Question 1

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK?

Accepted Answer

A)  The price variance is $20,000 favorable
B)  The quantity variance is $175,000 unfavorable
C)  The price variance is $20,000 unfavorable
D)  The quantity variance is $20,000 unfavorable
E)  None of the choices are correct C

Question 2

Humphrey Manufacturing has the following standards for its production department: $\begin{array}{c}
\begin{array}{lll}
\
\
 \text { Materials}\
 \text { Direct labor }\
 \text { Variable overhead }\
 \text { Fixed overhead }\
 \text { Total cost per lot}
\end{array}
\begin{array}{lll}
\
\
 \text {10 pounds at \$ 2.40 / 1b}\
 \text {0.5 hour at\$ 16.00 / hr }\
 \text {0.5 hour at \$ 24.00 / hr }\
 \text {0.5 hour at\$ 43.20 / hr} \
\
\end{array}
\begin{array}{lll}
 \text {Per finished}\
 \text {lot of product}\
\$ 24.00 \
8.00 \
12.00 \
\underline{21.60} \
\underline{\$ 65.60} \
\end{array}
\end{array}$

Overhead is assigned to products based on standard direct labor hours.Humphrey budgeted 10,000 finished lots for the period,9,810 were actually produced.Actual overhead was $340,000 and actual direct labor hours were 3,950.What is Humphrey's overhead efficiency variance?

Accepted Answer

A)  $4,000 favorable
B)  $4,000 unfavorable
C)  $22,920 favorable
D)  $29,200 unfavorable
E)  $33,304 favorable  C

Question 3

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's price variances?

Accepted Answer

A)  $6.25 million unfavorable
B)  $12 million favorable
C)  $6.25 million favorable
D)  $5.75 million favorable
E)  None of the choices are correct C

Question 4

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's sales variance?

Accepted Answer

A)  $183,334 favorable
B)  $155,000 favorable
C)  $163,334 favorable
D)  $175,000 favorable
E)  None of the choices are correct

Question 5

Which of these is true?

Accepted Answer

A)  Budgeted fixed factory overhead = Budgeted overhead per unit × actual volume
B)  Budgeted fixed factory overhead = Budgeted overhead per unit × standard volume
C)  Budgeted factory overhead = (Budgeted fixed overhead per unit × budgeted volume) + actual variable overhead
D)  Budgeted factory overhead = (Budgeted fixed overhead per unit × standard volume) + budgeted variable overhead
E)  None of the choices are correct

Question 6

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is true of Wendy's overhead variances?

Accepted Answer

A)  Overhead spending variance is $45,000 fav
B)  Overhead efficiency variance is $7,500 fav
C)  Overhead volume variance is $25,000 fav
D)  Overhead spending variance is $37,500 fav
E)  None of the choices are correct

Question 7

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is Wendy's total overhead variance?

Accepted Answer

A)  $75,000 over absorbed
B)  $12,500 over absorbed
C)  $12,500 under absorbed
D)  $25,000 over absorbed
E)  None of the choices are correct

Question 8

Karpoff Kremes (KK)planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's mix variance? (Do not round your intermediate calculations. )

Accepted Answer

A)  $0
B)  $175,000 favorable
C)  $28,348 favorable
D)  $8,348 unfavorable
E)  Unable to determine

Question 9

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is Wendy's total overhead absorbed?

Accepted Answer

A)  $1,175,000
B)  $1,200,000
C)  $1,187,500
D)  $1,250,000
E)  None of the choices are correct

Question 10

The overhead volume variance:

Accepted Answer

A)  captures the difference between planned overheads and actual overheads
B)  measures underutilized capacity
C)  measures the opportunity cost of actual capacity utilization differing from planned capacity utilization
D)  as a performance measure encourages overproduction
E)  All of the choices are correct

Question 11

Which of these is true?

Accepted Answer

A)  Budgeted volume = Actual output × units allowed
B)  Actual volume = Budgeted output × actual units allowed
C)  Expected volume = Standard volume
D)  Standard volume = Actual output × # cost driver units allowed
E)  None of the choices are correct

Question 12

Wendy Wall (WW)makes wall units.For the year,the following details have been budgeted.Output,10,000 units;factory overhead $1,250,000,of which 60% is variable.Each wall unit should take 2.5 hours of direct labor to produce.WW produced 9,500 units with 24,000 DLH used and $1,175,000 actual overhead was incurred.Overhead is allocated based on direct labor hours (DLH). What is the correct overhead absorption rate (to nearest cent)?

Accepted Answer

A)  $52.63
B)  $50.00
C)  $49.47
D)  $47.00
E)  None of the choices are correct

Question 13

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's quantity variances?

Accepted Answer

A)  $12 million unfavorable
B)  $5.75 million favorable
C)  $5.75 million unfavorable
D)  $6.25 million unfavorable
E)  None of the choices are correct

Question 14

Humphrey Manufacturing has the following standards for its production department: $\begin{array}{c}
\begin{array}{lll}
\
\
 \text { Materials}\
 \text { Direct labor }\
 \text { Variable overhead }\
 \text { Fixed overhead }\
 \text { Total cost per lot}
\end{array}
\begin{array}{lll}
\
\
 \text {10 pounds at \$ 2.40 / 1b}\
 \text {0.5 hour at\$ 16.00 / hr }\
 \text {0.5 hour at \$ 24.00 / hr }\
 \text {0.5 hour at\$ 43.20 / hr} \
\
\end{array}
\begin{array}{lll}
 \text {Per finished}\
 \text {lot of product}\
\$ 24.00 \
8.00 \
12.00 \
\underline{21.60} \
\underline{\$ 65.60} \
\end{array}
\end{array}$
 Overhead is assigned to products based on standard direct labor hours.Humphrey budgeted 10,000 finished lots for the period,9,810 were actually produced.Actual overhead was $340,000 and actual direct labor hours were 3,950.What is Humphrey's overhead spending variance?

Accepted Answer

A)  $4,000 favorable
B)  $4,000 unfavorable
C)  $22,920 favorable
D)  $29,200 unfavorable
E)  $33,304 favorable

Exam 13: Overhead and Marketing Variances

Karpoff Kremes (KK) planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK?

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's price variances?

Karpoff Kremes (KK) planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's sales variance?

Which of these is true?

Karpoff Kremes (KK) planned to sell 40,000 Kings at $20 each and 20,000 Kweens at $15 each.Actual sales of the former were 45,000 and 25,000 of the latter,at $19 and $16 respectively. Which is true of KK's mix variance? (Do not round your intermediate calculations. )

The overhead volume variance:

Which of these is true?

Boris Bangles planned to sell 280,000 banjos at $400 each,but actually sold 250,000 at $425 each.Which is true of BB's quantity variances?