Question 1

Use the information below to answer the following question(s).Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
  Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
  Direct Manufacturing Labour:
  Direct Marketing Labour:
 
-What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?

Accepted Answer

A) $25,000 favourable; $18,400 favourable 
B) $23,750 favourable; $12,650 unfavourable 
C) $25,000 unfavourable; $18,400 unfavourable 
D) $23,750 unfavourable; $12,650 unfavourable 
E) $23,750 favourable; $12,650 favourable

Question 2

Use the information below to answer the following question(s).The following data for a pottery company pertain to the production of 2,000 clay pots during July.Direct Materials (all materials purchased were used):
  Direct Manufacturing Labour:
 
-What is the direct manufacturing labour efficiency variance?

Accepted Answer

A) $672 unfavourable 
B) $500 favourable 
C) $672 favourable 
D) $500 unfavourable 
E) $28 favourable

Question 3

What is benchmarking, and how is it useful to a company?

Accepted Answer

The answer of What is benchmarking, and how is it...

Question 4

Use the information below to answer the following question(s).A company makes table lamps, for which the following standards have been developed:
  During January, production of 100 lamps was expected, but 110 lamps were actually completed.Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-The direct-material rate variance for January is

Accepted Answer

A) $420 unfavourable. 
B) $420 favourable. 
C) $400 favourable. 
D) $400 unfavourable. 
E) $20 favourable.

Question 5

Variances and flexible budgets help managers gain insights into why actual results differ from planned performance.

Accepted Answer

A) True 
 B)False

Question 6

Jam Life Inc.manufactures jam products.It makes a mixed fruit and berry jam by blending strawberries, peaches, and apricots.Budgeted costs to produce 100,000 kilograms of jam in September were:
  Actual costs to produce 100,000 kilograms of jam in September were:
  Required:
1.Calculate the total direct materials rate and efficiency variances.2.Calculate the total direct materials mix and yield variances.3.Jam Life's largest competitor sells a 500 gram jar of mixed fruit and berry jam for $4.50 .If Jam Life's management wants to meet this price and cover monthly fixed costs of $180,000 then what will be the company's margin of safety? (Assume that Jam Life will continue to use the budgeted mix of ingredients.)

Accepted Answer

The answer of Jam Life Inc.manufactures jam products.It makes a...

Question 7

Waddell Productions uses a standard cost system for all manufacturing transactions.For the month of June the following activities have taken place:
  Required:
Record the necessary journal entries to:
1.Record the materials purchases assuming that materials rate variances are recorded at the time of purchase.2.Record the materials placed into production.3.Record the direct labour used in production.

Accepted Answer

The answer of Waddell Productions uses a standard cost system...

Question 8

Use the information below to answer the following question(s).Jenny's Condiments makes a specialty mustard for street vendors that is composed of wet ingredients and dry ingredients.Two parts of wet ingredients at a standard cost of $12, and three parts of dry ingredients at a standard cost of $9, are required for every batch.In the first week of July, Jenny produced two hundred thirty batches of mustard using 450 units of wet ingredients and 750 units of dry ingredients.
-For the dry ingredients what are the material mix and yield variances respectively?

Accepted Answer

A) $270 favourable/$270 unfavourable 
B) $360 unfavourable/$360 unfavourable 
C) $360 favourable/$360 unfavourable 
D) $360 favourable/$360 favourable 
E) $270 unfavourable/$270 unfavourable

Question 9

Use the information below to answer the following question(s).All Good Things Ltd.planned on producing 600 units for the year.However, actual production was 400 units.Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour; static budget amounts were 1,200 hours at $21 per hour.
-What is the All Good Things Ltd.static-budget variance?

Accepted Answer

A) $400 F 
B) $400 U 
C) $600 F 
D) $200 F 
E) $200 U

Question 10

Answer the following question(s)using the information below.Eco Furniture Ltd.makes wooden furniture.One of their products is a wooden desk.The exterior is made of walnut, a high quality wood, but the interior drawers are made of pine, a less expensive wood.The budgeted direct materials quantities and prices for one desk are:
  During the month of November 600 desks were produced.The actual material volume and costs were:
 
-What is the direct materials yield variance for walnut?

Accepted Answer

A) $28,750 U 
B) $16,500 U 
C) $19,500 F 
D) $16,500 F 
E) $13,950 U

Question 11

The term efficiency variance is the direct cost portion of the flexible-budget variance.

Accepted Answer

A) True 
 B)False

Question 12

The textbook discusses five levels of variances: Level 0, Level 1, Level 2, Level 3, and Level 4.Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.

Accepted Answer

The answer of The textbook discusses five levels of variances:...

Question 13

Answer the following question(s)using the information below.Apple Valley Orchards, Inc.(AVO), developed standard costs for direct material and direct labour.In 2019, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.  During September 2020, AVO produced and sold 1,200 pies using 1,875 kilograms of direct materials at an average cost per kilogram of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour.
-September's direct labour efficiency variance is

Accepted Answer

A) $285.00 unfavourable. 
B) $285.00 favourable. 
C) $290.00 unfavourable. 
D) $280.00 unfavourable. 
E) $280.00 favourable.

Question 14

If a company only reached 85% of their production goal, the 85% may be called the company's

Accepted Answer

A) effectiveness rate. 
B) efficiency rate. 
C) goal achievement rate. 
D) standard production rate. 
E) variance rate.

Question 15

Explain how variance analysis is used in conjunction with activity-based costing.

Accepted Answer

The answer of Explain how variance analysis is used in...

Question 16

Use the information below to answer the following question(s).Everclean Filter Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and had used a budgeted selling price of $11 per unit. 
-What is the static-budget variance of operating income?

Accepted Answer

A) $258,000 unfavourable 
B) $258,000 favourable 
C) $222,000 favourable 
D) $222,000 unfavourable 
E) $3,000 unfavourable

Question 17

Which of the following is likely to be related to an unfavourable direct materials rate variance?

Accepted Answer

A) Standard costs were determined correctly. 
B) the negotiating skills of the marketing manager 
C) unexpected price decreases in direct materials 
D) Actual direct material purchases were in larger quantities than normal, resulting in receiving volume discounts. 
E) Materials were purchased based on a competitive bid.

Question 18

Use the following data to prepare a flexible budget for possible sales/production levels of 6,000; 7,000; and, 8,000 units.Show the contribution margin at each activity level.  Variable costs:
  Fixed costs:

Accepted Answer

The answer of Use the following data to prepare a...

Question 19

A favourable variance can be automatically interpreted as "good news."

Accepted Answer

A) True 
 B)False

Question 20

An unfavourable variance is conclusive evidence of poor performance.

Accepted Answer

A) True 
 B)False

Exam 7: Flexible Budgets, Variances, and Management Control: I

What is benchmarking, and how is it useful to a company?

Variances and flexible budgets help managers gain insights into why actual results differ from planned performance.

The term efficiency variance is the direct cost portion of the flexible-budget variance.

The textbook discusses five levels of variances: Level 0, Level 1, Level 2, Level 3, and Level 4.Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.

If a company only reached 85% of their production goal, the 85% may be called the company's

Explain how variance analysis is used in conjunction with activity-based costing.

Which of the following is likely to be related to an unfavourable direct materials rate variance?

Use the following data to prepare a flexible budget for possible sales/production levels of 6,000; 7,000; and, 8,000 units.Show the contribution margin at each activity level. Variable costs: Fixed costs:

A favourable variance can be automatically interpreted as "good news."

An unfavourable variance is conclusive evidence of poor performance.