Deck 22: Flexible Budgets and Standard Costs

Question 1

A flexible budget is prepared to allow:

A) actual and budgeted results to be compared at almost any level of activity.
B) costs and revenues to be compared at a particular level of activity only.
C) management discretion and flexibility.
D) flexibility in determining standard costs.

Answer 1

actual and budgeted results to be compared at almost any level of activity.

Question 2

Which of the following is correct regarding a static budget?

A) A static budget is a budget that stays the same from one period to the next.
B) A static budget is also known as a fixed budget.
C) A static budget is prepared for only one level of activity.
D) A static budget is adjusted for changes in the level of activity.

Answer 2

A static budget is prepared for only one level of activity.

Question 3

Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper, while fixed costs are $75,000 per month for volumes up to 850,000 diapers and $112,500 for volumes above 850,000 diapers. The flexible budget would reflect monthly operating income for 800,000 diapers and 900,000 diapers of what dollar amounts?

A) $7,500 and $60,000, respectively
B) $60,000 and $45,000, respectively
C) $45,000 and $22,500, respectively
D) $22,500 and $7,500, respectively

Answer 3

$45,000 and $22,500, respectively

Question 4

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar amount?

A) $100,000
B) $130,000
C) $180,000
D) $160,000

Question 5

Sassy Company sells its widgets for $20 each. Its variable cost is $12 per widget. Fixed costs are $150,000 per month for volumes up to 70,000 widgets. Above 70,000 widgets, monthly fixed costs are $200,000. What is the budgeted operating income at a level of 60,000 widgets per month?

A) $280,000
B) $330,000
C) $480,000
D) $1,200,000

Question 6

Sassy Company sells its widgets for $20 each. Its variable cost is $12 per widget. Fixed costs are $150,000 per month for volumes up to 70,000 widgets. Above 70,000 widgets, monthly fixed costs are $200,000. What is the budgeted operating income at a level of 80,000 widgets per month?

A) $280,000
B) $1,600,000
C) $640,000
D) $440,000

Question 7

Which of the following does not need to be known in order to create a flexible budget?

A) The variable cost per unit
B) The fixed cost per unit
C) The budgeted selling price
D) Different volume levels within the relevant range

Question 8

A sales volume variance is a function of which of the following?

A) Actual sales volume and normal sales volume
B) Actual results and amounts in the flexible budget
C) Amounts in the flexible budget and the static budget
D) Number of units actually sold and number of units expected to be sold according to the static budget

Question 9

Western Outfitters Mountain Sports projected 2008 sales of 75,000 units at a unit sale price of $12.00. Actual 2008 sales were 72,000 units at $14.00 per unit. Actual variable costs, budgeted at $4.00 per unit, totaled $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the flexible budget variance for total expenses?

A) $67,000 favorable
B) $79,000 unfavorable
C) $12,000 unfavorable
D) $12,000 favorable

Question 10

Which of the following results in a favorable flexible budget variance?

A) The actual direct labor cost was less than the static budget labor cost.
B) The actual direct material cost per unit was less than the standard direct material cost per unit.
C) The actual fixed overhead cost per unit was less than the predetermined fixed overhead cost per unit.
D) The actual variable overhead cost was less than the flexible budget overhead cost.

Question 11

Which of the following actions would not help avoid an unfavorable sales volume variance?

A) Design more attractive products to increase demand.
B) Provide additional advertising to increase the number of units sold.
C) Provide incentives to the sales force to increase the number of units sold.
D) Increase the unit selling price in order to generate additional revenue.

Question 12

A flexible budget is prepared using standard costs.

Question 13

Which of the following is not a reason as to why companies use standard costs?

A) To establish performance standards
B) To prepare the budget
C) To expand the role of the accounting department
D) To set the sales prices of their products and services

Question 14

Which of the following statements is correct?

A) A favorable direct labor price variance implies that the actual total cost of direct labor was less than the standard cost of direct labor.
B) An unfavorable direct material price variance implies that the actual total cost of direct materials was greater than the standard cost of direct materials.
C) An unfavorable direct labor efficiency variance implies that the actual direct labor hours were less than the standard direct labor hours.
D) A favorable direct material price variance implies that the actual unit cost of direct materials was less than the standard unit cost of direct materials.

Question 15

An unfavorable direct material efficiency variance indicates that the actual:

A) unit cost of the direct materials exceeded the standard unit cost of the direct materials.
B) total cost of the direct materials exceeded the total standard cost of the direct materials.
C) quantity of direct materials usedwas greater than the standard quantity of direct materials allowed for the budgeted production volume.
D) quantity of direct materials used was greater than the standard quantity of direct materials allowed for the actual production volume.

Question 16

Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | } \hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \\\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \\\hline \text { Actual direct materials used } & 100,000 \text { pounds } \\\hline \text { Actual finished goods produced } & 25,000 \text { units } \\\hline\end{array}$$ What is the total actual cost of the direct materials used?

A) $100,000
B) $89,000
C) $75,000
D) $83,250

Question 17

Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | } \hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \\\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \\\hline \text { Actual direct materials used } & 100,000 \text { pounds } \\\hline \text { Actual finished goods produced } & 25,000 \text { units } \\\hline\end{array}$$ How much is the direct materials efficiency variance?

A) $11,000 unfavorable
B) $11,000 favorable
C) $25,000 unfavorable
D) $25,000 favorable

Question 18

Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | } \hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \\\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \\\hline \text { Actual direct materials used } & 100,000 \text { pounds } \\\hline \text { Actual finished goods produced } & 25,000 \text { units } \\\hline\end{array}$$ How much is the direct materials price variance?

A) $11,000 F
B) $25,000 F
C) $11,000 U
D) $25,000 U

Question 19

The direct materials price variance should be calculated:

A) when the materials are purchased.
B) when the materials are requisitioned for use.
C) at the end of the reporting period.
D) when the actual quantity of materials used is known.

Question 20

The actual cost of direct materials is $10.50 per pound. The standard cost per pound is $11.75. During the current period, 10,000 pounds were used in production and 11,500 pounds were purchased. The standard quantity for actual units produced is 9,900 pounds. How much is the direct materials price variance, assuming it is recorded at purchase point?

A) $14,375 favorable
B) $14,375 unfavorable
C) $12,500 unfavorable
D) $12,500 favorable

Question 21

The following information describes a company's usage of direct labor in a recent period:
$$\begin{array} { | l | l | } \hline \text { Actual direct labor hours used } & 44,000 \\\hline \text { Actual rate per hour } & \$ 20 \\\hline \text { Standard rate per hour } & \$ 18 \\\hline \text { Standard hours for units produced } & 42,000 \\\hline\end{array}$$ How much is the direct labor efficiency variance?

A) $40,000 unfavorable
B) $40,000 favorable
C) $36,000 favorable
D) $36,000 unfavorable

Question 22

The following information describes a company's usage of direct labor in a recent period:
$$\begin{array} { | l | l | } \hline \text { Actual direct labor hours used } & 44,000 \\\hline \text { Actual rate per hour } & \$ 20 \\\hline \text { Standard rate per hour } & \$ 18 \\\hline \text { Standard hours for units produced } & 42,000 \\\hline\end{array}$$ How much is the direct labor price variance?

A) $84,000 favorable
B) $88,000 favorable
C) $88,000 unfavorable
D) $84,000 unfavorable

Question 23

The actual cost of direct labor per hour is $12.50 and the standard cost of direct labor per hour is $12.00. Two standard direct labor hours are allowed per finished good. During the current period, 250 finished goods were produced using 475 direct labor hours. How much is the direct labor efficiency variance?

A) $312.50 unfavorable
B) $300.00 favorable
C) $312.50 favorable
D) $300.00 unfavorable

Question 24

The actual cost of direct labor per hour is $12.50. Three standard direct labor hours are allowed per finished good. During the current period, 800 finished goods were produced using 2,500 direct labor hours. The direct labor efficiency variance is $1,300, unfavorable. What was the standard labor rate per hour?

A) $13.00
B) $12.75
C) $13.50
D) $12.00

Question 25

The standard cost of direct labor per hour is $8.00. Four standard direct labor hours are allowed per finished good. During the current period, 350 finished goods were produced using 1,350 direct labor hours. The direct labor price variance is $405, unfavorable. Calculate the actual cost of direct labor per hour.

A) $7.70
B) $8.30
C) $8.00
D) Impossible to determine using the given data

Question 26

What does an unfavorable direct labor price variance indicate?

A) Both actual quantity and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output.
B) The actual direct labor cost per hour exceeded the standard direct labor cost per hour for actual output.
C) The actual cost of direct labor per hour was less than the standard cost of direct labor per hour.
D) The actual quantity of direct labor hours worked exceeded the standard quantity of hours for actual output.

Question 27

Jennifer Gibson Company budgeted 4,000 pounds of direct materials costing $7.00 per pound to make 8,000 units of product. The company actually used 4,200 pounds costing $6.50 per pound to make the 8,000 units. What is the direct materials efficiency variance?

A) $3,400 F
B) $3,400 U
C) $1,400 F
D) $1,400 U

Question 28

Professional Woodworkers budgeted 3 hours of direct labor per unit at $8.50 per hour to produce 400 units of product. The 400 units were completed using 1,140 hours at $8.75 per hour. What is the direct labor price variance?

A) $300 favorable
B) $285 unfavorable
C) $300 unfavorable
D) $285 favorable

Question 29

David Cole Industries budgeted 4,000 pounds of direct materials to make 8,000 units of product. The company actually used 4,200 pounds to make the 8,000 units. The direct materials efficiency variance is $1,400 unfavorable. What is the standard cost per pound?

A) $1.90
B) $6.50
C) $7.00
D) $2.00

Question 30

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?

A) $8,400 unfavorable
B) $3,200 favorable
C) $8,750 favorable
D) $5,200 unfavorable

Question 31

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials efficiency variance?

A) $3,200 unfavorable
B) $3,550 favorable
C) $3,550 unfavorable
D) $3,200 favorable

Question 32

Video Products budgeted 2 hours of direct labor per unit at $9.00 per hour to produce 3,500 units of product. The 3,500 units were completed using 7,350 hours at $9.25 per hour. What is the direct labor efficiency variance?

A) $3,500 unfavorable
B) $4,988 favorable
C) $1,750 favorable
D) $3,150 unfavorable

Question 33

Video Products budgeted 2 hours of direct labor per unit at $9.00 per hour to produce 3,500 units of product. The 3,500 units were completed using 7,350 hours at $9.25 per hour. What is the direct labor price variance?

A) $1,837.50 unfavorable
B) $1,750.00 favorable
C) $1,750.00 unfavorable
D) $1,837.50 favorable

Question 34

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } \hline & \text { Standard Total Cost } & \text { Actual Total Cost } \\\hline \text { Direct materials: } & & \\\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \\\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \\\hline \text { Direct labor: } & & \\\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \\\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \\\hline\end{array}$$ What is the direct materials price variance?

A) $800 unfavorable
B) $1,960 favorable
C) $960 favorable
D) $1,160 unfavorable

Question 35

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } \hline & \text { Standard Total Cost } & \text { Actual Total Cost } \\\hline \text { Direct materials: } & & \\\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \\\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \\\hline \text { Direct labor: } & & \\\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \\\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \\\hline\end{array}$$ What is the direct materials efficiency variance?

A) $960 unfavorable
B) $800 unfavorable
C) $960 favorable
D) $800 favorable

Question 36

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } \hline & \text { Standard Total Cost } & \text { Actual Total Cost } \\\hline \text { Direct materials: } & & \\\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \\\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \\\hline \text { Direct labor: } & & \\\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \\\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \\\hline\end{array}$$ What is the direct labor price variance?

A) $270 unfavorable
B) $270 favorable
C) $120 favorable
D) $120 unfavorable

Question 37

Education Products Company gathered the following information for Job #155:
$$\begin{array} { | l | l | l | } \hline & \text { Standard Total Cost } & \text { Actual Total Cost } \\\hline \text { Direct materials: } & & \\\hline \text { Standard: } 1,000 \text { pints at } \$ 5 / \text { pint } & \$ 5,000 & \\\hline \text { Actual: } 1,160 \text { pints at } \$ 6 / \text { pint } & & \$ 6,960 \\\hline \text { Direct labor: } & & \\\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & \$ 3,750 & \\\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } . & & \$ 3,480 \\\hline\end{array}$$ What is the direct labor efficiency variance?

A) $150 unfavorable
B) $150 favorable
C) $125 favorable
D) $125 unfavorable

Question 38

Martin Racing Company gathered the following actual results for the current month:
$$\begin{array} { | l | r | } \hline \text { Actual amounts: } & \\\hline \text { Units produced } & 3,000 \\\hline \text { Direct materials purchased and used } ( 5,400 \text { pounds } ) & \$ 21,600 \\\hline \text { Direct labor cost (4,600 hours) } & \$ 36,800 \\\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \\\hline\end{array}$$ Budgeted production and standard costs were:
$$\begin{array} { | l | l | } \hline \text { Budgeted production } & 3,500 \text { units } \\\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \\\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 21,000 \\\hline\end{array}$$ What is the direct materials price variance?

A) $2,400 unfavorable
B) $1,350 favorable
C) $2,400 favorable
D) $1,350 unfavorable

Question 39

Martin Racing Company gathered the following actual results for the current month:
$$\begin{array} { | l | r | } \hline \text { Actual amounts: } & \\\hline \text { Units produced } & 3,000 \\\hline \text { Direct materials purchased and used (5,400 pounds } ) & \$ 21,600 \\\hline \text { Direct labor cost } ( 4,600 \text { hours } ) & \$ 36,800 \\\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \\\hline\end{array}$$ Budgeted production and standard costs were:
$$\begin{array} { | l | l | } \hline \text { Budgeted production } & 3,500 \text { units } \\\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \\\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 21,000 \\\hline\end{array}$$ What is the direct materials efficiency variance?

A) $1,500 unfavorable
B) $2,550 favorable
C) $3,900 favorable
D) $1,050 unfavorable

Question 40

Martin Racing Company gathered the following actual results for the current month:
$$\begin{array} { | l | r | } \hline \text { Actual amounts: } & \\\hline \text { Units produced } & 3,000 \\\hline \text { Direct materials purchased and used (5,400 pounds } ) & \$ 21,600 \\\hline \text { Direct labor cost } ( 4,600 \text { hours } ) & \$ 36,800 \\\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \\\hline\end{array}$$ Budgeted production and standard costs were:
$$\begin{array} { | l | l | } \hline \text { Budgeted production } & 3,500 \text { units } \\\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \\\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 21,000 \\\hline\end{array}$$ What is the direct labor price variance?

A) $2,250 unfavorable
B) $1,500 favorable
C) $2,300 unfavorable
D) $3,050 favorable

Question 41

Martin Racing Company gathered the following actual results for the current month:
$$\begin{array} { | l | r | } \hline \text { Actual amounts: } & \\\hline \text { Units produced } & 3,000 \\\hline \text { Direct materials purchased and used } ( 5,400 \text { pounds } ) & \$ 21,600 \\\hline \text { Direct labor cost (4,600 hours) } & \$ 36,800 \\\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \\\hline\end{array}$$ Budgeted production and standard costs were:
$$\begin{array} { | l | l | } \hline \text { Budgeted production } & 3,500 \text { units } \\\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \\\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 21,000 \\\hline\end{array}$$ What is the direct labor efficiency variance?

A) $750 favorable
B) $750 unfavorable
C) $2,300 unfavorable
D) $3,050 favorable

Question 42

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } \hline & \text { Direct materials } & \\\hline & \text { Product X } & \text { Product } \mathbf { Y } \\\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \\\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \\\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \\\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \\\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \\\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \\\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \\\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \\\hline\end{array}$$ What is the actual quantity used per unit for Product X?

A) 2.5 lbs.
B) 3.0 lbs.
C) 1.0 lb.
D) 2.0 lbs.

Question 43

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } \hline & \text { Direct materials } & \\\hline & \text { Product X } & \text { Product } \mathbf { Y } \\\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \\\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \\\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \\\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \\\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \\\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \\\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \\\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \\\hline\end{array}$$ What is the direct materials flexible budget variance for Product X?

A) $200 unfavorable
B) $400 favorable
C) $600 favorable
D) $200 favorable

Question 44

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } \hline & \text { Direct materials } & \\\hline & \text { Product X } & \text { Product } \mathbf { Y } \\\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \\\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \\\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \\\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \\\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \\\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \\\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \\\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \\\hline\end{array}$$ What is the standard price per unit for Product Y?

A) $5.50/lb.
B) $2.67/lb.
C) $5.00/lb.
D) $5.38/lb.

Question 45

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } \hline & \text { Direct materials } & \\\hline & \text { Product X } & \text { Product } \mathbf { X } \\\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \\\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \\\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \\\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \\\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \\\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \\\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \\\hline\end{array}$$ What is the efficiency variance for Product Y?

A) $1,200 favorable
B) $1,200 unfavorable
C) $1,650 unfavorable
D) $1,650 favorable

Question 46

Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | } \hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \\\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \\\hline \text { Actual direct materials used } & 100,000 \text { pounds } \\\hline \text { Actual finished goods produced } & 25,000 \text { units } \\\hline\end{array}$$ What is the actual cost of the direct materials used per pound?

A) $1.00
B) $.75
C) $.89
D) $1.11

Question 47

Daub, Inc. gathered the following information for the month ended March 31, 2009:
$$\begin{array} { | l | c | c | c | } \hline \text { The static budget volume is 4,500 units: } & & & \\\hline \text { Overhead flexible budget: } & & & \\\hline \text { Number of units } & 4,000 & 4,500 & 5,000 \\\hline \text { Standard machine hours } & 12,000 & 13,500 & 15,000 \\\hline \text { Budgeted overhead costs: } & & & \\\hline \text { Variable } & \$ 24,000 & \$ 27,000 & \$ 30,000 \\\hline \text { Fixed } & \$ 33,750 & \$ 33,750 & \$ 33,750 \\\hline\end{array}$$ Actual production was 5,000 units. Actual overhead costs were $26,000 for variable costs and $35,000 for fixed costs. Actual machine hours worked were 14,100 hours. What is the overhead production volume variance?

A) $2,750 unfavorable
B) $2,750 favorable
C) $3,750 unfavorable
D) $3,750 favorable

Question 48

Which of the following statements is not correct?

A) Price variance measures how well a business keeps unit prices of materials and labor within standards.
B) An efficiency or quantity variance measures how well a business uses its materials or direct labor hours.
C) A price variance is the difference between actual and standard prices of an input, multiplied by the standard quantity of the input.
D) A quantity variance is the difference between actual and standard quantity of an input, multiplied by the actual quantity of the input.

Question 49

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
recent month, Regal manufactured 1,000 bags of premium dog food; 54,000 pounds of direct
materials were actually used at a cost of $29,160. How much was the direct materials quantity
variance?

A) $2,000 unfavorable
B) $2,000 favorable
C) $2,700 favorable
D) $2,700 unfavorable

Question 50

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
recent month, Regal manufactured 1,000 bags of premium dog food; 54,000 pounds of direct
materials were actually used at a cost of $29,160. How much was the direct materials price
variance?

A) $2,000 unfavorable
B) $2,000 favorable
C) $2,160 favorable
D) $2,160 unfavorable

Question 51

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
recent month, Regal manufactured 1,200 bags of premium dog food; 64,000 pounds of direct
materials were actually purchased and used. The direct materials price variance for the month was
$3,200 unfavorable. What was the actual cost per pound of direct materials?

A) $.55
B) $.45
C) $.50
D) $.56

Question 52

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag of premium dog food that it manufactures; the standard price is $.50 per pound. During the most
recent month, Regal manufactured 1,200 bags of premium dog food; the direct materials efficiency
variance for the month was $3,000 unfavorable. How many pounds of direct materials were used
during the month?

A) 60,000
B) 66,000
C) 54,000
D) 63,000

Question 53

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 2,000 units and used 3,900 labor hours at a cost of $47,580. What was the labor efficiency variance for the month?

A) $1,200 unfavorable
B) $1,220 unfavorable.
C) $1,200 favorable
D) $1,220 unfavorable

Question 54

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 2,000 units and used 3,900 labor hours at a cost of $47,580. What was the labor price variance for the month?

A) $800 unfavorable
B) $780 favorable
C) $800 favorable
D) $780 unfavorable

Question 55

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 3,000 units while reporting an unfavorable labor
Efficiency variance of $2,400. How many hours of direct labor were actually used during the month?

A) 6,000
B) 5,800
C) 6,200
D) 7,200

Question 56

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 3,000 units while reporting an unfavorable labor price variance of $1,160. What was the total actual labor cost assuming that 5,800 labor hours were
Actually incurred?

A) $68,440
B) $70,760
C) $69,600
D) $73,160

Question 57

Rae Company reported a $108,000 favorable labor efficiency variance last month. The standard labor
Rate is $12 an hour and the standard labor hours per unit is 60. How many units were produced last
Month, if 45,000 labor hours were actually incurred?

A) 750
B) 900
C) 600
D) 875

Question 58

Marnie Company reported a $9,600 unfavorable labor efficiency variance last month. The standard
Labor rate is $8 an hour and the standard labor hours per unit is 10. How many units were produced
Last month if 12,000 labor hours were actually incurred?

A) 1,200
B) 1,020
C) 1,320
D) 1,080

Question 59

Which of the following statements is correct?

A) An unfavorable direct labor efficiency variance should always be attributed to the production manager.
B) A favorable direct materials price variance is always beneficial.
C) Variances should be used to raise questions and direct attention, rather than to blame.
D) An unfavorable variance is always the fault of the supervisor.

Question 60

Which of the following statements is incorrect?

A) A standard costing system helps managers prepare a budget.
B) A price variance measures how well a business keeps unit costs within standards.
C) The actual cost of an input impacts the efficiency variance.
D) A standard costing system helps managers set target levels of performance.

Question 61

Quick Tax Returns budgets 1.5 direct labor hours for every tax return that it prepares, at a standard
Cost of $20 an hour. During the most recent year, 500 returns were completed with the labor cost
Totaling $17,600. The actual labor cost was $22 per hour during that period. What was the direct labor efficiency variance?

A) $1,000 unfavorable
B) $1,000 favorable
C) $1,100 favorable
D) $1,100 unfavorable

Question 62

The following information has been provided by Hall Company:
5,000 units were produced last year.
The material price variance was $16,800 favorable.
The material quantity variance was $8,000 unfavorable.
10,500 feet of direct material was purchased and used.
The standard price of the direct material was $4 per foot.
What was the actual cost per foot of direct materials?

A) $4.00
B) $2.40
C) $5.60
D) $3.24

Question 63

The following information has been provided by Hall Company:
5,000 units were produced last year.
The material price variance was $16,800 favorable.
The material quantity variance was $8,000 unfavorable.
10,500 feet of direct material was purchased and used.
The standard price of the direct material was $4 per foot.
What was the total standard direct material cost for the 5,000 units produced?

A) $34,000
B) $20,000
C) $25,200
D) $28,000

Question 64

The following information has been provided by Hall Company:
5,000 units were produced last year.
The material price variance was $16,800 favorable.
The material quantity variance was $8,000 unfavorable.
10,500 feet of direct material was purchased and used.
The standard price of the direct material was $4 per foot.
What was the total actual direct material cost for the 5,000 units produced?

A) $34,000
B) $42,800
C) $25,200
D) $28,000

Question 65

An increase in the direct labor rate as a result of union negotiations would most likely impact which
Of the following variances?

A) Direct labor efficiency variance
B) Direct labor price variance
C) Direct labor quantity variance
D) Sales volume variance

Question 66

Which of the following could possibly explain an unfavorable direct materials efficiency variance and a favorable direct materials price variance occurring during the same period?

A) The purchase of higher-quality direct materials
B) The use of inexperienced direct laborers
C) The purchase of lower-quality direct materials
D) A machine being out of alignment

Question 67

Rice Corporation has provided the following information:
Direct material standard per unit: 3 pounds
Standard price per pound: $3.50
Actual number of pounds purchased and used: 1,575
Actual cost of materials purchased: $5,355
Actual number of units produced: 500
What is the direct materials price variance?

A) $157.50 unfavorable
B) $157.50 favorable
C) $150.00 favorable
D) $150.00 unfavorable

Question 68

Sue Corporation has provided the following information:
Direct labor standard per unit: 2.5 hours
Standard cost per labor hour: $16.00
Actual number of direct labor hours incurred: 1,975
Actual cost of direct labor: $15.50
Actual number of units produced: 750
What is the direct labor price variance?

A) $937.50 unfavorable
B) $937.50 favorable
C) $987.50 favorable
D) $987.50 unfavorable

Question 69

Sue Corporation has provided the following information:
Direct labor standard per unit: 2.5 hours
Standard cost per labor hour: $16.00
Actual number of direct labor hours incurred: 1,975
Actual cost of direct labor: $15.50
Actual number of units produced: 750
What is the direct labor efficiency variance?

A) $1,550 unfavorable
B) $1,550 favorable
C) $1,600 favorable
D) $1,600 unfavorable

Question 70

Rice Corporation has provided the following information:
Direct material standard per unit: 3 pounds
Standard price per pound: $3.50
Actual number of pounds purchased and used: 1,575
Actual cost of materials purchased: $5,355
Actual number of units produced: 500
What is the direct materials quantity variance?

A) $262.50 unfavorable
B) $262.50 favorable
C) $255.00 favorable
D) $255.00 unfavorable

Question 71

The production volume variance is favorable whenever actual output is less than expected output.

Question 72

The standard variable overhead rate for Unbeatable Toys is $5. Budgeted fixed overhead is $20,000. Unbeatable Toys budgeted production was 2,000 units for the current period and actual production was 1,950. What is the production volume variance?

A) $250 unfavorable
B) $500 favorable
C) $500 unfavorable
D) $250 favorable

Question 73

Peterson Company gathered the following flexible budget information:
$$\begin{array} { | l | l | l | } \hline \text { Percent of normal capacity } & 90 \% & 100 \% \\\hline \text { Standard direct labor hours } & 27,000 & 30,000 \\\hline \text { Total budgeted variable overhead } & \$ 54,000 & \$ 60,000 \\\hline \text { Total budgeted fixed overhead } & \$ 90,000 & \$ 90,000 \\\hline\end{array}$$ How much is the total budgeted overhead at 95% of normal capacity?

A) $90,000
B) $150,000
C) $147,000
D) $142,500

Question 74

Daub, Inc. gathered the following information for the month ended March 31, 2009:
$$\begin{array} { | l | c | c | c | } \hline \text { The static budget volume is 4,500 units: } & & & \\\hline \text { Overhead flexible budget: } & & & \\\hline \text { Number of units } & 4,000 & 4,500 & 5,000 \\\hline \text { Standard machine hours } & 12,000 & 13,500 & 15,000 \\\hline \text { Budgeted overhead costs: } & & & \\\hline \text { Variable } & \$ 24,000 & \$ 27,000 & \$ 30,000 \\\hline \text { Fixed } & \$ 33,750 & \$ 33,750 & \$ 33,750 \\\hline\end{array}$$ Actual production was 5,000 units. Actual overhead costs were $26,000 for variable costs and $35,000 for fixed costs. Actual machine hours worked were 14,100 hours. What is the standard rate of variable overhead per machine hour?

A) $1.84
B) $2.50
C) $2.00
D) $1.50

Question 75

Which of the following would cause an unfavorable production volume variance?

A) If actual production exceeds budgeted production
B) If actual fixed overhead costs exceeds budgeted fixed overhead costs
C) If budgeted fixed overhead costs exceed actual fixed overhead costs
D) If actual production is less than budgeted production

Question 76

The overhead flexible budget variance is:

A) the difference between the actual total overhead and the total overhead in the static budget.
B) the difference between the actual total overhead and the total overhead in the flexible budget.
C) favorable, if actual production exceeds budgeted production.
D) unfavorable, if actual production exceeds budgeted production.

Question 77

When recording the use of direct materials in the production process, work in process inventory is debited for which of the following?

A) Standard quantity for actual production times standard cost per pound
B) Standard quantity for actual production times actual cost per pound
C) Actual quantity times standard cost per pound
D) Actual quantity times actual cost per pound

Question 78

When recording direct labor incurred in the production process, which of the following shows the effect on work in process inventory?

A) Debited for standard quantity for actual production times standard cost per hour
B) Credited for standard quantity usage for actual production times actual cost per hour
C) Debited for actual quantity times standard cost per hour
D) Credited for standard quantity for actual production times standard cost per hour

Question 79

The entry to allocate manufacturing overhead to production involves which of the following?

A) Debit to work in process inventory for the actual cost of overhead
B) Credit to work in process inventory for the standard cost of overhead based on actual production
C) Credit to work in process inventory for the actual cost of overhead
D) Debit to work in process inventory for the standard cost of overhead based on actual production

Question 80

When recording the use of direct materials in the production process, materials inventory is credited for which of the following?

A) Standard quantity for actual production times actual cost per pound
B) Actual quantity times standard cost per pound
C) Actual quantity times actual cost per pound
D) Standard quantity for actual production times standard cost per pound