Question 1

Explain the difference between the sales mix variance and the sales quantity variance.

Accepted Answer

The sales mix variance measures the impa

Question 2

The variable production cost variances are computed using the units produced instead of the units sold.

Accepted Answer

A) True 
 B)False

Question 3

Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted) 
$$\begin{array} { | l | r | r | } 
\hline & \text { Actual } & \text { Budget } \
\hline \text { Units } & 8,000 & 10,000 \
\hline \text { Sales Revenue } & \$ 92,000 & \$ 105,000 \
\hline
\end{array}$$The sales price variance for June was:

Accepted Answer

A)  $8,000 favorable. 
B)  $8,000 unfavorable. 
C)  $10,000 unfavorable. 
D)  $10,500 unfavorable. 
A)  $8,000 favorable. 
B)  $8,000 unfavorable. 
C)  $10,000 unfavorable. 
D)  $10,500 unfavorable.

Question 4

The Buffett Company had the following expectations:$$\begin{array} { | c | r | l | } 
\hline \text { Total market for the product } & 175,000 & \text { units } \
\hline \text { Buffett's budgeted sales } & 54,250 & \
\hline \text { Contribution margin per unit } & \$ 13.00 & \
\hline \text { Actual results for the year were: } & & \
\hline \text { Total market for the product } & 166,250 & \text { units } \
\hline \text { Buffett's actual sales } & 56,526 & \
\hline
\end{array}$$ 
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute Buffett's sales activity variance.b.Compute Buffett's market share variance.c.Computer Buffett's industry volume variance.

Accepted Answer

a.$29,575 F
b.$64,837.50 F
c.$35,262.50

Question 5

If variances are not prorated at the end of the accounting period,they are closed to the Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 6

Porcini Enterprises produces two products,AR and QT.Actual and budgeted information for the year ending April 30 is provided below: 
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the sales activity variance for each product.b.Compute the sales mix variance for each product.c.Compute the sales quantity variance for each product.

Accepted Answer

a.AR: $1,440 F;QT: $400 U
b.AR: $1,260

Question 7

Ingredient A12H is a raw material used to make Calvin Corporation's major product.The standard cost of Ingredient A12H is $23.00 per ounce and the standard quantity is 3.8 ounces per unit of output.Data concerning the compound for October appear below:
$$\begin{array} { | l | r | } 
\hline \text { Cost of material purchased in October, per ounce } & \$ 23.10 \
\hline \text { Material purchased in October, ounces } & 2,300 \
\hline \text { Material used in production in October, ounces } & 2,120 \
\hline \text { Actual output in October, units } & 600 \
\hline
\end{array}$$ The raw material was purchased on account.The Materials Price Variance for October would be recorded as a:

Accepted Answer

A)  debit of $230. 
B)  credit of $212. 
C)  debit of $212. 
D)  credit of $230. 
A)  debit of $230. 
B)  credit of $212. 
C)  debit of $212. 
D)  credit of $230.

Question 8

The following standards have been established for a raw material used to make product P62:

The following data pertain to a recent month's operations: Required:
a.What is the materials price variance for the month?
b.What is the materials quantity variance for the month?

Accepted Answer

a.Materials price variance = (AQ × AP)-

Question 9

Explain the difference between the market share variance and the industry volume variance.

Accepted Answer

The market share variance tells how much

Question 10

The next year's budget for Howard,Inc. ,a multi-product company,is given below:
$$\begin{array} { | l | r | r | } 
\hline & \text { Product } A & \text { Product B } \
\hline \text { Sales } & \$ 1,890,000 & \$ 1,377,000 \
\hline \text { Variable costs } & 919,800 & 594,000 \
\hline \text { Fixed costs } &\underline{ 500,000 }& \underline{500,000} \
\hline \text { Net income } & \underline{\$ 470,200} & \underline{283,000} \
\hline \text { Units } & 252,000 & 108,000 \
\hline \text { Market share } & 12.5 \% & 20.0 \% \
\hline
\end{array}$$ 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.Howard analyzes the effects its sales variances have on the profitability of the company. $$\begin{array} { | c | r | r | r | } 
\hline \text { Product Line } & \text { Units } & \text { Sales } & \text { Mkt share } \
\hline \text { A } & 252,230 & \$ 1,848,579 & 15.0 \% \
\hline \text { B } & 113,770 & \$ 1,479,010 & 17.0 \% \
\hline
\end{array}$$
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.

Accepted Answer

a.A: $885.50 F;B: $41,832.50 F
b.A: $161

Question 11

The sales quantity variance would be favorable when a company sells:

Accepted Answer

A)  relatively fewer of the products bearing contribution margins lower than average. 
B)  relatively more of the products bearing contribution margins higher than average. 
C)  more total units than budgeted,holding the sales mix constant. 
D)  less total units than budgeted,holding the sales mix constant. 
A)  relatively fewer of the products bearing contribution margins lower than average. 
B)  relatively more of the products bearing contribution margins higher than average. 
C)  more total units than budgeted,holding the sales mix constant. 
D)  less total units than budgeted,holding the sales mix constant.

Question 12

The Fantasy Gifts Company,a maker of Holiday novelties,needs your help immediately.The company's accountant resigned without leaving adequate records or explanations for what she did.In reviewing the records,you find the following information for May: 
$$\begin{array} { | l | r | } 
\hline \text { Materials Purchased } & 20,000 \text { units } \
\hline \text { Materials Used } & 15,000 \text { units } \
\hline
\end{array}$$ You find a copy of the budget which shows that materials were budgeted at $0.60/unit.You know that the materials price variance is recorded at the time of purchase and you find some handwritten notes among the accountant's work papers,which indicate the following:

$$\begin{array} { | l | c | } 
\hline \text { Materials price variance } & \$ 200 \mathrm {~F} \
\hline \text { Materials efficiency (quantity) variance } & \$ 600 \mathrm {~F} \
\hline
\end{array}$$What was the total standard cost of direct materials allowed during May?

Accepted Answer

A)  $8,260. 
B)  $8,400. 
C)  $9,440. 
D)  $9,600. 
A)  $8,260. 
B)  $8,400. 
C)  $9,440. 
D)  $9,600.

Question 13

Ingredient A12H is a raw material used to make Calvin Corporation's major product.The standard cost of Ingredient A12H is $23.00 per ounce and the standard quantity is 3.8 ounces per unit of output.Data concerning the compound for October appear below: 
$$\begin{array} { | l | r | } 
\hline \text { Cost of material purchased in October, per ounce } & \$ 23.10 \
\hline \text { Material purchased in October, ounces } & 2,300 \
\hline \text { Material used in production in October, ounces } & 2,120 \
\hline \text { Actual output in October, units } & 600 \
\hline
\end{array}$$The raw material was purchased on account.The credit to the Raw Materials account for October would total:

Accepted Answer

A)  $52,440. 
B)  $48,760. 
C)  $52,900. 
D)  $53,130. 
A)  $52,440. 
B)  $48,760. 
C)  $52,900. 
D)  $53,130.

Question 14

A company's direct labor standards for a given operation and the actual results for the current period are provided below:
Standard rates:
Level One: $20 per hour
Level Two: $15 per hour
Time to produce one unit:
Two (2)Level One workers at 15-minutes each
Three (3)Level Two workers at 10 minutes each
Actual Results:
Units produced: 10,000
Labor used:
4,000 hours of Level One workers at $25 per hour
6,800 hours of Level Two workers at $15 per hour
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the labor price (rate)variances for each worker level.b.Compute the labor efficiency variances for each worker level.c.Compute the labor mix variances for each worker level.d.Compute the labor yield variances for each worker level.

Accepted Answer

a.L1: $20,000 U;L2: 0
b.L1: $20,000 F;L2

Question 15

A company's direct labor standards for a given operation and the actual results for the current period are provided below:
Standard rates:
Class A: $24 per hour
Class B: $12 per hour
Time to produce one unit:
Three (3)Class A workers at 20 minutes each
Two (2)Class B workers at 15-minutes each
Actual Results:
Units produced: 6,000
Labor used:
5,800 hours of Class A workers;total payroll: $156,600
3,500 hours of Class B workers;total payroll: $49,000
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the labor price (rate)variances for each worker level.b.Compute the labor efficiency variances for each worker level.c.Compute the labor mix variances for each worker level.d.Compute the labor yield variances for each worker level.

Accepted Answer

a.A: $17,400 U;B: $7,000 U
b.A: $4,800 F

Question 16

Prince Inc.has the following information: 
$$\begin{array} { | l | r | l | } 
\hline \text { Total payroll } & \$ 165,300 & \
\hline \text { Standard direct labor hours } & 45,000 & \
\hline \text { Labor rate variance } & \$ 8,700 & \mathrm {~F} \
\hline \text { Labor mix variance } & \$ 4,000 & \mathrm {~F} \
\hline \text { Labor yield variance } & \$ 2,000 & \mathrm {~F} \
\hline
\end{array}$$What was the standard direct labor rate?

Accepted Answer

A)  $3.50. 
B)  $3.80. 
C)  $4.00. 
D)  $5.80. 
A)  $3.50. 
B)  $3.80. 
C)  $4.00. 
D)  $5.80.

Question 17

A company's direct labor standards for a given operation and the actual results for the current period are provided below:
Standard rates:
Advanced: $18 per hour
Trained: $15 per hour
Novice: $10 per hour
  
Actual Results:
Units produced: 4,000
Labor used:
2,200 hours of Advanced workers
4,300 hours of Trained workers
1,900 hours of Novice workers
Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the labor efficiency variances for each worker level.b.Compute the labor mix variances for each worker level.c.Compute the labor yield variances for each worker level.

Accepted Answer

a.Adv: $3,600 U;Train: $4,500 U;Nov: $1,

Question 18

The standard direct labor cost for room cleaning at Texas Hotels is $2.50 per room ($10 per hour in wages divided by 4 rooms cleaned per hour).Actual labor costs were $11,330 for the month.During the period there were 1,100 labor hours worked;3,920 rooms were cleaned during the month.Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the labor price variance for the period.b.Compute the labor efficiency variance for the period.

Accepted Answer

a.$330 U
b.$1,200 U
Feedback:

Question 19

If the number of units produced exceeds the number of units sold,the full-absorption operating profit will be lower than variable costing operating profit.

Accepted Answer

A) True 
 B)False

Question 20

The following data for April has been provided by Cowle Corporation. The volume variance for April is:

Accepted Answer

A)  $10,150 U. 
B)  $8,120 U. 
C)  $8,120 F. 
D)  $10,150 F. 
A)  $10,150 U. 
B)  $8,120 U. 
C)  $8,120 F. 
D)  $10,150 F.

Explain the difference between the sales mix variance and the sales quantity variance.

The variable production cost variances are computed using the units produced instead of the units sold.

Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted) Actual Budget Units 8,000 10,000 Sales Revenue \ 92,000 \ 105,000 The sales price variance for June was:

If variances are not prorated at the end of the accounting period,they are closed to the Cost of Goods Sold.

The following standards have been established for a raw material used to make product P62: The following data pertain to a recent month's operations:Required: a.What is the materials price variance for the month? b.What is the materials quantity variance for the month?

Explain the difference between the market share variance and the industry volume variance.

The sales quantity variance would be favorable when a company sells:

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 the standard direct labor rate?

If the number of units produced exceeds the number of units sold,the full-absorption operating profit will be lower than variable costing operating profit.

The following data for April has been provided by Cowle Corporation.The volume variance for April is:

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Performance Measurement to Support Business Strategy

Filters

Exam 17: Additional Topics in Variance Analysis

Explain the difference between the sales mix variance and the sales quantity variance.

The variable production cost variances are computed using the units produced instead of the units sold.

Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted) Actual Budget Units 8,000 10,000 Sales Revenue \ 92,000 \ 105,000 The sales price variance for June was:

If variances are not prorated at the end of the accounting period,they are closed to the Cost of Goods Sold.

The following standards have been established for a raw material used to make product P62: The following data pertain to a recent month's operations:Required: a.What is the materials price variance for the month? b.What is the materials quantity variance for the month?

Explain the difference between the market share variance and the industry volume variance.

The sales quantity variance would be favorable when a company sells:

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 the standard direct labor rate?

If the number of units produced exceeds the number of units sold,the full-absorption operating profit will be lower than variable costing operating profit.

The following data for April has been provided by Cowle Corporation.The volume variance for April is:

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Fundamentals of Variance Analysis

Performance Measurement to Support Business Strategy

Filters