Question 1

In a standard cost system,overhead is applied to production on a basis of:

Accepted Answer

A)  the denominator hours chosen for the period. 
B)  the budgeted hours for the normal production level of activity. 
C)  the actual hours required to complete the output of the period. 
D)  the standard hours allowed to complete the output of the perioD.
Standard costing uses standard hours,not actual or budgeteD. 
A)  the denominator hours chosen for the period. 
B)  the budgeted hours for the normal production level of activity. 
C)  the actual hours required to complete the output of the period. 
D)  the standard hours allowed to complete the output of the perioD.
Standard costing uses standard hours,not actual or budgeteD.

Question 2

The exhibit below reflects a summary of performance for a single item of a retail store's inventory for the month ended April 30: (CIA adapted) T
 he sales volume variance is:

Accepted Answer

A)  $20,000 favorable. 
B)  $20,000 unfavorable. 
C)  $11,000 favorable. 
D)  $12,000 unfavorable. 
A)  $20,000 favorable. 
B)  $20,000 unfavorable. 
C)  $11,000 favorable. 
D)  $12,000 unfavorable.

Question 3

A chemical company in the Midwest produces a solvent used by manufacturers of plastics.Three basic chemicals go into this solvent.The standards for one-liter of this product are:
Chemical A: 500 ml.@ $10 per liter
Chemical B: 100 ml.@ $50 per liter
Chemical C: 400 ml.@ $20 per liter
During the last period,10,000 liters of the solvent were produced and the company purchased the following amounts of each chemical:
Chemical A: 6,400 liters @ $9.00 per liter
Chemical B: 900 liters @ $75.00 per liter
Chemical C: 4,200 liters @ $20.00 per liter
Because these chemicals are volatile,the company uses them immediately upon purchase,so there are no beginning and ending inventories.Required:
(Be sure to indicate whether the variance is favorable or unfavorable. )
a.Compute the direct material price variances.b.Compute the direct material efficiency variances.c.Compute the direct material mix variances.d.Compute the direct material yield variances.

Accepted Answer

a.A: $6,400 F;B: $22,500 U;C: 0
b.A: $14

Question 4

The production cost yield variance is conceptually the same as the sales quantity variance.

Accepted Answer

A) True 
 B)False

Question 5

What is the correct journal entry to record direct labor when the actual labor mix is favorable and the total standard hours allowed is greater than the total actual hours worked?

Accepted Answer

A) 
$$\begin{array} { | l | c | c | } 
\hline \text { Work in Process Inventory } & \times  \times \times & \
\hline \text { Direct labor yield variance } & \times \times \times & \
\hline \text { Direct labor mix variance } & \times\times \times & \
\hline \text { Wages Payable } & & \times \times  \times \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | c | c | } 
\hline \text { Work in Process Inventory } & \times\times \times & \
\hline \text { Direct labor yield variance } & & \times \times\times \
\hline \text { Direct labor mix variance } & & \times \times \times \
\hline \text { Wages Payable } & & \times \times  \times \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | c | c | } 
\hline \text { Finished Goods Inventory } & \times \times \times & \
\hline \text { Direct labor mox variance } & \times \times \times & \
\hline \text { Direct labor yield variance } & & \times \times  \times \
\hline \text { Work in Process Inventory } & & \times \times  \times \
\hline
\end{array}$$ 
D) 
$\begin{array}{|l|l|l|}
\hline \begin{array}{l}
\text { Finished Goods } \
\text { Inventory }
\end{array} & \text{xxx} & \
\hline \text { Direct labor yield } & &\text{xxx} \
\text { variance } & & \
\hline \text { Direct labor mix } & &\text{xxx} \
\text { variance } & &  \
\hline \text { Work in Process } & & \
 \text { Inventory } & & \text{xxx}\
\hline
\end{array}$ 
A) 
$$\begin{array} { | l | c | c | } 
\hline \text { Work in Process Inventory } & \times  \times \times & \
\hline \text { Direct labor yield variance } & \times \times \times & \
\hline \text { Direct labor mix variance } & \times\times \times & \
\hline \text { Wages Payable } & & \times \times  \times \
\hline
\end{array}$$ 
B) 
$$\begin{array} { | l | c | c | } 
\hline \text { Work in Process Inventory } & \times\times \times & \
\hline \text { Direct labor yield variance } & & \times \times\times \
\hline \text { Direct labor mix variance } & & \times \times \times \
\hline \text { Wages Payable } & & \times \times  \times \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | c | c | } 
\hline \text { Finished Goods Inventory } & \times \times \times & \
\hline \text { Direct labor mox variance } & \times \times \times & \
\hline \text { Direct labor yield variance } & & \times \times  \times \
\hline \text { Work in Process Inventory } & & \times \times  \times \
\hline
\end{array}$$ 
D) 
$\begin{array}{|l|l|l|}
\hline \begin{array}{l}
\text { Finished Goods } \
\text { Inventory }
\end{array} & \text{xxx} & \
\hline \text { Direct labor yield } & &\text{xxx} \
\text { variance } & & \
\hline \text { Direct labor mix } & &\text{xxx} \
\text { variance } & &  \
\hline \text { Work in Process } & & \
 \text { Inventory } & & \text{xxx}\
\hline
\end{array}$

Question 6

The basic variance analysis framework used for manufacturing companies can also be used in service organizations.

Accepted Answer

A) True 
 B)False

Question 7

Barrymore Corporation,which makes landing gears,has provided the following data for a recent month:$$\begin{array} { | l | r | l | } 
\hline \text { Budgeted production } & 1,200 & \text { gears } \
\hline \begin{array} { l } 
\text { Standard machine-hours per } \
\text { gear }
\end{array} & 5.9 & \text { machine-hours } \
\hline \text { Budgeted supplies cost } & \$ 6.50 & \begin{array} { l } 
\text { per machine- } \
\text { hour }
\end{array} \
\hline \text { Actual production } & 1,300 & \text { gears } \
\hline \text { Actual machine-hours } & 7,950 & \text { machine-hours } \
\hline \text { Actual supplies cost (total) } & \$ 49,742 & \
\hline
\end{array}$$
Required:
Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable.Show your work!

Accepted Answer

Variable overhead rate variance = (AH ×

Question 8

A company makes a product using two materials,one of which is interchangeable with a third material.The standards for producing one 200-pound batch are presented below.The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O.The price of M was $0.03 per pound and the actual price of O was $0.10.$$\begin{array} { | l | r | r | r | } 
\hline \text { Material } & \begin{array} { r } 
\text { Standard } \
\text { Quantity (lbs) }
\end{array} & \begin{array} { r } 
\text { LBS Standard } \
\text { Costrb }
\end{array} & \text { Total Cost } \
\hline \mathrm { O } & 0 & \$ .10 & \$ 0 \
\hline \mathrm { H } & 80 & .08 & 6.40 \
\hline \mathrm { M } & 120 & .02 & 2.40 \
\hline &\underline{ 200} & &\underline{ \$ 8.80} \
\hline
\end{array}$$What is the materials yield variance?

Accepted Answer

A)  $1.12. 
B)  $1.68. 
C)  $3.00. 
D)  $1.32. 
A)  $1.12. 
B)  $1.68. 
C)  $3.00. 
D)  $1.32.

Question 9

The labor yield variance is actual total hours at:

Accepted Answer

A)  actual mix times actual labor rates less actual total hours at actual mix times standard labor rates. 
B)  actual mix times standard labor rates less standard total hours at standard mix times standard labor rates. 
C)  actual mix times standard labor rates less actual total hours at standard mix times standard labor rates. 
D)  standard mix times standard labor rates less standard total hours at standard mix times standard labor rates. 
A)  actual mix times actual labor rates less actual total hours at actual mix times standard labor rates. 
B)  actual mix times standard labor rates less standard total hours at standard mix times standard labor rates. 
C)  actual mix times standard labor rates less actual total hours at standard mix times standard labor rates. 
D)  standard mix times standard labor rates less standard total hours at standard mix times standard labor rates.

Question 10

The data below relate to a product of Omaha Company. 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.

Accepted Answer

a.$6,230 U
b.$2,450 U
c.$6,610 U
d.$3,96

Question 11

The general approach in variance analysis is to separate the variance into components based on a budgeting formula.

Accepted Answer

A) True 
 B)False

Question 12

The sales activity variance is equal to the sum of the market share variance and the:

Accepted Answer

A)  selling price variance. 
B)  industry volume variance. 
C)  sales quantity variance. 
D)  sales mix variance. 
A)  selling price variance. 
B)  industry volume variance. 
C)  sales quantity variance. 
D)  sales mix variance.

Question 13

Rudy Corporation makes automotive engines.For the most recent month,budgeted production was 6,000 engines.The standard power cost is $8.80 per machine-hour.The company's standards indicate that each engine requires 6.1 machine-hours.Actual production was 6,400 engines.Actual machine-hours were 38,730 machine-hours.Actual power cost totaled $350,628.Required:
Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.Show your work!

Accepted Answer

Variable overhead rate variance = (AH ×

Question 14

Barium Corporation has provided the following data concerning its most important raw material,Compound XYY2: 
$$\begin{array} { | l | r | } 
\hline \text { Standard cost, per liter } & \$ 23.80 \
\hline \text { Standard quantity, liters per unit of output } & 5.7 \
\hline \text { Material used in production in August, liters } & 2,350 \
\hline \text { Actual output in August, units } & 400 \
\hline
\end{array}$$When recording the use of materials in production,Raw Materials would be:

Accepted Answer

A)  debited for $55,930. 
B)  debited for $54,264. 
C)  credited for $55,930. 
D)  credited for $54,264. 
A)  debited for $55,930. 
B)  debited for $54,264. 
C)  credited for $55,930. 
D)  credited for $54,264.

In a standard cost system,overhead is applied to production on a basis of:

The exhibit below reflects a summary of performance for a single item of a retail store's inventory for the month ended April 30: (CIA adapted) T he sales volume variance is:

The production cost yield variance is conceptually the same as the sales quantity variance.

What is the correct journal entry to record direct labor when the actual labor mix is favorable and the total standard hours allowed is greater than the total actual hours worked?

The basic variance analysis framework used for manufacturing companies can also be used in service organizations.

The labor yield variance is actual total hours at:

The general approach in variance analysis is to separate the variance into components based on a budgeting formula.

The sales activity variance is equal to the sum of the market share variance and the:

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

In a standard cost system,overhead is applied to production on a basis of:

The exhibit below reflects a summary of performance for a single item of a retail store's inventory for the month ended April 30: (CIA adapted) T he sales volume variance is:

The production cost yield variance is conceptually the same as the sales quantity variance.

What is the correct journal entry to record direct labor when the actual labor mix is favorable and the total standard hours allowed is greater than the total actual hours worked?

The basic variance analysis framework used for manufacturing companies can also be used in service organizations.

The labor yield variance is actual total hours at:

The general approach in variance analysis is to separate the variance into components based on a budgeting formula.

The sales activity variance is equal to the sum of the market share variance and the:

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