Question 1

Taylor Products Inc.has an $8000 unfavourable flexible budget variance for October.If October's flexible budget net income was $175 000,which of the following statements is true?

Accepted Answer

A)  Taylor's static budget must have showed net income of $183 000. 
B)  Taylor's static budget must have showed net income of $167 000. 
C)  Taylor's actual net income must have been $183 000. 
D)  Taylor's actual net income must have been $167 000.

Question 2

Paw-Paw Products
Paw-Paw Products produces and sells flannel covered dogbeds. In the current year, Paw-Paw had expected to sell 8000 beds but actually produced and sold 8500 beds. The following information is available regarding the standard cost to produc
In the current year, 44 000 metres of material were purchased and used at a cost of $1.60 per metre and 365 500 direct labour minutes were incurred at a cost of $.23 per minute.
-The company's direct labour rate variance for the current year was:

Accepted Answer

A)  $ 2550 F 
B)  $10 200 F 
C)  $10 965 U 
D)  $16 065 U

Question 3

Drummel Ltd.has a $7000 unfavourable variable overhead efficiency variance.Give one possible reason for this variance.

Accepted Answer

The answer of Drummel Ltd.has a $7000 unfavourable variable overhead...

Question 4

Meow Products Ltd.
Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post:
$\begin{array}{ll}
\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \
\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }
\end{array}$
In the current year, 38 000 feet of material were purchased out of which 35 000 feet were used at a cost of $1.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $.32 per minute.

-The company's direct materials price variance for the current year was:

Accepted Answer

A)  $2350 F 
B)  $7600 F 
C)  $7000 U 
D)  $4100 U

Question 5

In most companies,machines break down occasionally and employees are often less than perfect.Which type of standard acknowledges these characteristics when determining the standard cost of a product?

Accepted Answer

A)  Efficiency standard 
B)  Ideal standard 
C)  Practical standard 
D)  Budgeted standard

Question 6

Carlton Corporation
Carlton Corporation produces and sells faux-leather handbags. In the current year, the company budgeted for the production and sale of 1000 handbags; however, 900 handbags were actually produced and sold. Each bag has a standard requiring 2 metres of material at a cost of $4.00 per metre and 1 hour of assembly time at a cost of $9.50 per hour. Actual costs for the production of 900 bags were $7215 for materials (1850 metres purchased and used @ $3.90 per metre) and $10 125 for labour (1125 hours @ $9.00 per hour).
-Carlton's direct labour efficiency variance is:

Accepted Answer

A)  $ 562.50 F 
B)  $2 137.50 U 
C)  $1 187.50 U 
D)  $2 025.00 F

Question 7

Bayou Barbecue Inc.in the US bottles and sells barbecue sauce.In the current year,the company had expected to sell 500 000 bottles but actually bottled and sold 600 000 bottles.The standard direct materials cost for each bottle is $.36 comprised of 12 ounces of material at a cost of $.03 per ounce.During the year,7 800 000 ounces of material was purchased out of which 7 350 000 ounces were used at a cost of $.035 per ounce.
Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
A. Direct materials price variance
B. Direct materials usage variance

Accepted Answer

The answer of Bayou Barbecue Inc.in the US bottles and...

Question 8

Dabney Inc.has a favourable direct labour efficiency variance.Which of the following would be the most likely reason for this variance?

Accepted Answer

A)  The company used lower-paid workers in the production process more than they had expected. 
B)  Employees took a shorter amount of time to produce the product than expected. 
C)  The company used a standard direct labour rate that was too low. 
D)  Employees used less direct materials in the production process than expected.

Question 9

Hoppe Inc.manufactures widgets.Management has determined that each widget has a standard materials cost of $3.50 when 2.5 grams of raw material at a cost of $1.40 per gram are used.The static budget for the month of December showed an estimated production of 4000 widgets in December.During December,4300 widgets were actually produced.The actual cost for each widget was $3.60 when 2.25 grams of raw material at a cost of $1.60 per gram were purchased and used.What should be the total direct materials cost according to Hoppe's flexible budget for December?

Accepted Answer

A)  $14 400 
B)  $15 050 
C)  $14 000 
D)  $15 480

Question 10

Moreland Manufacturing Inc.
US-based Moreland Manufacturing Inc. produces and sells stainless steel faucets. In the current year, the company had budgeted for the production and sale of 6000 faucets but, due to unexpected demand, 7000 faucets were actually produced and sold. Each faucet has a standard requiring 15 ounces of direct material at a cost of $.40 per ounce and 15 minutes of assembly time at a cost of $.20 per minute. Actual costs for the production of 7000 faucets were $41 359.50 for materials (106 050 ounces purchased and used @ $.39 per ounce) and $21 560 for labour (98 000 minutes @ $.22 per minute).
-Moreland's direct materials price variance is:

Accepted Answer

A)  $1050.00 F 
B)  $1050.00 U 
C)  $1060.50 F 
D)  $1060.50 U

Question 11

Harkin Ltd.has a $5000 unfavourable variable overhead spending variance.Give two possible reasons for this variance.

Accepted Answer

The answer of Harkin Ltd.has a $5000 unfavourable variable overhead...

Question 12

In early 2009,Duncan Manufacturing Inc.had budgeted for the production and sale of 12 000 units at a sales price of $20 per unit.The following information is available regarding the standard cost for each unit: $\begin{array}{ll}
  \text { Direct materials: } & \text {\$ 4.00  (4 pounds at  \$ 1.00  per lb)}\
 \text {  Direct labour:} & \text {\$ 2.50(10 minutes of assembly at  \$ .25 per minute}\
\end{array}$
 
Actual results for 2009 were determined to be as follows:
$\begin{array}{ll}
\text { Number of units produced }\
{\text { and sold: }} & 11200 \text { units } \
\text { Sales revenue: } & \$ 235200 \text { (\$21 per unit) } \
\text { Direct materials cost: } & \$ 47840 \text { (46 } 000 \text { lbs purchased and used at } \$ 1.04 \text { per lb } \
\text { Direct labour cost: } & \$ 22000(110000 \text { minutes at } \$ .20 \text { per minute) }
\end{array}$
 
Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
 A. Sales price variance
B. Direct materials price variance
C. Direct materials usage variance
D. Direct labour rate variance
E. Direct labour efficiency variance

Accepted Answer

The answer of In early 2009,Duncan Manufacturing Inc.had budgeted for...

Question 13

A(n)___________ is attainable only when near-perfect conditions exist.

Accepted Answer

A)  practical standard 
B)  ideal standard 
C)  static budget 
D)  favourable variance

Question 14

Trina makes handmade leis in Hawaii which she sells to local tourists.She anticipates August to be a busy month with the sale of 500 leis.She has prepared the following static budget for August:
$\begin{array}{lr}
  \text {Sales revenue (500 units)  } &\$5000\
 \text {  Variable costs:} &\
 \text { Direct materials } &1000\
 \text {  Direct labour} &1000\
 \text { Overhead } &375\
 \text {  Fixed costs} &\underline{200}\
 \text { Net income}&\underline{\$2425}
\end{array}$

During August,Trina actually produced and sold 400 leis.What should be Trina's net income in August based on a flexible budget?

Accepted Answer

A)  $1940 
B)  $1825 
C)  $1425 
D)  $1900

Question 15

Meow Products Ltd.
Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post:
$\begin{array}{ll}
\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \
\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }
\end{array}$
In the current year, 38 000 feet of material were purchased out of which 35 000 feet were used at a cost of $1.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $.32 per minute.
-The company's direct labour rate variance for the current year was:

Accepted Answer

A)  $ 200 F 
B)  $ 200 U 
C)  $3200 F 
D)  $3200 U

Question 16

Mystic Falls Inc.
Mystic Falls Inc. bottles and sells a popular soft drink. In 2009, the company had expected to sell 1 000 000 bottles but actually bottled and sold 900 000 bottles. The standard direct materials cost for each bottle is $.40 comprised of 10 grams at a cost of $.04 per gram. During 2009, 10 000 000 grams of material were purchased out of which 9 200 000 grams were used at a cost of $.05 per gram.
-The direct materials price variance for 2009 was:

Accepted Answer

A)  $ 92 000 U 
B)  $ 92 000 F 
C)  $100 000 U 
D)  $100 000 F

Question 17

Armstrong Products
Refer to the Armstrong Products information below.
Armstrong Products applies fixed overhead at a rate of $3 per direct labour hour. Each unit produced is expected to take 2 direct labour hours. Armstrong expected production in the current year to be 10 000 units but 9000 units were actually produced. Actual direct labour hours were 19 000 and actual fixed overhead costs were $62 000.
-Armstrong's fixed overhead spending variance is:

Accepted Answer

A)  $8000 F 
B)  $8000 U 
C)  $2000 F 
D)  $2000 U

Question 18

Bellow Ltd.uses direct labour hours as the cost driver for variable overhead.In order to calculate the variable overhead efficiency variance,which of the following items does not need to be known?

Accepted Answer

A)  Actual overhead costs 
B)  Actual direct labour hours 
C)  Standard variable overhead rate per direct labour hour 
D)  Standard direct labour hours allowed

Question 19

New Hampshire Products has a favourable fixed overhead spending variance.Which of the following would be the most likely reason for this variance?

Accepted Answer

A)  More units were actually produced than predicted. 
B)  Fewer units were actually produced than predicted. 
C)  Actual fixed overhead was more than predicted. 
D)  Actual fixed overhead was less than predicted.

Question 20

Carolina Tile Company in the US manufactures and installs industrial tile flooring.In the current year,the company had anticipated producing and installing 80 000 tiles but actually produced and installed 90 000 tiles.The standard direct materials cost for each square foot of tile is $6.30 comprised of 3 pounds of material at a cost of $2.10 per pound.During the year,300 000 pounds of material were purchased out of which 280 000 pounds were used at a cost of $1.90 per pound.
Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U).
A. Direct materials price variance
B. Direct materials usage variance

Accepted Answer

The answer of Carolina Tile Company in the US manufactures...

Exam 13: Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis