Question 1

When goods are completed and transferred from Work In Process Inventory (WIP) to Finished Goods (FG) Inventory, the costs in the transfer accounting entry are

Accepted Answer

A)  incurred costs. 
B)  standard costs. 
C)  assigned costs. 
D)  actual costs.

Question 2

When assigning costs for direct materials, direct labor, and manufacturing overhead to
Production, the costs should be recorded as

Accepted Answer

A)  actual costs incurred. 
B)  standard costs. 
C)  estimated costs. 
D)  total budgeted costs.

Question 3

The formula for the direct materials (DM) price variance is

Accepted Answer

A)  (AQpurch x AP) - (AQpurch x SP). 
B)  (SQpurch x AP) - (SQpurch x SP). 
C)  (AQpurch x AP) + (AQpurch x SP). 
D)  (AQpurch x AP) - (SQpurch x SP).

Question 4

The correct equation for a Master Budget Variance is

Accepted Answer

A)  (Budgeted volume x Actual price) - (Actual volume x Budgeted price). 
B)  (Budgeted volume x Actual price) + (Actual volume x Budgeted price). 
C)  (Budgeted volume x Budgeted price) - (Actual volume x Actual price). 
D)  (Budgeted volume x Budgeted price) + (Actual volume x Actual price).

Question 5

Which of the following shows the required quantities and current prices of manufacturing costs
For each input: direct materials, direct labor, variable manufacturing overhead and fixed manufacturing overhead?

Accepted Answer

A)  Bill of materials 
B)  Standard cost card 
C)  Variance analysis 
D)  Job cost sheet

Question 6

Ember Industries incurs an actual unit sales price of $6 and a budgeted unit sales price of 
$5 for a butane fireplace lighter. Last week, the company actually sold 45 lighters when it budgeted to sell 50 lighters. Compute Ember's Master Budget Variance, Flexible Budget Variance, and Sales Activity Variance. Show all computations.

Accepted Answer

The answer of Ember Industries incurs an actual unit sales...

Question 7

Philly Rug Company produces designer rugs for clients. The standard size rug will require 3 
yards of direct materials (DM), 1 hours of direct labor (DL) time, and 2 hours of machine time. MOH costs are applied based on machine hours. DM is expected to cost $8.00 per yard, DL is budgeted at $12 per hour, and cost of machine time is estimated at $3/machine hour for variable-MOH and $2/machine hour for fixed-MOH. Create a standard cost card for a standard size rug for Philly Rug Company to compute the standard cost for one unit of product.

Accepted Answer

The answer of Philly Rug Company produces designer rugs for...

Question 8

When an employee overspends on a business expense where a specific guideline has been set, the spending above the guideline is called a

Accepted Answer

A)  cost override. 
B)  corrective-action activity. 
C)  ethical violation. 
D)  variance.

Question 9

How do managers use benchmarking to plan and control in order to achieve company
objectives?

Accepted Answer

The answer of How do managers use benchmarking to plan...

Question 10

Mejor Medical Machines manufactures hospital equipment. The company was recently able
to purchase materials for production and secure a bulk purchase discount with an additional prompt payment cash discount. However, as the materials were transferred into production of $3,900 from DM Inventory, due to the lower quality of materials, additional calibrations were needed to achieve the original quality in the production of the equipment, and an unfavorable Direct Materials (DM) Efficiency Variance of $500 resulted. Record the journal entry to recognize this use of the direct materials into production for Mejor Medical assuming that this unfavorable variance is recognized when materials are placed into production.

Accepted Answer

The answer of Mejor Medical Machines manufactures hospital equipment. The...

Question 11

A company's direct labor (DL) efficiency variance is computed as

Accepted Answer

A)  (AQ x SP) + (SQ x SP). 
B)  (AQ x AP) - (SQ x SP). 
C)  (AQ x AP) - (AQ x SP). 
D)  (AQ x SP) - (SQ x SP).

Question 12

Describe production variances and identify three specific production variances.

Accepted Answer

The answer of Describe production variances and identify three specific...

Question 13

The equation for the simplified sales activity variance is

Accepted Answer

A)  (Actual volume - Budgeted volume) x Actual sales price. 
B)  (Actual volume - Budgeted volume) x Budgeted sales price. 
C)  (Actual sales price per unit - Budgeted sales price per unit) x Actual volume sold. 
D)  (Actual sales price per unit - Budgeted sales price per unit) x Budgeted volume sold.

Question 14

Identify at least two causes for fixed-MOH variances.

Accepted Answer

The answer of Identify at least two causes for fixed-MOH...

Question 15

Kidzlane has direct materials (DL) standards of 2 pounds per unit at $4 per pound for its most popular toy. Last month, 5,600 pounds of direct materials that actually cost $28,000 were used to produce 3,000 toy units. The direct materials (DM) efficiency variance for last month was

Accepted Answer

A)  $1,600 unfavorable. 
B)  $1,600 favorable. 
C)  $5,600 unfavorable. 
D)  $5,600 favorable.

Question 16

A favorable Variable-MOH Price Variance means that

Accepted Answer

A)  less was paid than expected for variable-MOH resources. 
B)  more was paid than expected for variable-MOH resources. 
C)  less of the cost driver related to the variable-MOH resources was used than expected. 
D)  more of the cost driver related to the variable-MOH resources was used than expected.

Question 17

Which of the following variances focuses on using the contribution margin as the basis for measuring the full impact of sales activity changes?

Accepted Answer

A)  Sales price variance 
B)  Market share variance 
C)  Comprehensive sales activity variance 
D)  Market size variance

Question 18

Mejor Medical Machines manufactures hospital equipment. The company recently 
purchased materials for production, and was able to secure a bulk purchase discount with an additional prompt payment cash discount. As a result, the original purchase on account with all of the discounts was $3,900, which resulted in a Direct Materials (DM) Price Variance of $900, favorable. Record the journal entry to recognize this raw materials purchase for Mejor Medical assuming that the variance is recognized at the time of purchase.

Accepted Answer

The answer of Mejor Medical Machines manufactures hospital equipment. The...

Question 19

Variances with overall favorable effects will carry

Accepted Answer

A)  debit balances which increase operating income. 
B)  credit balances which decrease operating income. 
C)  credit balances which increase operating income. 
D)  debit balances which decrease operating income.

Question 20

The variance that highlights the difference between actual sales volume and the master budget
Sales volume is the

Accepted Answer

A)  MOH volume variance. 
B)  Master budget variance. 
C)  Flexible budget variance. 
D)  Sales activity variance.

Exam 10: Variance Analysis and Standard Costing