Question 1

The term "processing cycle efficiency" (PCE):

Accepted Answer

A)  Like manufacturing cycle time, is a measure of operational efficiency. 
B)  Is defined as the ratio of manufacturing lead time to delivery time. 
C)  Is defined as manufacturing lead time minus delivery time. 
D)  Is defined as the ratio of customer-response time to order-delivery time. 
E)  Is at an optimum level when PCE = 0.

Question 2

Falcon Company uses a standard cost system; as such, all inventories are carried on the books at standard cost. During the most recent period the company manufactured 12,000 units. The standard cost sheet indicates that the standard direct labor cost per unit is $1.50. The performance report for the period includes an unfavorable direct labor rate variance of $1,000 and a favorable direct labor efficiency variance of $275.
Required:
What was the total actual cost of direct labor incurred during the period, to the nearest whole dollar?

Accepted Answer

The answer of Falcon Company uses a standard cost system;...

Question 3

Roncy Manufacturing uses enhanced powder plastics (EPP) to manufacture a high-pressure board, Dura-Plastic. Information concerning its operation in June was as follows:The standard cost per ounce of EPP (rounded to two decimal places) is:

Accepted Answer

A)  $6.22. 
B)  $6.30. 
C)  $6.65. 
D)  $6.84. 
E)  Greater than $7.00.

Question 4

The way managers and employees who are affected by a standard cost system perceive the system will:

Accepted Answer

A)  Be of little consequence on the success of the system if correctly implemented. 
B)  Generally be minimal in impact on the implementation of the system. 
C)  Affect its success or failure in implementing the system. 
D)  Be difficult to assess. 
E)  Not matter in the long run (e.g., because of competitive pressures).

Question 5

A manufacturer planned to use $82.00 of materials per unit produced, but in the most recent period it actually used $80.00 of material per unit produced. During this same period, the company planned to produce 1,200 units, but actually produced only 1,000 units. The flexible-budget variance for materials, to the nearest dollar, is:

Accepted Answer

A)  $2,000 favorable. 
B)  Impossible to determine without additional information. 
C)  $14,000 unfavorable. 
D)  $16,400 unfavorable. 
E)  $2,400 unfavorable.

Question 6

Which of the following is not indicated as an advantage of using nonfinancial performance measures, relative to financial performance measures, as part of an operational control system?

Accepted Answer

A)  Nonfinancial performance indicators are readily understandable by operating personnel. 
B)  Nonfinancial performance indicators can be viewed as drivers of future financial performance. 
C)  Nonfinancial performance indicators direct attention to precise problem areas that need attention. 
D)  Nonfinancial performance measures are more reliable than financial performance measures.

Question 7

Marv Company's direct labor costs for manufacturing its only product were as follows for October:$\begin{array}{lrr}
\text { Standard direct labor hours (DLHs) per unit of product } & 2.0 \
\text { Budgeted finished units for the period } & 6,000 \
\text { Actual number of finished units produced } & 5,000 \
\text { Standard wage rate per direct labor hour (SP) } & \$ 20.00 \
\text { Direct labor costs incurred } & \$ 207,000 \
\text { Actual wage rate per direct labor hour (AP) } & \$  18.00
\end{array}$The total direct labor variance for October, rounded to the nearest dollar, was:

Accepted Answer

A)  $7,000 unfavorable. 
B)  $9,000 favorable. 
C)  $9,000 unfavorable. 
D)  $32,000 favorable. 
E)  $54,000 unfavorable.

Question 8

The arrival of new manufacturing techniques such as automation, flexible manufacturing systems, and cluster or cell manufacturing has:

Accepted Answer

A)  Emphasized the importance of direct labor variances. 
B)  Not affected the importance of direct labor cost variances. 
C)  Led to a deemphasis of the importance of direct labor cost variances. 
D)  Made direct labor variances obsolete. 
E)  Eliminated the need to calculate and report direct materials variances.

Question 9

Europa Company manufactures only one product. Presented below is direct labor information for November. $\begin{array}{lr}
\text { Standard direct labor hours per unit of product } & 3.20 \
\text { Number of finished units produced } & 6,500 \
\text { Standard wage rate per direct labor hour (SP) } & \$ 19.20 \
\text { Total direct labor pavroll for the period } & \$ 359.424\
\text { Actual wage rate per direct labor hour worked (AP) }&\$16.00
\end{array}$The direct labor flexible-budget variance for November, to the nearest dollar, was:

Accepted Answer

A)  $26,624 unfavorable. 
B)  $31,949 unfavorable. 
C)  $39,936 favorable. 
D)  $71,885 favorable. 
E)  $103,834 favorable.

Question 10

Which of the following benefits is not typically associated with a move to a just-in-time (JIT) manufacturing system?

Accepted Answer

A)  Raw materials are delivered as close as possible to time of production. 
B)  Existence of long-term contracts with selected suppliers. 
C)  Reduction in employee training and education costs. 
D)  Decreases in manufacturing lead time. 
E)  Improved customer-response time (CRT).

Question 11

During the most recent period Appliance, Inc. manufactured 10,000 units. The standard cost sheet indicates that the standard direct labor cost per unit is $3.00. The performance report for the period includes a favorable direct labor rate variance of $2,000, and a favorable direct labor efficiency variance of $500.
Required:
What was the total actual cost of direct labor incurred during the period, rounded to the nearest dollar?

Accepted Answer

The answer of During the most recent period Appliance, Inc....

Question 12

A materials usage variance can be caused by all the following except:

Accepted Answer

A)  The number of units produced during the period (i.e., output volume). 
B)  Performance of the workers in using the materials. 
C)  Quality of the materials. 
D)  Skill level of the workers using the materials. 
E)  Inadequate employee supervision.

Question 13

Minmax Co.'s direct labor information for February is as follows:$\begin{array}{lr}
\text { Direct labor hours worked (AQ) } & 33,600 \
\text { Standard direct labor hours for units manufactured (SQ) } & 35,000 \
\text { Unfavorable direct labor rate variance } & \$ 11,760 \
\text { Total payroll for direct labor } & \$ 470,400
\end{array}$The standard direct labor rate per hour (SP) (to two decimal places) for February was:

Accepted Answer

A)  $13.44. 
B)  $13.65. 
C)  $13.78. 
D)  $14.00. 
E)  $14.35.

Question 14

Lucky Company's direct labor information for the month of February is as follows: $\begin{array}{lr}
\text { Actual direct labor hours worked (AQ) } & 61,500 \
\text { Standard direct labor hours allowed (SQ) } & 63,000 \
\text { Total payroll for direct labor } & \$ 774,900 \
\text { Direct labor efficiency variance } & \$ 18,000
\end{array}$The actual direct labor rate per hour (AP) for February, rounded to two decimal places, was:

Accepted Answer

A)  $12.00. 
B)  $12.30. 
C)  $12.60. 
D)  $13.20. 
E)  $13.50.

Question 15

Shoemaker Perkins Company uses a standard cost system and had 400 pounds of raw material X15 on hand on September 1. The standard cost of X15 is $10.00 per pound. The production standard calls for 2 pounds of material X15 for each unit of product manufactured. The company manufactured 600 units of the product in September, and had 500 pounds of material X-15 in stock on September 30. The actual price for material X-15 purchased during the month was $1 per pound below the standard cost. The material usage variance in September was $3,000 unfavorable. What is the purchase-price variance for material X in September, rounded to the nearest dollar?

Accepted Answer

A)  $1,100 favorable. 
B)  $1,200 favorable. 
C)  $1,300 favorable. 
D)  $1,500 favorable. 
E)  $1,600 favorable.

Question 16

Europa Company manufactures only one product. Presented below is direct labor information for November. $\begin{array}{lr}
\text { Standard direct labor hours per unit of product } & 3.20 \
\text { Number of finished units produced } & 6,500 \
\text { Standard wage rate per direct labor hour (SP) } & \$ 19.20 \
\text { Total direct labor pavroll for the period } & \$ 359.424\
\text { Actual wage rate per direct labor hour worked (AP) }&\$16.00
\end{array}$The actual direct labor hours worked (AQ) during November (rounded to the nearest whole number) was:

Accepted Answer

A)  18,720. 
B)  19,200. 
C)  20,800. 
D)  22,400. 
E)  22,464.

Question 17

Which of the following is different in a flexible budget compared to the master budget for a period?

Accepted Answer

A)  Selling price per unit. 
B)  Variable cost per unit. 
C)  Budgeted fixed cost. 
D)  Sales volume. 
E)  Budgeted fixed administrative costs.

Question 18

Customer response time (CRT) can be defined as:

Accepted Answer

A)  The time lapse between when a customer places an order and when that order is delivered to the customer. 
B)  Wait time + manufacturing time. 
C)  Manufacturing lead time + production cycle time. 
D)  Receipt time + delivery time. 
E)  Manufacturing lead time less delivery time.

Question 19

A flexible budget contains:

Accepted Answer

A)  Cost targets based on actual output for the period. 
B)  Cost targets based on planned output for the period. 
C)  Actual costs incurred for the actual output of the period. 
D)  Costs and revenues for the difference between planned and actual output. 
E)  Costs based on actual output of the period, and revenue based on master budgeted output.

Question 20

Patterson, Inc.wishes to evaluate, in summary fashion, its financial performance for the most recent period.Budgeted and actual operating results for this period are presented below. $$\begin{array} { | l | r | r | } 
\hline & { \begin{array} { c } 
\text { Master } \
\text { Budget }
\end{array} } & { \begin{array} { c } 
\text { Actual } \
\text { Results }
\end{array} } \
\hline \text { Units sold } & 40,000 & 36,000 \
\hline \text { Sales } & \$ 2,000,000 & \$ 1,900,000 \
\hline \text { Variable costs } & \$ 1,200,000 & \$ 1,152,000 \
\hline \text { Fixed costs } & \$ 600,000 & \$ 660,000 \
\hline
\end{array}$$ Required:
1.What was the actual operating income for the period?
2.What is the firm's master budget operating income?
3.What was the flexible-budget operating income for the period?
4.What is the total operating-income variance of the period?
5.What was the sales-volume variance, in terms of operating income, for the period?
6.What are the key elements of the traditional financial control model?
7.What are the primary limitations of the traditional financial control model?

Accepted Answer

The answer of Patterson, Inc.wishes to evaluate, in summary fashion,...

Exam 14: Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

The term "processing cycle efficiency" (PCE) :