Question 1

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

Accepted Answer

A) $12,250 unfavorable. 
B) $14,700 unfavorable. 
C) $14,700 favorable. 
D) $12,250 favorable. 
E) $26,950 favorable.

Question 2

Standard costs can be used by management to assess the reasonableness of actual costs incurred.

Accepted Answer

A) True 
 B)False

Question 3

A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

Accepted Answer

A) True 
 B)False

Question 4

The following information describes production activities of the Midtown Corp.:
  30,000 units were completed during the year
Budgeted standards for each unit produced:
1/2 lb.of raw material at $4.15 per lb.
10 minutes of direct labor at $12.50 per hour
Compute the direct materials price and quantity and the direct labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

Accepted Answer

The answer of The following information describes production activities of...

Question 5

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

Accepted Answer

A) True 
 B)False

Question 6

The process of closing ending variance account balances increases Cost of Goods Sold.

Accepted Answer

A) True 
 B)False

Question 7

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

-Compute the total direct materials cost variance.

Accepted Answer

A) $6,000 favorable. 
B) $3,570 unfavorable. 
C) $2,430 favorable. 
D) $6,000 unfavorable. 
E) $3,570 favorable.

Question 8

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 materials quantity variance for the month was:

Accepted Answer

A) $1,800 favorable 
B) $5,800 unfavorable 
C) $5,800 favorable 
D) $1,800 unfavorable 
E) $1,000 favorable

Question 9

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 total labor cost variance?

Accepted Answer

A) $2,000 unfavorable. 
B) $3,000 unfavorable. 
C) $5,500 unfavorable. 
D) $8,000 unfavorable. 
E) $9,000 unfavorable.

Question 10

The total sales variance can be divided into the sales price variance and the sales volume variance.

Accepted Answer

A) True 
 B)False

Question 11

A favorable variance for a cost means that when compared to the budget,the actual cost is ________ than the budgeted cost.

Accepted Answer

The answer of A favorable variance for a cost means...

Question 12

Clevenger Co.planned to produce and sell 30,000 units with a selling price of $10 per unit.Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000.Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a flexible budget income statement for the actual level of sales and production.

Accepted Answer

The answer of Clevenger Co.planned to produce and sell 30,000...

Question 13

A company's flexible budget for 60,000 units of production showed sales of $96,000,variable costs of $36,000,and fixed costs of $26,000.What operating income would be expected if the company produces and sells 70,000 units?

Accepted Answer

The answer of A company's flexible budget for 60,000 units...

Question 14

A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000.The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units.The total controllable cost variance is:

Accepted Answer

A) $1,200 favorable. 
B) $1,200 unfavorable. 
C) $13,200 favorable. 
D) $13,200 unfavorable. 
E) $15,200 favorable.

Question 15

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

-Compute the direct materials quantity variance.

Accepted Answer

A) $2,430 unfavorable. 
B) $3,570 unfavorable. 
C) $2,430 favorable. 
D) $6,000 unfavorable. 
E) $3,570 favorable.

Question 16

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

Accepted Answer

A) Variable costs. 
B) Fixed costs. 
C) Standard costs. 
D) Product costs. 
E) Period costs.

Question 17

When using a standard cost accounting system,how are unfavorable variances recorded? How are favorable variances recorded?

Accepted Answer

The answer of When using a standard cost accounting system,how...

Question 18

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 rate variance for August?

Accepted Answer

A) $2,000 favorable. 
B) $2,104 unfavorable. 
C) $2,104 favorable. 
D) $4,160 favorable. 
E) $2,000 unfavorable.

Question 19

Based on a predicted level of production and sales of 22,000 units,a company anticipates total variable costs of $99,000,fixed costs of $30,000,and operating income of $36,000.Based on this information,the budgeted amount of contribution margin for 20,000 units would be:

Accepted Answer

A) $99,000. 
B) $90,000. 
C) $66,000. 
D) $150,000. 
E) $60,000.

Question 20

A fixed budget is also called a ________ budget.

Accepted Answer

The answer of A fixed budget is also called a...

Exam 21: Flexible Budgets and Standard Costs

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

Standard costs can be used by management to assess the reasonableness of actual costs incurred.

A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

The process of closing ending variance account balances increases Cost of Goods Sold.

Fletcher Company collected the following data regarding production of one of its products. -Compute the total direct materials cost variance.

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 total labor cost variance?

The total sales variance can be divided into the sales price variance and the sales volume variance.

A favorable variance for a cost means that when compared to the budget,the actual cost is ________ than the budgeted cost.

A company's flexible budget for 60,000 units of production showed sales of $96,000,variable costs of $36,000,and fixed costs of $26,000.What operating income would be expected if the company produces and sells 70,000 units?

A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000.The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units.The total controllable cost variance is:

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

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

When using a standard cost accounting system,how are unfavorable variances recorded? How are favorable variances recorded?

Based on a predicted level of production and sales of 22,000 units,a company anticipates total variable costs of $99,000,fixed costs of $30,000,and operating income of $36,000.Based on this information,the budgeted amount of contribution margin for 20,000 units would be:

A fixed budget is also called a ________ budget.