Question 1

The purchasing department is responsible for the price paid for materials.

Accepted Answer

A) True 
 B)False

Question 2

The following information comes from the records of Barney Co. for the current period.
a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable.
b. Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

Accepted Answer

The answer of The following information comes from the records...

Question 3

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

Accepted Answer

A) True 
 B)False

Question 4

A cost variance can be further separated into the quantity variance and the price variance.

Accepted Answer

A) True 
 B)False

Question 5

Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Accepted Answer

A) True 
 B)False

Question 6

Differences between actual costs and standard costs are known as ________. These differences may be subdivided into ________ and ________.

Accepted Answer

cost variances (or just variance); price

Question 7

The overhead cost variance is calculated as:

Accepted Answer

A)  Standard applied overhead less budgeted overhead. 
B)  Actual overhead incurred less standard overhead applied. 
C)  Budgeted overhead less standard overhead applied. 
D)  Actual overhead incurred less standard applied overhead. 
E)  Actual fixed cost less budgeted overhead. 
A)  Standard applied overhead less budgeted overhead. 
B)  Actual overhead incurred less standard overhead applied. 
C)  Budgeted overhead less standard overhead applied. 
D)  Actual overhead incurred less standard applied overhead. 
E)  Actual fixed cost less budgeted overhead.

Question 8

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 variable costs expected if the company produces and sells 16,000 units is:

Accepted Answer

A)  $48,000. 
B)  $64,000. 
C)  $40,000. 
D)  $24,000. 
E)  $18,000. 
A)  $48,000. 
B)  $64,000. 
C)  $40,000. 
D)  $24,000. 
E)  $18,000.

Question 9

A company provided the following direct materials cost information. Compute the direct materials quantity variance.

Accepted Answer

A)  $78,250 Favorable. 
B)  $2,750 Unfavorable. 
C)  $2,750 Favorable. 
D)  $2,500 Favorable. 
E)  $2,500 Unfavorable. 
A)  $78,250 Favorable. 
B)  $2,750 Unfavorable. 
C)  $2,750 Favorable. 
D)  $2,500 Favorable. 
E)  $2,500 Unfavorable.

Question 10

In producing 700 units of product last period, Azure Company used 5,000 pounds of Material K, costing $34,250. The company has established the standard of using 7.2 pounds of Material K per unit of product, at a price of $7.50 per pound. Calculate the materials price and quantity variances associated with producing the 700 units, and indicate whether they are favorable or unfavorable:

Accepted Answer

AQ x AP = 5,000 lbs. ∗ $6.85* = $34,250

Question 11

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor rate variance?

Accepted Answer

A)  $27,500 unfavorable. 
B)  $22,000 favorable. 
C)  $16,000 unfavorable. 
D)  $16,000 favorable. 
E)  $6,000 unfavorable. 
A)  $27,500 unfavorable. 
B)  $22,000 favorable. 
C)  $16,000 unfavorable. 
D)  $16,000 favorable. 
E)  $6,000 unfavorable.

Question 12

When the actual price per unit of direct materials used exceeds the standard price per unit, the company has an unfavorable direct materials price variance.

Accepted Answer

A) True 
 B)False

Question 13

Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a fixed budget income statement for the planned level of sales and production.

Accepted Answer

The answer of Clevenger Co. planned to produce and sell...

Question 14

The following information describes a company's usage of direct labor in a recent period. The direct labor rate variance is:

Accepted Answer

A)  $29,000 favorable. 
B)  $29,000 unfavorable. 
C)  $22,500 unfavorable. 
D)  $52,500 favorable. 
E)  $52,500 unfavorable. 
A)  $29,000 favorable. 
B)  $29,000 unfavorable. 
C)  $22,500 unfavorable. 
D)  $52,500 favorable. 
E)  $52,500 unfavorable.

Question 15

A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ________.

Accepted Answer

management

Question 16

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

Accepted Answer

A)  $34,000. 
B)  $10,000. 
C)  $18,667. 
D)  $16,000. 
E)  $24,000. 
A)  $34,000. 
B)  $10,000. 
C)  $18,667. 
D)  $16,000. 
E)  $24,000.

Question 17

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

Accepted Answer

A)  Rolling budget. 
B)  Production budget. 
C)  Flexible budget. 
D)  Merchandise purchases budget. 
E)  Fixed budget. 
A)  Rolling budget. 
B)  Production budget. 
C)  Flexible budget. 
D)  Merchandise purchases budget. 
E)  Fixed budget.

Question 18

Whidbey Co. fixed budget for the year is shown below:
   Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

Accepted Answer

The answer of Whidbey Co. fixed budget for the year...

Question 19

A fixed budget is based on a single predicted amount of sales or other activity measure.

Accepted Answer

A) True 
 B)False

Question 20

Sales variance analysis is used by managers for:

Accepted Answer

A)  Planning purposes only. 
B)  Budgeting purposes only. 
C)  Control purposes only. 
D)  Planning and control purposes. 
E)  Planning and budgeting purposes. 
A)  Planning purposes only. 
B)  Budgeting purposes only. 
C)  Control purposes only. 
D)  Planning and control purposes. 
E)  Planning and budgeting purposes.

The purchasing department is responsible for the price paid for materials.

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

A cost variance can be further separated into the quantity variance and the price variance.

Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Differences between actual costs and standard costs are known as . These differences may be subdivided into and .

The overhead cost variance is calculated as:

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 variable costs expected if the company produces and sells 16,000 units is:

A company provided the following direct materials cost information. Compute the direct materials quantity variance.

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor rate variance?

When the actual price per unit of direct materials used exceeds the standard price per unit, the company has an unfavorable direct materials price variance.

The following information describes a company's usage of direct labor in a recent period. The direct labor rate variance is:

A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ________.

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

Whidbey Co. fixed budget for the year is shown below: Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

A fixed budget is based on a single predicted amount of sales or other activity measure.

Sales variance analysis is used by managers for:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Exam 8: Flexible Budgets and Standard Costs

The purchasing department is responsible for the price paid for materials.

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

A cost variance can be further separated into the quantity variance and the price variance.

Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Differences between actual costs and standard costs are known as ________. These differences may be subdivided into ________ and ________.

The overhead cost variance is calculated as:

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 variable costs expected if the company produces and sells 16,000 units is:

A company provided the following direct materials cost information. Compute the direct materials quantity variance.

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor rate variance?

When the actual price per unit of direct materials used exceeds the standard price per unit, the company has an unfavorable direct materials price variance.

The following information describes a company's usage of direct labor in a recent period. The direct labor rate variance is:

A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ________.

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

Whidbey Co. fixed budget for the year is shown below: Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

A fixed budget is based on a single predicted amount of sales or other activity measure.

Sales variance analysis is used by managers for:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

Lean Principles and Accounting

Accounting for Business Transactions

Filters

Differences between actual costs and standard costs are known as . These differences may be subdivided into and .