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The Sydney Manufacturing Company uses a fixed budget of 80,000 direct labour hours, with planned overhead cost of $400,000 for variable overhead and $120,000 for fixed overhead. Under a flexible budget with 100% capacity of 100,000 labour hours, the variable and fixed costs at 100% capacity would be: |
| | A) | $400,000 and $120,000 |
| | B) | $500,000 and $120,000 |
| | C) | $400,000 and $150,000 |
| | D) | $500,000 and $150,000 |
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| 2.
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Which of the following is true? |
| | A) | Flexible budget and fixed budget are synonymous terms |
| | B) | Quantity variance and price variance are synonymous terms |
| | C) | Flexible budget and variable budget are synonymous terms |
| | D) | Historical costs and standard costs are synonymous terms |
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| 3.
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The materials price variance may be computed by: |
| | A) | (Actual price - Standard price) X Actual quantity used |
| | B) | (Actual price - Standard price) X Standard quantity |
| | C) | (Actual quantity - Standard quantity) X Actual price |
| | D) | (Actual quantity - Standard quantity) X Standard price |
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| 4.
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The actual materials price (AP) was $3.50, the actual quantity (AQ) of material was 5,100 units, and the materials price variance (PV) was $1,275 unfavourable. The standard materials price (SP): |
| | A) | was $3.75 |
| | B) | was $3.30 |
| | C) | was $3.00 |
| | D) | was $3.25 |
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| 5.
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Leland Manufacturing produced 3,700 units of finished product, using 15,000 pounds of raw material. Sixteen thousand pounds were purchased for $158,400. The material standards for the product are 4 pounds at $10 per pound. What was the materials price variance (PV)? |
| | A) | $1,500, favourable |
| | B) | $2,475, favourable |
| | C) | $ 150, favourable |
| | D) | $ 198, favourable |
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| 6.
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Which of the following is correct with regard to using the standard quantity to compute materials variances?
Standard quantity used: |
| | A) | Materials Price Variance: Yes
Materials Quantity Variance: No |
| | B) | Materials Price Variance: Yes
Materials Quantity Variance: Yes |
| | C) | Materials Price Variance: No
Materials Quantity Variance: No |
| | D) | Materials Price Variance: No
Materials Quantity Variance: Yes |
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| 7.
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The standard units (SQ) were 5,200, the standard price (SP) was $3.25, and the materials quantity variance (QV) was $325 favourable. The actual units (AQ): |
| | A) | were 5,300 |
| | B) | were 5,000 |
| | C) | were 5,100 |
| | D) | were 5,200 |
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| 8.
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Which of the following is correct with regard to using the standard unit price to compute materials variances?
Standard unit price used: |
| | A) | Materials Price Variance: Yes
Materials Quantity Variance: No |
| | B) | Materials Price Variance: Yes
Materials Quantity Variance: Yes |
| | C) | Materials Price Variance: No
Materials Quantity Variance: No |
| | D) | Materials Price Variance: No
Materials Quantity Variance: Yes |
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| 9.
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An unfavourable materials quantity variance may be the result of: |
| | A) | a greater than anticipated waste in the manufacturing process |
| | B) | an increase in the cost per unit of raw materials |
| | C) | a decrease in the cost per unit of raw materials |
| | D) | a lower than anticipated waste in the manufacturing process |
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| 10.
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Which of the following is correct with regard to the standard labour hours being used to compute labour variances?
Standard labour hours used: |
| | A) | Labour Rate Variance: Yes
Labour Efficiency Variance: No |
| | B) | Labour Rate Variance: Yes
Labour Efficiency Variance: Yes |
| | C) | Labour Rate Variance: No
Labour Efficiency Variance: No |
| | D) | Labour Rate Variance: No
Labour Efficiency Variance: Yes |
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| 11.
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The labour rate variance may be computed by: |
| | A) | (Actual rate - Standard hours) X Actual hours |
| | B) | (Actual hours - Standard hours) X Standard price |
| | C) | (Actual hours - Standard rate) X Actual hours |
| | D) | (Actual rate - Standard rate) X Standard hours |
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| 12.
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The standard cost of one unit of product includes 2 hours of direct labour at $7.50 per hour. The company's labour rate variance was $80, unfavourable. The efficiency variance was $30, favourable. Two-hundred and fifty units were produced. The actual labour hours: |
| | A) | were 496 hours |
| | B) | were 500 hours |
| | C) | were 504 hours |
| | D) | were 514 hours |
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| 13.
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Which of the following is correct with regard to using the standard labour rate to compute labour variances?
Standard labour rate used: |
| | A) | Labour Rate Variance: Yes
Labour Efficiency Variance: No |
| | B) | Labour Rate Variance: Yes
Labour Efficiency Variance: Yes |
| | C) | Labour Rate Variance: No
Labour Efficiency Variance: No |
| | D) | Labour Rate Variance: No
Labour Efficiency Variance: Yes |
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| 14.
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The standard hourly rate was $1.40. The actual rate was $1.30. The labour rate variance was $600, favourable. The actual labour hours: |
| | A) | were 6,000 |
| | B) | were 6,400 |
| | C) | were 1,000 |
| | D) | were 1,500 |
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| 15.
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The Big Company's expected production volume was 36,000 units at 9,000 hours of labour. The fixed overhead rate is $3 per hour at 36,000 units. Actual fixed overhead was $26,000 for 32,000 units of production. Which of the following is correct? |
| | A) | Spending variance, $3,000 F; volume variance, $2,000 U. |
| | B) | Spending variance, $1,000 U; volume variance, $3,000 U. |
| | C) | Spending variance, $1,000 U; volume variance, $3,000 F. |
| | D) | Spending variance, $1,000 F; volume variance, $3,000 U. |
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| 16.
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The Big Company's expected production volume was 36,000 units at 9,000 hours of labour. The variable overhead rate is $5 per hour. Actual variable overhead was $41,000 for 32,000 units of production at 8,500 hours of labour. Which of the following is correct? |
| | A) | Spending variance, $1,500 unfav.; efficiency variance, $2,000 unfav. |
| | B) | Spending variance, $1,500 fav.; efficiency variance, $2,500 unfav. |
| | C) | Spending variance, $1,500 unfav.; efficiency variance, $2,500 fav. |
| | D) | Spending variance, $2,000 fav.,; efficiency variance, $2,500 unfav. |
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| 17.
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The overhead variances for Big Company were:
Variable overhead spending variance: $450 unfavourable.
Variable overhead efficiency variance: $750 favourable.
Fixed overhead spending variance: $1,250 unfavourable.
Fixed overhead volume variance: $3,000 unfavourable.
What was the overhead controllable variance? |
| | A) | $950 unfavourable |
| | B) | $1,700 unfavourable |
| | C) | $3,000 unfavourable |
| | D) | $500 favourable |
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| 18.
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Under a standard costing system, the overhead variances are recorded when: |
| | A) | the factory overhead is applied to the Goods in Process account |
| | B) | the factory labour is recorded |
| | C) | the materials price variance is recorded |
| | D) | the cost of goods sold is recorded |
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| 19.
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Under a standard cost system, the materials quantity variance was recorded at $500 unfavourable, the materials price variance was recorded at $1,620 favourable, and the Goods in Process was debited for $43,120. The actual materials used were 42,000 units at: |
| | A) | $0.10 each |
| | B) | $0.01 each |
| | C) | $1.00 each |
| | D) | $0.0988 each |
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| 20.
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Which of the following statements is INCORRECT regarding the standard costs? |
| | A) | Standard costs are the normal costs that should be incurred to produce a product or service. |
| | B) | Standard costs are budgeted after the period and used in evaluation. |
| | C) | Standard costs are compared to actual costs and the differences are presented as variances. |
| | D) | Standard costs should be based on a careful examination of the processes used to produce a product or perform a service. |
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| 21.
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Which of the following statements is CORRECT regarding the fixed and flexible budgets? |
| | A) | A fixed budget compares actual costs with the costs that should have been incurred at the actual activity level. |
| | B) | A fixed budget shows the revenues, costs, and expenses expected to occur at the specified production and sales volume. |
| | C) | A flexible budget is less useful in evaluating the actual performance. |
| | D) | A flexible budget expresses variable costs in the total amounts expected to occur at the specified production and sales volume. |
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| 22.
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Which of the following is not included in the controllable variance? |
| | A) | the variable overhead spending variance. |
| | B) | the fixed overhead spending variance. |
| | C) | the variable overhead efficiency variance |
| | D) | the overhead volume variance. |
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