Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. \[\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budget } \\ \hline \text { Dresses sold } & 5,000 & 6,000 \\ \hline \text { Sales } & \$ 235,000 & \$ 300,000 \\ \hline \text { Variable costs } & \underline { ( 145,000 ) } & \underline { ( 180,000 ) } \\ \hline \text { Contribution margin } & \$ 90,000 & 120,000 \\ \hline \text { Fixed Costs } & \underline { ( 84,000 ) } & \underline { ( 80,000 ) } \\ \hline \text { Operating inc ome } & \underline { \$ 6,000} &\underline { \$ 40,000 }\\ \hline \end{array}\]The effect of the sales quantity variance on the contribution margin for November is:

A) $30,000 unfavorable. B) $18,000 unfavorable. C) $20,000 unfavorable. D) $15,000 unfavorable. A) $30,000 unfavorable. B) $18,000 unfavorable. C) $20,000 unfavorable. D) $15,000 unfavorable.

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 Quantity Variance for October would be recorded as a:

A) credit of $3,680. B) debit of $4,140. C) credit of $4,140. D) debit of $3,680. A) credit of $3,680. B) debit of $4,140. C) credit of $4,140. D) debit of $3,680.

Bonner Company's direct labor cost for March was as follows: \[\begin{array} { | l | r | r | } \hline \text { Actual direct labor hours } & 30,000 & \\ \hline \text { Standard direct labor hours } & 31,500 & \\ \hline \text { Rate variance } & \$ 4,500 & \text { U } \\ \hline \text { Total payroll } & \$ 189,000 & \\ \hline \text { Labor mix variance } & \$ 4,225 & \text { U } \\ \hline \end{array}\]What was Bonner's direct labor yield variance?

A) $13,450. B) $9,675. C) $9,225. D) $5,000. A) $13,450. B) $9,675. C) $9,225. D) $5,000.

A machine distributor sells two models,basic and deluxe.The following information relates to its master budget.Actual sales were 7,000 basic models and 2,800 deluxe models.The actual sales prices were the same as the budgeted sales prices for both models. \[\begin{array} { | l | r | r | } \hline & \text { Basic } & \text { Deluse } \\ \hline \text { Sales (units) } & 8,000 & 2,000 \\ \hline \text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\ \hline \text { Variable costs per unit } & \$ 6,400 & \$ 9,000 \\ \hline \end{array}\]What is the sales quantity variance for the basic model?

A) $120,000. B) $256,000. C) $1,344,000. D) $1,600,000. A) $120,000. B) $256,000. C) $1,344,000. D) $1,600,000.

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. \[\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budget } \\ \hline \text { Dresses sold } & 5,000 & 6,000 \\ \hline \text { Sales } & \$ 235,000 & \$ 300,000 \\ \hline \text { Variable costs } & \underline { ( 145,000 ) } & \underline { ( 180,000 ) } \\ \hline \text { Contribution margin } & \$ 90,000 & 120,000 \\ \hline \text { Fixed Costs } & \underline { ( 84,000 ) } & \underline { ( 80,000 ) } \\ \hline \text { Operating inc ome } &\underline { \$ 6,000} & \underline {\$ 40,000} \\ \hline \end{array}\]The sales price variance for November is:

A) $30,000 unfavorable. B) $18,000 unfavorable. C) $20,000 unfavorable. D) $15,000 unfavorable. A) $30,000 unfavorable. B) $18,000 unfavorable. C) $20,000 unfavorable. D) $15,000 unfavorable.

A machine distributor sells two models,basic and deluxe.The following information relates to its master budget.Actual sales were 7,000 basic models and 2,800 deluxe models.The actual sales prices were the same as the budgeted sales prices for both models.\[\begin{array} { | l | r | r | } \hline & \text { Basic } & \text { Deluse } \\ \hline \text { Sales (units) } & 8,000 & 2,000 \\ \hline \text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\ \hline \text { Variable costs per unit } & \$ 6,400 & \$ 9,000 \\ \hline \end{array}\]What is the sales mix variance for the basic model?

A) $256,000. B) $1,344,000. C) $1,600,000. D) $2,520,000. A) $256,000. B) $1,344,000. C) $1,600,000. D) $2,520,000.

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. \[\begin{array} { | l | r | r | } \hline & \text { Actual } & \text { Budget } \\ \hline \text { Dresses sold } & 5,000 & 6,000 \\ \hline \text { Sales } & \$ 235,000 & \$ 300,000 \\ \hline \text { Variable costs } & ( 145,000 ) & \underline { ( 180,000 ) } \\ \hline \text { Contribution margin } & \$ 90,000 & 120,000 \\ \hline \text { Fixed Costs } & \underline { ( 84,000 ) } & \underline { ( 80,000 ) } \\ \hline \text { Operating inc ome } &\underline {\$6 , 000} &\underline { \$ 40,000 }\\ \hline \end{array}\]What additional information is needed for Danner to calculate the dollar impact of a change in market share on operating income for November? (CMA adapted)

A) Danner's budgeted market share and the budgeted total market size. B) Danner's budgeted market share,the budgeted total market size,and average market selling price. C) Danner's budgeted market share and the actual total market size. D) Danner's actual market share and the actual total market size. A) Danner's budgeted market share and the budgeted total market size. B) Danner's budgeted market share,the budgeted total market size,and average market selling price. C) Danner's budgeted market share and the actual total market size. D) Danner's actual market share and the actual total market size.

Exam 17: Additional Topics in Variance Analysis

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. Actual Budget Dresses sold 5,000 6,000 Sales \ 235,000 \ 300,000 Variable costs Contribution margin \ 90,000 120,000 Fixed Costs Operating inc ome The effect of the sales quantity variance on the contribution margin for November is:

(Multiple Choice)

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Question 61

Some variances are the result of standards that are inaccurate or do not reflect the current production process.

(True/False)

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Question 62

The labor mix variance is actual total hours at:

(Multiple Choice)

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Question 63

The Foxmoore Company experienced a $100,000 shortfall in sales revenues for the year.Top management is quite disturbed about this and has decided to use variance analysis in assigning the responsibility for the decline.Which of the following variances would most likely be within the control of the marketing department?

(Multiple Choice)

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Question 64

Advantage Co.sells two types of drives-standard and specialty.The budget is based on a combination of last year's information as well as forecasted industry sales and the company's market share.The following information is provided for June: Required: 1)Prepare a static budget and flexible budget for the company for June.2)What is the revenue sales-volume variance?

(Essay)

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Question 65

High Tech builds fence panels to custom order.Materials include 15 units of lumber at $2.25/unit.Standards call for 3 hours of labor at $25/hr.During October,3,121 fence panels were built.Materials purchased totaled $113,650 for 51,100 units of lumber.Actual lumber usage in production was 51,069 units.The October payroll was $248,000 for 9,500 hours.Required: (Be sure to indicate whether the variance is favorable or unfavorable. ) a.Compute the direct material price variance.b.Compute the direct material quantity variance.c.Compute the direct labor rate variance.d.Compute the direct labor efficiency variance.

(Essay)

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Question 66

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: Cost of material purchased in October, per ounce \ 23.10 Material purchased in October, ounces 2,300 Material used in production in October, ounces 2,120 Actual output in October, units 600 The raw material was purchased on account.The Materials Quantity Variance for October would be recorded as a:

(Multiple Choice)

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Question 67

Bonner Company's direct labor cost for March was as follows: Actual direct labor hours 30,000 Standard direct labor hours 31,500 Rate variance \ 4,500 U Total payroll \ 189,000 Labor mix variance \ 4,225 U What was Bonner's direct labor yield variance?

(Multiple Choice)

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Question 68

A machine distributor sells two models,basic and deluxe.The following information relates to its master budget.Actual sales were 7,000 basic models and 2,800 deluxe models.The actual sales prices were the same as the budgeted sales prices for both models. Basic Deluse Sales (units) 8,000 2,000 Sales price per unit \ 8,000 \ 12,000 Variable costs per unit \ 6,400 \ 9,000 What is the sales quantity variance for the basic model?

(Multiple Choice)

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Question 69

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. Actual Budget Dresses sold 5,000 6,000 Sales \ 235,000 \ 300,000 Variable costs Contribution margin \ 90,000 120,000 Fixed Costs Operating inc ome The sales price variance for November is:

(Multiple Choice)

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Question 70

The direct material price variance is based on the quantity of materials purchased when the quantity purchased is different from the quantity used.

(True/False)

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Question 71

A machine distributor sells two models,basic and deluxe.The following information relates to its master budget.Actual sales were 7,000 basic models and 2,800 deluxe models.The actual sales prices were the same as the budgeted sales prices for both models. Basic Deluse Sales (units) 8,000 2,000 Sales price per unit \ 8,000 \ 12,000 Variable costs per unit \ 6,400 \ 9,000 What is the sales mix variance for the basic model?

(Multiple Choice)

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Question 72

The next year's budget for Canfield,Inc. ,a multi-product company,is given below: Product 1 Product 2 Sales \ 1,890,000 \ 1,377,000 Variable costs 919,800 594,000 Fixed costs 500,000 500,000 Net income Units 252,000 108,000 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.Canfield analyzes the effects its sales variances have on the profitability of the company. Product Line Units Sales A 252,230 \ 1,848,579 B 113,770 \ 1,479,010 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.

(Essay)

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Question 73

In the new cost management scheme of things,what are some of the disadvantages of the traditional standard cost system (list at least four)?

(Essay)

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Question 74

For a company that produces more than one product,the sales volume variance can be divided into which two of the following additional variances? (CMA adapted)

(Multiple Choice)

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Question 75

Yellon Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The following data pertain to last month's operations: The fixed manufacturing overhead budget variance is:

(Multiple Choice)

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Question 76

Danner Fashions sells a line of women's dresses.Danner's performance report for November is shown below: (CMA adapted) The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the various factors affecting the difference between budgeted and actual operating income. Actual Budget Dresses sold 5,000 6,000 Sales \ 235,000 \ 300,000 Variable costs (145,000) Contribution margin \ 90,000 120,000 Fixed Costs Operating inc ome What additional information is needed for Danner to calculate the dollar impact of a change in market share on operating income for November? (CMA adapted)

(Multiple Choice)

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Question 77

Professional accounting firms could not compute a labor mix and labor yield variance for their auditors because labor in accounting is not substitutable.

(True/False)

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Question 78

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 material yield variance for May?

(Multiple Choice)

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Question 79

If a company sells two products,it is possible for both products to have a favorable sales mix variance.another.

(True/False)

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Question 80

Some variances are the result of standards that are inaccurate or do not reflect the current production process.

The labor mix variance is actual total hours at:

Bonner Company's direct labor cost for March was as follows: Actual direct labor hours 30,000 Standard direct labor hours 31,500 Rate variance \ 4,500 U Total payroll \ 189,000 Labor mix variance \ 4,225 U What was Bonner's direct labor yield variance?

The direct material price variance is based on the quantity of materials purchased when the quantity purchased is different from the quantity used.

In the new cost management scheme of things,what are some of the disadvantages of the traditional standard cost system (list at least four)?

For a company that produces more than one product,the sales volume variance can be divided into which two of the following additional variances? (CMA adapted)

Yellon Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor-hours (DLHs).The following data pertain to last month's operations: The fixed manufacturing overhead budget variance is:

Professional accounting firms could not compute a labor mix and labor yield variance for their auditors because labor in accounting is not substitutable.

If a company sells two products,it is possible for both products to have a favorable sales mix variance.another.

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

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