Question 1

The effect on sales, expenses, or operating income of changes in units sold is measured by the:

Accepted Answer

A) Flexible-budget variance. 
B) Sales-volume variance. 
C) Sales price variance 
D) Operating income flexible-budget variance. 
E) Production-volume variance.

Question 2

The difference between the actual sales volume for a period and the flexible-budget sales volume is:

Accepted Answer

A) The total sales volume variance for the period. 
B) The total production-volume variance for the period. 
C) The sales price variance for the period. 
D) The operating-income sales volume variance for the period. 
E) Zero-by definition.

Question 3

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 had an effect on the importance of direct labor variances. 
C) De-emphasized 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 4

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 5

Which one of the following is the difference between the actual direct labor hours and the standard direct labor hours for the units manufactured, multiplied by the standard hourly wage rate per hour?

Accepted Answer

A) Direct labor price variance. 
B) Direct labor efficiency variance. 
C) Total direct labor standard cost variance. 
D) Direct labor flexible-budget variance. 
E) Direct labor operating-income variance.

Question 6

How many units of the product were produced during the past month?

Accepted Answer

A) 800. 
B) 1,000. 
C) 1,200. 
D) 1,500. 
E) 2,000.

Question 7

The amount A is:

Accepted Answer

A) $102,080. 
B) $103,440. 
C) $105,600. 
D) $108,000. 
E) Impossible to determine without further information.

Question 8

The amount C is:

Accepted Answer

A) $72,000. 
B) $74,400. 
C) $75,000. 
D) $90,000. 
E) $111,000.

Question 9

Prokp's total standard direct labor cost for the output in April was:

Accepted Answer

A) $17,600. 
B) $21,600. 
C) $22,400. 
D) $24,000. 
E) $26,400.

Question 10

The actual direct materials purchase price (AP) per kilogram is:

Accepted Answer

A) $11.80. 
B) $11.96. 
C) $12.04. 
D) $12.20. 
E) $12.50.

Question 11

The primary purpose of calculating standard cost variances each period is:

Accepted Answer

A) To achieve financial control regarding operating activities. 
B) To facilitate the recording of manufacturing costs during a period. 
C) To adjust reported income to flexible-budget income. 
D) To diagnose the cause of operating problems as well as what should be done to correct such problems. 
E) To minimize income tax liabilities.

Question 12

Which one of the following is the difference in direct material costs between the actual cost incurred during the period and the total standard cost in the flexible budget for the units manufactured during the period?

Accepted Answer

A) Direct materials price variance. 
B) Direct materials mix variance. 
C) Direct materials usage variance. 
D) Direct materials flexible-budget variance. 
E) Direct materials efficiency variance.

Question 13

Customer-response time (CRT) is usually defined as:

Accepted Answer

A) The time between when a customer places an order and the time when the order is received by the customer. 
B) The elapsed time between initial customer contact and the time a customer places an order. 
C) The time between when a customer places an order and when that order is manufactured. 
D) The time between when an order is started into production and when that order is completed. 
E) The time it takes to respond to customer inquiries.

Question 14

The number of pounds of direct materials used to produce July's output was:

Accepted Answer

A) 12,000 pounds. 
B) 20,000 pounds. 
C) 24,000 pounds. 
D) 25,000 pounds. 
E) 40,000 pounds.

Question 15

James has the following information pertaining to its usage of direct labor in a recent period:  Required:
1. Calculate the labor efficiency variance for the period.
2. Calculate the labor rate variance for the period.
3. Prepare, in proper form, the journal entry to record wage expense for the period, including any associated standard cost variances.

Accepted Answer

The answer of James has the following information pertaining to...

Question 16

A firm uses a JIT inventory system and has an unfavorable selling price variance for the period just ended. If the proportion of the total variable manufacturing costs to total sales in both the flexible budget and the actual operating results is 70%:

Accepted Answer

A) The firm has an unfavorable total variable manufacturing cost variance. 
B) The firm has a favorable total variable manufacturing cost variance. 
C) The firm has an unfavorable total flexible-budget variance. 
D) The firm has a favorable contribution margin variance. 
E) The firm has a favorable total flexible-budget variance.

Question 17

The total flexible-budget (FB) variance for operating income is:

Accepted Answer

A) $3,600 unfavorable. 
B) $6,000 unfavorable. 
C) $15,400 unfavorable. 
D) $21,000 unfavorable. 
E) $27,000 unfavorable.

Question 18

An organization subject to intense competitive pressures would most likely use:

Accepted Answer

A) Ideal standards for its operations. 
B) Real standards for its operations. 
C) Caution in even using standard costs at all. 
D) A mix of types of standards. 
E) Standards that are not modified over time.

Question 19

The standard cost per ounce of EPP is:

Accepted Answer

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

Question 20

The direct labor flexible-budget variance is:

Accepted Answer

A) $18,900 unfavorable. 
B) $42,300 unfavorable. 
C) $46,350 unfavorable. 
D) $44,500 unfavorable. 
E) $54,900 unfavorable.

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