Question 1

Kyle, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

Accepted Answer

A)  $30,000 favorable. 
B)  $13,750 unfavorable. 
C)  $16,250 favorable. 
D)  $30,000 unfavorable. 
E)  $13,750 favorable. 
A)  $30,000 favorable. 
B)  $13,750 unfavorable. 
C)  $16,250 favorable. 
D)  $30,000 unfavorable. 
E)  $13,750 favorable. D

Question 2

A _______________________ contains relevant information that compares actual results to planned activities.

Accepted Answer

Budget report

Question 3

A company uses the following standard costs to produce a single unit of output. During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:

Accepted Answer

A)  $1,800 favorable 
B)  $5,800 unfavorable 
C)  $5,800 favorable 
D)  $1,800 unfavorable 
E)  $1,000 favorable 
A)  $1,800 favorable 
B)  $5,800 unfavorable 
C)  $5,800 favorable 
D)  $1,800 unfavorable 
E)  $1,000 favorable A

Question 4

Tiger, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity.
During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:
Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Accepted Answer

The answer of Tiger, Inc. has developed the following standard...

Question 5

Standard costs are used in the calculation of:

Accepted Answer

A)  Price and quantity variances. 
B)  Price variances only. 
C)  Quantity variances only. 
D)  Price, quantity, and sales variances. 
E)  Quantity and sales variances. 
A)  Price and quantity variances. 
B)  Price variances only. 
C)  Quantity variances only. 
D)  Price, quantity, and sales variances. 
E)  Quantity and sales variances.

Question 6

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

Accepted Answer

A)  $2,667. 
B)  $14,000. 
C)  $18,667. 
D)  $24,000. 
E)  $35,000. 
A)  $2,667. 
B)  $14,000. 
C)  $18,667. 
D)  $24,000. 
E)  $35,000.

Question 7

If cost variances are material, they should always be closed directly to Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 8

Gates Company reports the following information regarding the production on one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.

Accepted Answer

Direct materials cost variance
Actual un

Question 9

A direct labor cost variance may be broken down into a controllable variance and a volume variance.

Accepted Answer

A) True 
 B)False

Question 10

The following information relating to a company's overhead costs is available. Based on this information, the total overhead variance is: Based on this information, the total overhead variance is:

Accepted Answer

A)  $7,000 favorable. 
B)  $6,000 favorable. 
C)  $1,000 unfavorable. 
D)  $6,000 unfavorable. 
E)  $1,000 favorable. 
A)  $7,000 favorable. 
B)  $6,000 favorable. 
C)  $1,000 unfavorable. 
D)  $6,000 unfavorable. 
E)  $1,000 favorable.

Question 11

Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.

Accepted Answer

A) True 
 B)False

Question 12

Cabot Company collected the following data regarding production of one of its products. Compute the direct labor cost variance.

Accepted Answer

A)  $53,500 unfavorable. 
B)  $40,500 favorable. 
C)  $53,500 favorable. 
D)  $13,000 unfavorable. 
E)  $40,500 unfavorable. 
A)  $53,500 unfavorable. 
B)  $40,500 favorable. 
C)  $53,500 favorable. 
D)  $13,000 unfavorable. 
E)  $40,500 unfavorable.

Question 13

Kyle, Inc. has collected the following data on one of its products. The direct materials price variance is:

Accepted Answer

A)  $13,750 unfavorable. 
B)  $16,250 unfavorable. 
C)  $16,250 favorable. 
D)  $30,000 unfavorable. 
E)  $33,000 favorable. 
A)  $13,750 unfavorable. 
B)  $16,250 unfavorable. 
C)  $16,250 favorable. 
D)  $30,000 unfavorable. 
E)  $33,000 favorable.

Question 14

When standard manufacturing costs are recorded in the accounts and the cost variances are immaterial at the end of the accounting period, the cost variances should be:

Accepted Answer

A)  Carried forward to the next accounting period. 
B)  Allocated between cost of goods sold, finished goods, and goods in process. 
C)  Closed to cost of goods sold. 
D)  Written off as a selling expense. 
E)  Ignored. 
A)  Carried forward to the next accounting period. 
B)  Allocated between cost of goods sold, finished goods, and goods in process. 
C)  Closed to cost of goods sold. 
D)  Written off as a selling expense. 
E)  Ignored.

Question 15

What are the four steps in the effective management of variance analysis?

Accepted Answer

The four steps are: (1) prepar

Question 16

A fixed budget performance report never provides useful information for evaluating variances.

Accepted Answer

A) True 
 B)False

Question 17

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

Accepted Answer

A) True 
 B)False

Question 18

If Falcon Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

Accepted Answer

The answer of If Falcon Company's actual overhead incurred during...

Question 19

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called _________________ and _____________ variances.

Accepted Answer

The answer of Direct materials variances are called price and...

Question 20

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a __________________ standard.

Accepted Answer

The answer of A standard that takes into account the...

Exam 24: Flexible Budgets and Standard Costs

Kyle, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

A _______________________ contains relevant information that compares actual results to planned activities.

Standard costs are used in the calculation of:

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

If cost variances are material, they should always be closed directly to Cost of Goods Sold.

Gates Company reports the following information regarding the production on one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.

A direct labor cost variance may be broken down into a controllable variance and a volume variance.

The following information relating to a company's overhead costs is available. Based on this information, the total overhead variance is: Based on this information, the total overhead variance is:

Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.

Cabot Company collected the following data regarding production of one of its products. Compute the direct labor cost variance.

Kyle, Inc. has collected the following data on one of its products. The direct materials price variance is:

When standard manufacturing costs are recorded in the accounts and the cost variances are immaterial at the end of the accounting period, the cost variances should be:

What are the four steps in the effective management of variance analysis?

A fixed budget performance report never provides useful information for evaluating variances.

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

If Falcon Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called _________________ and _____________ variances.

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a __________________ standard.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Capital Budgeting and Managerial Decisions

Filters

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called _____ and _ variances.