Question 1

The difference between budgeted and applied fixed factory overhead is referred to as a __________________________________________________.

Accepted Answer

The answer of The difference between budgeted and applied fixed...

Question 2

Wimberly Company Wimberly Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar).
 Refer to Wimberly Company.Assume that the company computes the material price variance on the basis of material issued to production.What is the total material variance?

Accepted Answer

A) $1,050 U 
B) $1,050 F 
C) $3,030 U 
D) $3,030 F

Question 3

Expected standards generally yield favorable variances.

Accepted Answer

A) True 
 B)False

Question 4

Reichs Company The following information is for Reichs Company's September production:
$\begin{array}{ll}
\textbf { Standard: }\
\text { Material } & 4.0 \text { feet per unit } @ \$ 3.75 \text { per foot } \
\text { Labor } & 3.0 \text { hours per unit } @ \$ 8.25 \text { per hour }
\end{array}$

$\begin{array}{ll}
\textbf { Actual: }\
\text { Production } & 3,500 \text { units produced during the month } \
\text { Material } & 14,200 \text { feet used; } 14,700 \text { feet purchased @ } \$ 3.70\text { per foot } \
\text { Labor } & 10,400 \text { direct labor hours } \$ 8.35\text { per hour }
\end{array}$ (Round all answers to the nearest dollar.)
Refer to Reichs Company.What is the material price variance (calculated at point of purchase)?

Accepted Answer

A) $ 735 F 
B) $ 735 U 
C) $ 710 F 
D) $ 710 U

Question 5

Which of the following statements regarding standard cost systems is true?

Accepted Answer

A) Favorable variances are not necessarily good variances. 
B) Managers will investigate all variances from standard. 
C) The production supervisor is generally responsible for material price variances. 
D) Standard costs cannot be used for planning purposes since costs normally change in the future.

Question 6

Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? $\underline{\text{Ideal}} ~~~~~~~~\underline{\text{Practical}} ~~~~~~~~~~~\underline{\text{Expected annual}}$

Accepted Answer

A) yes no no 
B) no no no 
C) no yes yes 
D) yes yes no

Question 7

Ritchie Company Ritchie Company uses a standard cost system for its production process.Ritchie Company applies overhead based on direct labor hours.The following information is available for July:
 Refer to Ritchie Company Using the two-variance approach,what is the controllable variance?

Accepted Answer

A) $21,650 U 
B) $16,480 U 
C) $5,775 U 
D) $12,080 U

Question 8

A conversion variance combines labor and overhead variances.

Accepted Answer

A) True 
 B)False

Question 9

When multiple materials are used,the difference between the total quantity and the standard quantity of output when a nonstandard mix of materials is used is known as the _________________________ variance.

Accepted Answer

The answer of When multiple materials are used,the difference between...

Question 10

The following information is available from the Fitzgerald Company: $\begin{array}{ll}
\text { Actual OH } & \$ 15,000 \
\text { Fixed OH expenses, actual } & \$ 7,200 \
\text { Fixed OH expenses, budgeted } & \$ 7,000 \
\text { Actual hours } & 3,500 \
\text { Standard hours } & 3,800 \
\text { Variable OH rate per DLH } & \$ 2.50
\end{array}$ Assuming that Fitzgerald uses a three-way analysis of overhead variances,what is the overhead spending variance?

Accepted Answer

A) $750 F 
B) $750 U 
C) $950 F 
D) $1,500 U

Question 11

The material price variance (computed at point of purchase)is

Accepted Answer

A) the difference between the actual cost of material purchased and the standard cost of material purchased. 
B) the difference between the actual cost of material purchased and the standard cost of material used. 
C) primarily the responsibility of the production manager. 
D) both a and c.

Question 12

Fleetwood Company Fleetwood Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Fleetwood produced 4,500 units:
$\begin{array}{ll}\text { Standard: }\
\text { DLH per unit } & 2.50 \
\text { Variable overhead per DLH } & \$ 1.75 \
\text { Fixed overhead per DLH } & \$ 3.10 \
\text { Budgeted variable overhead } & \$ 21,875 \
\text { Budgeted fixed overhead } & \$ 38,750\\\text { Actual: }\
\text {Direct labor hours }&10,000\
\text { Variable overhead}&\$26,250\
\text { Fixed overhead}&\$38,000\
\end{array}$ Refer to Fleetwood Company.Using the one-variance approach,what is the total overhead variance?

Accepted Answer

A) $6,062.50 U 
B) $3,625.00 U 
C) $9,687.50 U 
D) $6,562.50 U

Question 13

When computing variances from standard costs,the difference between actual and standard price multiplied by actual quantity used yields a

Accepted Answer

A) combined price-quantity variance. 
B) price variance. 
C) quantity variance. 
D) mix variance.

Question 14

Ideal standards are an effective means of controlling variances and motivating workers.

Accepted Answer

A) True 
 B)False

Question 15

Expected standards generally yield unfavorable variances.

Accepted Answer

A) True 
 B)False

Question 16

Starr Company has made the following information available for its production facility for the current month.Fixed overhead was estimated at 22,000 machine hours for the production cycle.Actual machine hours for the period were 21,700,which generated 4,200 units.
  Starr Company's standard costs are as follows:
  Determine the following items:

Accepted Answer

The answer of Starr Company has made the following information...

Question 17

The fixed overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal the predetermined activity level for a given period,the volume variance will be

Accepted Answer

A) zero. 
B) favorable. 
C) unfavorable. 
D) either favorable or unfavorable,depending on the budgeted overhead.

Question 18

The formula for price/rate variance is (AP - SP)´ SQ.

Accepted Answer

A) True 
 B)False

Question 19

When multiple labor categories are used,the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a ______________________________ variance.

Accepted Answer

The answer of When multiple labor categories are used,the monetary...

Question 20

Hidalgo Company has made the following information available for its production facility for the current month.Fixed overhead was estimated at 19,000 machine hours for the production cycle.Actual machine hours for the period were 18,900,which generated 3,900 units.
  Hidalgo Company's standard costs are as follows:
  Determine the following items:

Accepted Answer

The answer of Hidalgo Company has made the following information...

Exam 7: Standard Costing and Variance Analysis

The difference between budgeted and applied fixed factory overhead is referred to as a __________________________________________________.

Expected standards generally yield favorable variances.

Which of the following statements regarding standard cost systems is true?

Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? $\underline{\text{Ideal}} \underline{\text{Practical}} ~~~\underline{\text{Expected annual}}$

Ritchie Company Ritchie Company uses a standard cost system for its production process.Ritchie Company applies overhead based on direct labor hours.The following information is available for July: Refer to Ritchie Company Using the two-variance approach,what is the controllable variance?

A conversion variance combines labor and overhead variances.

When multiple materials are used,the difference between the total quantity and the standard quantity of output when a nonstandard mix of materials is used is known as the _________________________ variance.

The material price variance (computed at point of purchase) is

When computing variances from standard costs,the difference between actual and standard price multiplied by actual quantity used yields a

Ideal standards are an effective means of controlling variances and motivating workers.

Expected standards generally yield unfavorable variances.

The fixed overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal the predetermined activity level for a given period,the volume variance will be

The formula for price/rate variance is (AP - SP)´ SQ.

When multiple labor categories are used,the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a ______________________________ variance.