Question 1

Which of the following is not part of the flow of events in variance analysis:

Accepted Answer

A) Preparing a standard cost performance report. 
B) Identifying questions and their answers. 
C) Taking corrective and strategic actions. 
D) Computing and analyzing variances. 
E) Working to ensure that all variances are favorable.

Question 2

A company uses the following standard costs to produce a single unit of output. 
During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.
-Based on this information,the direct labor rate variance for the month was:

Accepted Answer

A) $1,200 favorable 
B) $3,650 favorable 
C) $2,450 favorable 
D) $3,650 unfavorable 
E) $1,200 unfavorable

Question 3

Hassock Corp.produces woven wall hangings.It takes 2 hours of direct labor to produce a single wall hanging.Hassock's standard labor cost is $12 per hour.During August,Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376.What is Hassock's labor efficiency variance for August?

Accepted Answer

A) $12,480 favorable. 
B) $10,376 unfavorable. 
C) $14,584 unfavorable. 
D) $4,160 favorable. 
E) $12,480 unfavorable.

Question 4

Ransom,Inc.budgets direct materials cost at $1.10/liter and each product requires 4 liters per unit of finished product.April's activities show usage of 832 liters to complete 196 units at a cost of $798.72.Compute the direct materials price and quantity variances.Indicate if the variance is favorable or unfavorable.

Accepted Answer

The answer of Ransom,Inc.budgets direct materials cost at $1.10/liter and...

Question 5

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour.The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500.What is the direct labor rate variance?

Accepted Answer

A) $27,500 unfavorable. 
B) $22,000 favorable. 
C) $16,000 unfavorable. 
D) $16,000 favorable. 
E) $6,000 unfavorable.

Question 6

Engineworks Co.provides the following fixed budget data for the year:

Required:
Prepare a flexible budget performance report for the year using the contribution margin format.

Accepted Answer

The answer of Engineworks Co.provides the following fixed budget data...

Question 7

The following company information is available.The direct materials quantity variance is:

Accepted Answer

A) $10,000 unfavorable. 
B) $13,200 unfavorable. 
C) $9,600 unfavorable. 
D) $10,000 favorable. 
E) $13,200 favorable.

Question 8

Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

Accepted Answer

A) $6,125 unfavorable. 
B) $7,000 unfavorable. 
C) $7,000 favorable. 
D) $21,000 favorable. 
E) $14,875 favorable.

Question 9

Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through 10.Enter the letter of the term with the definition,using the space preceding the definition.
(a)Cost variance
(b)Volume variance
(c)Price variance
(d)Quantity variance
(e)Standard costs
(f)Controllable variance
(g)Fixed budget
(h)Flexible budget
(i)Variance analysis
(j)Management by exception

Accepted Answer

The answer of Presented below are terms preceded by letters...

Question 10

Cost variances are ignored under management by exception.

Accepted Answer

A) True 
 B)False

Question 11

Fletcher Company collected the following data regarding production of one of its products.

-Compute the direct labor rate variance.

Accepted Answer

A) $80,250 unfavorable. 
B) $80,250 favorable. 
C) $61,125 favorable. 
D) $61,125 unfavorable. 
E) $19,125 unfavorable.

Question 12

Fletcher Company collected the following data regarding production of one of its products.

-Compute the standard quantity allowed for the actual output.

Accepted Answer

A) 243,000 pounds. 
B) 240,000 pounds. 
C) 40,000 pounds. 
D) 480,000 pounds. 
E) 80,000 pounds.

Question 13

A flexible budget expresses all costs on a per unit basis,regardless of cost behavior.

Accepted Answer

A) True 
 B)False

Question 14

Explain variance analysis.Describe how variance analysis assists managers.

Accepted Answer

The answer of Explain variance analysis.Describe how variance analysis assists...

Question 15

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials quantity variance is:

Accepted Answer

A) $27,500 unfavorable. 
B) $50,000 unfavorable. 
C) $50,000 favorable. 
D) $22,500 unfavorable. 
E) $22,500 favorable.

Question 16

Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials.What might be the cause(s)of this pattern of variances?

Accepted Answer

The answer of Wren Company determined that in the production...

Question 17

A company uses the following standard costs to produce a single unit of output. 
During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.
-Based on this information,the total direct labor cost variance for the month was:

Accepted Answer

A) $3,650 favorable 
B) $2,450 favorable 
C) $1,200 unfavorable 
D) $1,200 favorable 
E) $2,450 unfavorable

Question 18

In this type of budget,the master budget is based on a single prediction for sales volume,and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur:

Accepted Answer

A) Sales budget. 
B) Standard budget. 
C) Flexible budget. 
D) Fixed budget. 
E) Variable budget.

Question 19

Should both favorable and unfavorable variances be investigated,or only the unfavorable ones? Explain.

Accepted Answer

The answer of Should both favorable and unfavorable variances be...

Question 20

Fixed budgets are also known as flexible budgets.

Accepted Answer

A) True 
 B)False

Exam 21: Flexible Budgets and Standard Costs

Which of the following is not part of the flow of events in variance analysis:

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour.The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500.What is the direct labor rate variance?

Engineworks Co.provides the following fixed budget data for the year: Required: Prepare a flexible budget performance report for the year using the contribution margin format.

The following company information is available.The direct materials quantity variance is:

Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

Cost variances are ignored under management by exception.

Fletcher Company collected the following data regarding production of one of its products. -Compute the direct labor rate variance.

Fletcher Company collected the following data regarding production of one of its products. -Compute the standard quantity allowed for the actual output.

A flexible budget expresses all costs on a per unit basis,regardless of cost behavior.

Explain variance analysis.Describe how variance analysis assists managers.

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials quantity variance is:

Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials.What might be the cause(s)of this pattern of variances?

In this type of budget,the master budget is based on a single prediction for sales volume,and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur:

Should both favorable and unfavorable variances be investigated,or only the unfavorable ones? Explain.

Fixed budgets are also known as flexible budgets.