Exam 17: Additional Topics in Variance Analysis

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.What is the sales quantity variance for the deluxe model?

The budget for a given cost during a given period was $80,000.The actual cost for the period was $72,000.Considering these facts,the plant manager has done a better-than-expected job in controlling the cost if: (CPA adapted)

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.

Compound Q11H is a raw material used to make Grater Corporation's major product.The standard cost of compound Q11H 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: The raw material was purchased on account.The Materials Quantity Variance for October would be recorded as a:

The XYZ Company had the following expectations for the year: What is XYZ's market share variance?

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

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) The sales volume variance is:

If a company sells two products,it is possible for both products to have an unfavorable sales quantity variance.The quantity variance measures the difference between actual sales and budgeted sales.Both products could have sold fewer units than budgeted.

Some variances are the result of standards that are inaccurate or do not reflect the current production process.Variances are only as good as the standards they are based on.

The next year's budget for Green,Inc. ,a multi-product company,is given below: 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.Green analyzes the effects its sales variances have on the profitability of the company. What is the total sales mix variance?

The direct material price variance is based on the quantity of materials purchased when the quantity purchased is different from the quantity used.The price variance is due to the purchasing activity and should be related to units purchased.

The Kinetic Modification Group (KMG)produces a gasoline additive,Gas Gain.This product increases engine efficiency and improves gasoline mileage by creating a more complete burn in the combustion process.Careful controls are required during the production process to insure that the proper mix of input chemicals is achieved and that evaporation is controlled.Loss of output and efficiency may result if the controls are not effective.The standard cost of producing a 500-liter batch of Gas Gain is $135.The standard materials mix and related standard cost of each chemical used in a 500-liter batch are: The quantities of chemicals purchased and used during the current production period are shown in the schedule below.A total of 140 batches of Gas Gain were manufactured during the current production period.The controller of KMG has determined its costs and chemical usage variations at the end of the production period. If KMG recognizes all variances at the earliest possible moment,what is the total material price variance?

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

If raw materials are carried in the Direct Materials Inventory at standard cost,then it is reasonable to assume that the:

Which of the following factors should not be considered when deciding whether to investigate a variance?

The market share variance is more controllable by the marketing department than the industry volume variance.The industry volume is due to external activities.Market share can be influenced more readily by the marketing staff.

Standard costs should be based on:

Compound Q11H is a raw material used to make Grater Corporation's major product.The standard cost of compound Q11H 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: The raw material was purchased on account.The debit to the Raw Materials account for October would total:

The Heavenly 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: 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: What was the total standard cost of direct materials purchased during May?

There are several reasons why actual results differ from standards.Which of the following does not represent a reason why a variance might occur?