Deck 17: Additional Topics in Variance Analysis

Question 1

The production mix variance measures the impact of substituting one material for another material during the production process.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Output is usually defined as sales units in merchandising, but service organizations use measures of activity units, like patient days.

Answer 3

True

Question 4

The market share variance is more controllable by the marketing department than the industry volume variance.

Question 5

Two important characteristics to consider when deciding how many variances to review are is the impact of the variance and the extent to which the variance can be controlled.

Question 6

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

Question 7

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

Question 8

If the number of units produced exceeds the number of units sold, the full-absorption operating profit will be lower than variable costing operating profit.

Question 9

The industry volume variance is the portion of the sales activity variance due to a change in the company's proportion of sales in the markets in which they operate.

Question 10

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

Question 11

If a company sells two products, it is possible for both products to have an unfavorable sales quantity variance.

Question 12

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

Question 13

An increase in an industry's volume and a decrease in a company's market share implies that the company's sales price variance is unfavorable.

Question 14

The sales quantity variance is the same as the sales activity variance on a flexible budget performance report.

Question 15

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

Question 16

The direct labor yield variance is unfavorable when the total hours worked during a period are less than the total standard hours allowed for the actual number of units produced.

Question 17

The only variances that should be investigated are those for which the expected benefits of correction exceed the costs of investigating and correcting.

Question 18

If variances are not prorated at the end of the accounting period, they are closed to the Cost of Goods Sold.

Question 19

Labor variances are more important than material variances in service organizations.

Question 20

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

Question 21

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

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

Question 22

The Fantasy 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:
$$\begin{array} { l l } \text { Materials Purchased } & 20,000 \text { units } \\\text { Materials Used } & 15,000 \text { units }\end{array}$$
You find a copy of the budget which shows that materials were budgeted at $0.60/unit. You know that the material 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:
$$\begin{array} { l l } \text { Material price variance } & \$ 200 \text { F } \\\text { Material efficiency variance } & \$ 600 \text { F }\end{array}$$

-
What was the total standard cost of direct materials purchased during May?

A) $8,260.
B) $8,400.
C) $9,440.
D) $9,600.

Question 23

The Fantasy 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:
$$\begin{array} { l l } \text { Materials Purchased } & 20,000 \text { units } \\\text { Materials Used } & 15,000 \text { rits }\end{array}$$
You find a copy of the budget which shows that materials were budgeted at $0.60/unit. You know that the material 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:
$$\begin{array} { l l } \text { Material price variance } & \$ 200 \text { F } \\\text { Material efficiency variance } & \$ 600 \text { F }\end{array}$$

-
What was the total actual cost of the direct materials purchased during May?

A) $9,000.
B) $11,800.
C) $12,000.
D) $12,200.

Question 24

Ingredient B4376 is used to make Razor Corporation's major product. The standard cost of Ingredient B4376 is $24.50 per ounce and the standard quantity is 6.1 ounces per unit of output. In the most recent month, 5,030 ounces of the compound were used to make 700 units of the output. When recording the use of materials in production under a standard costing system, Materials Inventory would be:

A) credited for $123,235.
B) debited for $123,235.
C) debited for $104,615.
D) credited for $104,615.

Question 25

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.

A) Only A is true.
B) Only B is true.
C) Both of these are true.
D) Neither of these is true.

Question 26

Which of the following statements is(are) false?
(A) All variances should be prorated to inventories and cost of goods sold at the end of the accounting period.
(B) If the number of units produced exceeds the number of units sold, the full-absorption operating profit will be lower than variable costing operating profit.

A) Only A is false.
B) Only B is false.
C) Both of these are false.
D) Neither of these is false.

Question 27

Which of the following statements is (are) true?
(A)The market share variance is more controllable by the marketing department than the industry volume variance.
(B)The industry volume variance is the portion of the sales activity variance due to a change in the company's proportion of sales in the markets in which they operate.

A) Only A is true.
B) Only B is true.
C) Both of these are true.
D) Neither of these is true.

Question 28

One advantage of using a standard costing system is that it:

A) makes the record keeping process more complex and difficult.
B) never requires updating if standard costs have been carefully determined.
C) reduces the amount of information available to a manager.
D) provides managers with information that is useful in making decisions to improve performance.

Question 29

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

Question 30

Ingredient A12H is a 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:
$$\begin{array} { l r l } \text { Cost of material purchased in October } & \$ 23.10 & \text { per ounce } \\\text { Material purchased in October } & 2,300 & \text { ounces } \\\text { Material used in production in October } & 2,120 & \text { ounces } \\\text { Actual output in October } & 600 & \text { units }\end{array}$$
The material was purchased on account and Calvin Corporation uses a standard costing system.

-
The credit to the Materials Inventory account for October would total:

A) $52,440.
B) $48,760.
C) $52,900.
D) $53,130.

Question 31

Which of the following sales variances is further analyzed into the market share and industry volume variances?

A) Quantity.
B) Efficiency.
C) Mix.
D) Activity.

Question 32

Standards are estimates and should be based on:

A) perfect performance.
B) an average of past conditions.
C) the most likely level of performance.
D) current conditions.

Question 33

When the actual amount of a material used in production is greater than the standard amount allowed for the actual output, the journal entry would include:

A) debit to Materials Inventory; credit to Materials Efficiency Variance.
B) debit to Work-In-Process Inventory; credit to Materials Efficiency Variance.
C) debit to Materials Inventory; debit to Materials Efficiency Variance.
D) debit to Work-In-Process Inventory; debit to Materials Efficiency Variance.

Question 34

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

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.

Question 35

Ingredient A12H is a 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:
$\begin{array}{lr} \text {Cost of material purchased in October } & \text { \$23.10per ounce } \\ \text {Material purchased in October } & \text { 2,300 ounces} \\ \text { Material used in production in October } & \text { 2,120 ounces} \\ \text { Actual output in October } & \text { 600 units} \\\end{array}$

The material was purchased on account and Calvin Corporation uses a standard costing system.

-
The Material Efficiency 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.

Question 36

The Fantasy 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:
$$\begin{array} { l l } \text { Materials Purchased } & 20,000 \text { units } \\\text { Materials Used } & 15,000 \text { units }\end{array}$$
You find a copy of the budget which shows that materials were budgeted at $0.60/unit. You know that the material 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:
$$\begin{array} { l l } \text { Material price variance } & \$ 200 \text { F } \\\text { Material efficiency variance } & \$ 600 \text { F }\end{array}$$

-
What was the total standard cost of direct materials purchased during May?

A) $9,150.
B) $11,800.
C) $12,000.
D) $12,200.

Question 37

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

A) price variance is recognized when materials are purchased.
B) price variance is recognized when materials are placed into production.
C) company does not follow generally accepted accounting principles.
D) efficiency variance is recognized when the materials are purchased.

Question 38

Some variances are the result of accounting errors and omissions, including timing differences.

Question 39

Ingredient A12H is a 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:
$$\begin{array} { l c c } \text { Cost of material purchased in October } & \$ 23.10 & \text { per ounce } \\\text { Material purchased in October } & 2,300 & \text { ournces } \\\text { Material used in production in October } & 2,120 & \text { ounces } \\\text { Actual output in October } & 600 & \text { units }\end{array}$$
The material was purchased on account and Calvin Corporation uses a standard costing system.

-
The Material Price Variance for October would be recorded as a:

A) debit of $230.
B) credit of $212.
C) debit of $212.
D) credit of $230.

Question 40

Ingredient A12H is a 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:
$$\begin{array} { l r l } \text { Cost of material purchased in October } & \$ 23.10 & \text { per ounce } \\\text { Material purchased in October } & 2,300 & \text { ounces } \\\text { Material used in production in October } & 2,120 & \text { ounces } \\\text { Actual output in October } & 600 & \text { units }\end{array}$$
The material was purchased on account and Calvin Corporation uses a standard costing system.

-
The debit to the Materials Inventory account for October would total:

A) $52,900.
B) $52,440.
C) $48,760.
D) $53,130.

Question 41

Using the abbreviations listed below, what is the formula for the industry volume variance?
AMS = actual market share
BMS = budgeted market share
BCM = budgeted contribution margin per unit
ACM = actual contribution margin per unit
ATM = actual total market
BTM = budgeted total market

A) (ATM − BTM) (BMS) (ACM)
B) (ATM - BTM) (BMS) (BCM)
C) (AMS - BMS) (ATM) (ACM)
D) (AMS - BMS) (ATM) (BCM)

Question 42

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales activity variance for the basic model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 43

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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 activity variance for the basic model?

A) $1,280,000.
B) $1,600,000.
C) $11,200,000.
D) $12,800,000.

Question 44

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. $\begin{array}{lcccc}&&\text { Actual}&&\text { Budget }\\ \text { Dresses sold } & & \underline{ 5,000} & & \underline{ 6,000 }\\ \text { Sales } & \$ & 235,000 & \$ & 300,00 \\ \text { Variable costs } & & \underline{(145,000) }& & \underline{(180,000) }\\ \text { Contribution margin } & & \$90,000 & & 120,000 \\\text { Fixed Costs } & & \underline{ (84,000)} & & \underline{ (80,000)} \\ \text { Operating income } &\$& \underline{ \underline{ 6,000 }}&\$& \underline{ \underline{ \$ 40,000}} \\ \end{array}$

-
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.

Question 45

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. $\begin{array}{lcccc}&&\text { Actual}&&\text { Budget }\\ \text { Dresses sold } & & \underline{ 5,000} & & \underline{ 6,000 }\\ \text { Sales } & \$ & 235,000 & \$ & 300,00 \\ \text { Variable costs } & & \underline{(145,000) }& & \underline{(180,000) }\\ \text { Contribution margin } & & \$90,000 & & 120,000 \\\text { Fixed Costs } & & \underline{ (84,000)} & & \underline{ (80,000)} \\ \text { Operating income } &\$& \underline{ \underline{ 6,000 }}&\$& \underline{ \underline{ \$ 40,000}} \\ \end{array}$

-
The sales price variance for November is:

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

Question 46

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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 mix variance for the basic model?

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

Question 47

Which of the following income statement items is analyzed using the sales mix and the sales quantity variances?

A) Operating expenses.
B) Cost of goods sold.
C) Gross margin.
D) Contribution margin.

Question 48

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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 activity variance for the deluxe model?

A) $400,000.
B) $800,000.
C) $1,600,000.
D) $2,400,000.

Question 49

The sales mix variance would be:

A) favorable when a company sells relatively fewer of the products that have contribution margins lower than average.
B) favorable when a company sells relatively more of the products that have contribution margins higher than average.
C) unfavorable when a company sells relatively fewer of the products that have selling prices higher than average.
D) unfavorable when a company sells more of the products that have selling prices lower than average.

Question 50

Actual and budgeted information about the sales of a product are presented below for June: (CIA adapted)
$$\begin{array} { l c c } & \text { Actual } & \text { Budget } \\\text { Units } & \mathbf { 8 , 0 0 0 } & 10,000 \\\text { Sales Reverue } & \mathbf { 9 2 , 0 0 0 } & \mathbf { \$ 1 0 5 , 0 0 0 }\end{array}$$
The sales price variance for June was:

A) $8,000 favorable.
B) $8,000 unfavorable.
C) $10,000 unfavorable.
D) $10,500 unfavorable.

Question 51

Using the abbreviations listed below, what is the market share variance?
AMS = actual market share
BMS = budgeted market share
BCM = budgeted contribution margin per unit
ACM = actual contribution margin per unit
ATM = actual total market
BTM = budgeted total market

A) (ATM − BTM) (BMS) (ACM)
B) (ATM − BTM) (BMS) (BCM)
C) (AMS −BMS) (ATM) (ACM)
D) (AMS − BMS) (ATM) (BCM)

Question 52

The sales quantity variance would be favorable when a company sells:

A) relatively fewer of the products bearing contribution margins lower than average.
B) relatively more of the products bearing contribution margins higher than average.
C) more total units than budgeted, holding the sales mix constant.
D) less total units than budgeted, holding the sales mix constant.

Question 53

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. $\begin{array}{lcccc}&&\text { Actual}&&\text { Budget }\\ \text { Dresses sold } & & \underline{ 5,000} & & \underline{ 6,000 }\\ \text { Sales } & \$ & 235,000 & \$ & 300,00 \\ \text { Variable costs } & & \underline{(145,000) }& & \underline{(180,000) }\\ \text { Contribution margin } & & \$90,000 & & 120,000 \\\text { Fixed Costs } & & \underline{ (84,000)} & & \underline{ (80,000)} \\ \text {Operating income} &\$& \underline{ \underline{ 6,000 }}&\$& \underline{ \underline{ \$ 40,000}} \\ \end{array}$

-
The variable costs flexible budget variance for November is:

A) $5,000 favorable.
B) $5,000 unfavorable.
C) $4,000 favorable.
D) $4,000 unfavorable.

Question 54

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. $\begin{array}{lcccc}&&\text { Actual}&&\text { Budget }\\ \text { Dresses sold } & & \underline{ 5,000} & & \underline{ 6,000 }\\ \text { Sales } & \$ & 235,000 & \$ & 300,00 \\ \text { Variable costs } & & \underline{(145,000) }& & \underline{(180,000) }\\ \text { Contribution margin } & & \$90,000 & & 120,000 \\\text { Fixed Costs } & & \underline{ (84,000)} & & \underline{ (80,000)} \\ \text { Operating income } &\$& \underline{ \underline{ 6,000 }}&\$& \underline{ \underline{ \$ 40,000}} \\ \end{array}$

-
The effect of the sales activity variance on the contribution margin for November is:

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

Question 55

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales activity variance for the deluxe model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 56

The Morton Company gathered the following information for the year.
$\begin{array}{lllr}&\text { Product } \mathrm{K} & \text { Product } \mathrm{R} & \text { Total }\\\text { Budgeted sales mix (units) } & 40 \% & 60 \% & 100 \% \\\text { Budgeted and actual sales price } & \$ 48 & \$ 36 & \\\text { Budgeted variable cost per unit } & \$ 32 & \$ 24 &\\\text { Actual sales (units) } & & & 126,000 \\\text { Actual sales mix } & 60 \% & 40 \% & 100 \%\\\text { Fixed costs } & & & \$ 80,000\end{array}$


What is the total sales mix variance?

A) $705,600.
B) $403,200.
C) $302,400.
D) $100,800.

Question 57

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

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

Question 58

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

A) Sales price variance and flexible budget variance.
B) Sales mix variance and sales price variance.
C) Sales efficiency variance and sales price variance.
D) Sales quantity variance and sales mix variance.

Question 59

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) $\begin{array}{lccccccc}&&&&\text { Flexible }&&& \text { Static }\\&&\text { Actual } && \text { Budget } & &\text { Flexible } & \text { (Master) } \\&&\text { Results } && \text { Variances } && \text { Budget } & \text { Budget }\\\text { Sales (units) } & & 11,000 & & -0 & & 11,000 & 12,000 \\ \text { Revenue (sales) } & \$ & 208,000 &\text { \$ } & 12,000 \mathrm{U} & \$ & 220,000 & \$ 240,000 \\ \text { Variable costs } & & 121,000 & & 11,000 \mathrm{U} & & 110,000 & 120,000 \\\text { Contribution margin } & \text { \$ } & 87.000 & \text { \$ } & 23.000 \mathrm{U} & \text { \$ } & 110.000 & \$ 120.000 \\\text { Fixed costs } & & 72,000 & & -0 & & 72,000 & 72,000 \\ \text { Operating Income } & \$ & 15,000 &\text { \$ } & 23,000 \mathrm{U} & \$ & 38,000 & \$ 48,00 \\ \end{array}$ The sales activity variance is:

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

Question 60

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)

A) the cost is variable and actual production was 90% of budgeted production.
B) the cost is variable and actual production equals budgeted production.
C) the cost is variable and actual production was 80% of budgeted production.
D) the cost is a discretionary fixed cost and actual production equals budgeted production.

Question 61

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrrr}&\text { Product A } & \text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & \underline{500,000} & \underline{ 500,000} \\ \text { Net income } & \underline{ \underline{ 463,900 }}& \underline{ \underline{ 280,300}} \\ \text { Units } & 252,000 & 108,000\end{array}$
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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } &2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,77 0& \$ 1 , 4 7 9 , 0 1 0 \end{array}$$

-
Is the total sales mix variance favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 62

The Vargas Company had the following expectations for the year:
$\begin{array}{ll}\text {Budgeted results for the year were: }\\\text {Total market for the product}&175,000 \mathrm{units}\\\text { Vargas' budgeted sales } & \$ 1,763,125 \\\text { Variable costs per unit } & \$ 18.75 \\\text { Selling price per unit } & \$ 32.50\\\text { Actual results for the year were: }\\\text { Total market for the product}&166,250 \mathrm{units}\\\text { Vargas's actual sales}&56,525\\\text { Total Variable costs}&\$1,073,975\\\text { Total sales}&\$1,752,275\end{array}$

-
What is Vargas' industry volume variance?

A) $37,296.88.
B) $40,906.25.
C) $35,700.00.
D) $32,550.00.

Question 63

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrr}&\text { Product A}&\text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & 500,000 & 500,000 \\ \text { Net income } & 463,900 & 280,300 \\\text { Units } & 252,000 & 108,000\end{array}$
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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } & 2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,770& \$ 1 , 4 7 9 , 0 1 0\end{array}$$

-
Is the total sales price variance favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 64

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales quantity variance for the basic model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 65

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrrr}&\text { Product A } & \text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & \underline{500,000} & \underline{ 500,000} \\ \text { Net income } & \underline{ \underline{ 463,900 }}& \underline{ \underline{ 280,300}} \\ \text { Units } & 252,000 & 108,000\end{array}$
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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } & 2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,77 0& \$ 1 , 4 7 9 , 0 1 0 \end{array}$$

-
What is the total sales mix variance?

A) $12,478.00.
B) $20,815.00.
C) $33,915.00.
D) $40,553.50.

Question 66

The labor yield variance is actual total hours at:

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 67

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrrr}&\text { Product A } & \text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & \underline{500,000} & \underline{ 500,000} \\ \text { Net income } & \underline{ \underline{ 463,900 }}& \underline{ \underline{ 280,300}} \\ \text { Units } & 252,000 & 108,000\end{array}$
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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } & 2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,770& \$ 1 , 4 7 9 , 0 1 0 \end{array}$$

-
Is the total sales quantity variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 68

The Vargas Company had the following expectations for the year:
$\begin{array}{ll}\text {Budgeted results for the year were: }\\\text {Total market for the product}&175,000 \mathrm{units}\\\text { Vargas' budgeted sales } & \$ 1,763,125 \\\text { Variable costs per unit } & \$ 18.75 \\\text { Selling price per unit } & \$ 32.50\\\text { Actual results for the year were: }\\\text { Total market for the product}&166,250 \mathrm{units}\\\text { Vargas's actual sales}&56,525\mathrm{units}\\ \text { Total Variable costs}&\$1,073,975\\\text { Total sales}&\$1,752,275\end{array}$


-
Is the industry volume variance favorable or unfavorable?

A) Unfavorable.
B) Favorable.

Question 69

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales quantity variance for the basic model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 70

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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 basic model?

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

Question 71

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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 mix variance for the deluxe model?

A) $1,176,000.
B) $1,344,000.
C) $2,400,000.
D) $2,520,000.

Question 72

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales mix variance for the deluxe model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 73

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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.

-
Is the sales mix variance for the basic model favorable or unfavorable?

A) Favorable.
B) Unfavorable.

Question 74

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{lrr} \text { Level of activity} &2,500 \mathrm{DLH}\\ \text {Overhead costs at the denominator activity level: } &\\ \text { Variable overhead cost } &\$8,500\\ \text { Fixed overhead cost} &\$34,625\\\end{array}$


The following data pertain to operations for the most recent period:
$\begin{array}{lrr} \text { Actual hours} &2,600\mathrm{DLHs} \\ \text {Standard hours allowed for the actual output } & 2,592 \mathrm{DLH}\\ \text { Actual total variable manufacturing overhead cost } &\$9,100\\ \text {Actual total fixed manufacturing overhead cost } &\$ 35,025\\\end{array}$


-
What is the predetermined overhead rate to the nearest cent?

A) $16.97.
B) $17.25.
C) $16.59.
D) $17.65.

Question 75

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
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?

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

Question 76

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrrr}&\text { Product A } &\text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & 500,000 & 500,000 \\ \text { Net income } & 463,900 & 280,300 \\\text { Units } & 252,000 & 108,000\end{array}$ 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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } & 2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,770 & \$ 1 , 4 7 9 , 0 1 0\end{array}$$

-
What is the total sales price variance?

A) $22,203.50.
B) $28,442.50.
C) $50,646.50.
D) $79,088.50.

Question 77

The labor mix variance is actual total hours at:

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 78

The next year's budget for Trend, Inc., a multi-product company, is given below: $\begin{array}{lrrrr}&\text { Product A } & \text { Product B }\\\text { Sales } & \$ 1,890,000 & \$ 1,377,000 \\\text { Variable costs } & 926,100 & 596,700 \\\text { Fixed costs } & \underline{500,000} & \underline{ 500,000} \\ \text { Net income } & \underline{ \underline{ 463,900 }}& \underline{ \underline{ 280,300}} \\ \text { Units } & 252,000 & 108,000\end{array}$

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. Trend, Inc. analyzes the effects its sales variances have on the profitability of the company.
$$\begin{array} { c c c } \text { Product Lines } & \text { Units } & \text { Sales } \\\text { A } & 2 5 3 , 2 3 0 & \$ 1 , 8 4 8 , 5 7 9 \\\text { B } & 113,770& \$ 1 , 4 7 9 , 0 1 0 \end{array}$$

-
What is the total sales quantity variance?

A) $3,570.00.
B) $20,815.00.
C) $33,915.00.
D) $40,553.50.

Question 79

The computation of the material yield variance does not require the:

A) standard material mix.
B) standard material price.
C) standard output units.
D) total material actually acquired.

Question 80

A manufacturer of industrial equipment has a standard costing system based on standard direct labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below:
$\begin{array}{lrr} \text { Level of activity} &2,500 \mathrm{DLH}\\ \text {Overhead costs at the denominator activity level: } &\\ \text { Variable overhead cost } &\$8,500\\ \text { Fixed overhead cost} &\$34,625\\\end{array}$


The following data pertain to operations for the most recent period:
$\begin{array}{lrr} \text { Actual hours} &2,600\mathrm{DLHs} \\ \text {Standard hours allowed for the actual output } & 2,592 \mathrm{DLH}\\ \text { Actual total variable manufacturing overhead cost } &\$9,100\\ \text {Actual total fixed manufacturing overhead cost } &\$ 35,025\\\end{array}$



-
How much overhead was applied to products during the period to the nearest dollar?

A) $44,712.
B) $44,125.
C) $43,125.
D) $44,850.