The industry volume variance is the portion of the sales activity variance due to a change in the company's proportion of sales in the markets in which they operate.
(Multiple Choice)
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Compound Y23Z is used by Carrington Corporation to make one of its products.The standard cost of compound Y23Z is $38.70 per ounce and the standard quantity is 4.6 per unit of output.Data concerning the compound in the most recent month appear below:
Cost of material purchased in November, per \ 39.20 ounce Material purchased in November, ounces 2,800 Material used in production in Novernber, ounces 2,360 Actual output in November, units 500 The raw material was purchased on account.Required:
a.Record the purchase of the raw material in a journal entry.b.Record the use of the raw material in production in a journal entry.
(Essay)
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The direct labor yield variance is unfavorable when the total hours worked during a period are less than the total standard hours allowed for the actual number of units produced.
(True/False)
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The Oregon Company produces and sells a single product.Standards have been established for the product as follows:
Direct materials: 5 pounds @ $3.50 per pound = $17.50
Direct labor: 3 hours @ $5.50 per hour = $16.50
Actual cost and usage figures for the past month follow: Units produced 750 Direct materials used 4,000 pounds Direct materials purchased (4,500 \ 14,400 pounds) Direct labor cost (2,000 hours) \ 11,200
Required:
Prepare journal entries to record:
a.The purchase of raw materials.b.The usage of raw materials in production.c.The incurrence of direct labor cost.
(Essay)
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The Shum Company makes a product,Z,from two materials: X and Y.The standard prices and quantities are as follows:
X Y Price per pound \ 6 \ 9 Pounds per unit of product Z 10 5
In May,21,000 units of Z were produced by Shum Company,with the following actual prices and quantities of materials used:
x Y Price per pound \ 5.70 \ 8.40 Pounds used 216,000 114,000 What is the total direct materials mix variance for May?
(Multiple Choice)
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If a company sells two products,it is possible for both products to have an unfavorable sales quantity variance.
(True/False)
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What is the correct journal entry to record a favorable materials mix variance assuming all material variances are recognized when the direct materials are issued to production?
(Multiple Choice)
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The following data for April has been provided by Cowle Corporation.
The budget variance for April is:

(Multiple Choice)
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