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| 1 | |
If actual cost of direct labor was $1,700 for 500 units but the standard cost for direct labor for these same units was $2,000, then the direct labor cost variance is an unfavorable $300. |
| | A) | True |
| | B) | False |
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| 2 | |
When sales volume changes, flexible budgets can sometimes prove more useful to managers than fixed budgets. |
| | A) | True |
| | B) | False |
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| 3 | |
A flexible budget is also called a "static" budget. |
| | A) | True |
| | B) | False |
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| 4 | |
A flexible budget performance report lists differences between actual performance and budgeted performance based on actual sales volume or other activity level. |
| | A) | True |
| | B) | False |
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| 5 | |
Standard costs can be calculated for direct labor and direct materials. |
| | A) | True |
| | B) | False |
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| 6 | |
An unfavorable direct materials price variance would arise because too much material was used during production. |
| | A) | True |
| | B) | False |
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| 7 | |
A direct labor efficiency variance would arise because actual labor hours incurred during production were different than the standard amount that should have been used for that level of production. |
| | A) | True |
| | B) | False |
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| 8 | |
A favorable direct labor rate variance would arise because actual labor cost-per-hour was greater than the standard labor cost per hour. |
| | A) | True |
| | B) | False |
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| 9 | |
If actual cost of materials was $4,000 for 200 units but the standard cost for material for these same units was $3,900, then the material cost variance is a favorable $100. |
| | A) | True |
| | B) | False |
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| 10 | |
The purchasing department is usually responsible for the price paid for materials. |
| | A) | True |
| | B) | False |
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| 11 | |
The overhead cost variance is the difference between the total overhead cost applied to products and the total overhead cost actually incurred. |
| | A) | True |
| | B) | False |
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| 12 | |
Actual Cost (AC) = Actual Quantity (AQ) + Actual Price (AP) |
| | A) | True |
| | B) | False |
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| 13 | |
An unfavorable direct labor efficiency variance would be explained by the production manager. |
| | A) | True |
| | B) | False |
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| 14 | |
A standard cost is an amount incurred at the actual level of production for the period. |
| | A) | True |
| | B) | False |
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| 15 | |
The direct labor cost variance is a Favorable $600. If the direct labor efficiency variance is Unfavorable $200, then the direct labor rate variance is a Favorable $800. |
| | A) | True |
| | B) | False |
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| 16 | |
If the activity level increases 10%, total variable costs will? |
| | A) | remain the same |
| | B) | increase by more than 10% |
| | C) | decrease by less than 10% |
| | D) | increase 10% |
| | E) | none of these |
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| 17 | |
The relevant range of activity refers to the |
| | A) | geographical areas where the company plans to operate |
| | B) | activity level where all costs are constant |
| | C) | levels of activity over which the company expects to operate |
| | D) | level of activity where productivity is constant |
| | E) | none of these |
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| 18 | |
Which of the following is a major LIMITATION of a fixed budget performance report. |
| | A) | The inability of fixed budget reports to adjust for changes in activity levels |
| | B) | is based on predicted amounts of revenues and expenses corresponding |
| | C) | to the actual level of output |
| | D) | Prepared before the period and is often based on several levels of activity |
| | E) | None of these |
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| 19 | |
ABC Co. produced 32,000 units in 10,000 direct labor hours. Production for the period was estimated at 33,000 units and 11,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at |
| | A) | 33,000 units and 32,000 units |
| | B) | 11,000 hours and 10,000 hours |
| | C) | 33,000 units and 33,000 units |
| | D) | 32,000 units and 32,000 units |
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| 20 | |
A price variance arises when |
| | A) | actual quantity of input used and budgeted quantity of input |
| | B) | difference between actual price per unit of input and budgeted price per unit of input |
| | C) | difference between last year's price per unit of input and this year's price per unit of input |
| | D) | difference between standard materials cost and standard labor cost |
| | E) | none of these |
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| 21 | |
ABC Co. applies overhead on the basis of $3 per direct labor hour. ABC's direct labor standard is one direct labor hour per unit. If actual production volume was 400 units and actual manufacturing overhead was $1,650. The overhead variance is. |
| | A) | favorable variance of $450 |
| | B) | unfavorable variance of $450 |
| | C) | favorable variance of $1,650 |
| | D) | unfavorable variance of $1,650 |
| | E) | none of these |
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| 22 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 2,500 lbs. @ $1.15 per lb. = $2,875
Standard cost . . . . . . . . . . 2,400 lbs. @ $1.00 per lb. = $2,400
What is the direct materials cost variance? |
| | A) | favorable variance of $475 |
| | B) | unfavorable variance of $475 |
| | C) | favorable variance of $2,400 |
| | D) | unfavorable variance of $115 |
| | E) | none of these |
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| 23 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 2,500 lbs. @ $1.15 per lb. = $2,875
Standard cost . . . . . . . . . . 2,400 lbs. @ $1.00 per lb. = $2,400
What is the direct materials price variance? |
| | A) | favorable variance of $360 |
| | B) | unfavorable variance of $360 |
| | C) | favorable variance of $375 |
| | D) | unfavorable variance of $375 |
| | E) | none of these |
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| 24 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 2,500 lbs. @ $1.15 per lb. = $2,875
Standard cost . . . . . . . . . . 2,400 lbs. @ $1.00 per lb. = $2,400
What is the direct materials quantity variance? |
| | A) | favorable variance of $100 |
| | B) | unfavorable variance of $100 |
| | C) | favorable variance of $115 |
| | D) | unfavorable variance of $115 |
| | E) | none of these |
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| 25 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 200 hrs. @ $8.00 per hr. = $1600
Standard cost . . . . . . . . . . 220 hrs. @ $7.90 per hr. = $1738
What is the direct labor cost variance? |
| | A) | favorable variance of $20 |
| | B) | unfavorable variance of $22 |
| | C) | favorable variance of $138 |
| | D) | unfavorable variance of $138 |
| | E) | none of these |
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| 26 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 200 hrs. @ $8.00 per hr. = $1600
Standard cost . . . . . . . . . . 220 hrs. @ $7.90 per hr. = $1738
What is the direct labor efficiency variance? |
| | A) | favorable variance of $160 |
| | B) | unfavorable variance of $20 |
| | C) | favorable variance of $158 |
| | D) | unfavorable variance of $158 |
| | E) | none of these |
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| 27 | |
ABC Co. has the following information:
Actual cost . . . . . . . . . . . . 200 hrs. @ $8.00 per hr. = $1600
Standard cost . . . . . . . . . . 220 hrs. @ $7.90 per hr. = $1738
What is the direct labor rate variance? |
| | A) | favorable variance of $20 |
| | B) | unfavorable variance of $158 |
| | C) | favorable variance of $22 |
| | D) | unfavorable variance of $22 |
| | E) | none of these |
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| 28 | |
When budgeted and actual results are not the same amount, there is a budget |
| | A) | error |
| | B) | variance |
| | C) | anomaly |
| | D) | by-product |
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| 29 | |
A department has budgeted monthly fixed manufacturing overhead cost of $90,000 plus $4 per direct labor hour. If the actual level of activity for the month was 21,000 direct labor hours, what is the total budgeted manufacturing overhead cost for the month using a flexible budget? |
| | A) | $90,000 |
| | B) | $84,000 |
| | C) | $174,000 |
| | D) | cannot be determined |
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| 30 | |
If the purchasing agent buys materials at a price significantly below the standard price, but in doing so acquires materials that are significantly below grade in terms of quality, what direct material price and quantity variances are likely?
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| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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