TEST 2 MULTIPLE CHOICE
The fixed overhead budget variance is measured by:
The difference between budgeted fixed overhead cost and actual fixed overhead cost
A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from:
The purchase and use of lower than standard quality material
The direct labor budget is based on:
The required production for the period
Which of the following would produce a labor rate variance?
Use of persons with high hourly wage rates in tasks that call for low hourly wage rates
Blackwelder Snow removal's cost formula for its vehicle operating cost is $1,240 per month plus $348per snow day. For the month of December, the company planned activity of 12 snow-days, but the actual level of activity was 14 snow days. The actual vehicle operating cost for the month was $6,330. The vehicle operating cost in the planning budget for December would be closest to:
$5,416
Pardoe, Inc manufactures a single product in which variable manufacturing overhead is assigned on the basis of direct labor hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Standard Price Standard Cost Quantity or rate Direct materials.................. 1.5 pounds $3.00 per pound $4.50 Direct Labor..........................0.6 hours $6.00 per hour $3.60 Variable manufacturing overhead..0.6 hours $1.25 per hour $0.75 During March, the following activity was recorded -The company produced 3,000 units during the month -A total of 8,000 pounds of material were purchased at a cost of $23,000 -There was no beginning inventory of materials on hand to start the month, at the end of month, 2,000 pounds of material remained in the warehouse -During March, 1600 direct labor hours were worked at a rate of $6.50 per hour -Variable manufacturing overhead costs during March totaled $1,800 The materials price variance for March is:
1000F
Harris, Inc, had budgeted sales in units for the next five months as follows: June 9,400 units July 7,800 units August 7,300 units September 5,400 units October 4,100 units Past experience has shown that the ending inventory for each month should be equal to 20% of the next month's sales in units. The inventory on May 31 contained 1,880 units. The company needs to prepare a production budget for the next five months. The beginning inventory IN UNITS for September:
1080
Hatzenbuhler Manufacturing Corporation has prepared the following overhead budget for next month. Activity level........................ 6,800 machine-hours Variable overhead costs: Supplies............................ $22,440 Indirect labor................... 55,760 Fixed overhead costs: Supervision..................... 19,300 Utilities............................ 5,700 Depreciation.................... 7,400 Total overhead cost......... $110,600 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 6,600 machine-hours rather than 6,800 machine-hours? Assume that the activity levels of 6,800 machine-hours and 6,600 machine-hours are within the same relevant range.
108300.00
Sharp Company, a retailer, plans to sell 15,000 units of product X during the month of August. If the comp[nay has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month?
14,500
During June, Bradely company produced 4,000 units of product. The standard cost card indicated the following labor standard per unit of output: 3.5 hours at $6 per hour=$21. During the month, the company worked 15,000 hours. The standard hours allowed for the month were:
14000 hours
Harris company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of standard direct labor hours (DLHs). The company has provided the following data.
1500F
Hamway Products, Inc, makes and sells a single product called a Wob. It takes two yards of material A to make one Wob. Budgeted production of Wobs for the next four months is as follows: April 12,000 units → 1200 May 13,500 units → 1350 June 12,400 units → 1240 July 11,200 units → 1120 * 2 = 2240 The company wants to maintain monthly ending inventories of material A to equal 10% of the following months production needs. The cost of material A is .90 per yard. The desired ending inventory of material A for the month of June is
2,240 yards
Cox Company's direct material costs for the month of January were as follows: Actual quantity purchased 18,000 kilograms Actual unit purchase price $3.60 per kilogram Materials price Variance-U (based on purchases) $3,600 Standard quantity allowed for actual production 16,000 kilograms Actual quantity used 15,000 kilograms For January there was a favorable direct materials quantity variance of: A)$3360 B) $3373 C) $3,400 D) $3,800
3400
The labor rate variance for July was: A) $3,920 unfavorable C) $1,120 favorable B) $6,120 unfavorable D) $3,920 favorable
3920favorable
Bullins Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity...................................... 5,600 MHs Actual level of activity........................................... 5,900 MHs Cost formula for variable overhead cost............. $4.80 per MH Budgeted fixed manufacturing overhead cost..... $48,000 Actual total variable overhead.............................. $30,090 Actual total fixed manufacturing overhead.......... $44,000 What was the fixed manufacturing overhead budget variance for the month?
4000 favorable
The materials quantity variance for March is:
4500 u
The Collins company uses standard costing and has established the following direct material and direct labor standards for each unit of a single product it makes: Direct materials.......4 gallons at $8 per gallon Direct Labor..........1 hour at $16 per hour During July, the company made 6,000 units of product and incurred for the following costs: Direct materials purchased......26,800 gallons at $8,20 per gallon Direct materials used.............25,200 gallons Direct labor used..................5,600 hours at $15.30 per hour The material price variance for July was: A) $5.360 favorable C) $5,040 favorable B) $5,360 unfavorable D) $5,040 unfavorable
5360 unfavorable
Blackwelder Snow removal's cost formula for its vehicle operating cost is $1,240 per month plus $348per snow day. For the month of December, the company planned activity of 12 snow-days, but the actual level of activity was 14 snow days. The actual vehicle operating cost for the month was $6,330. The vehicle operating cost in the planning budget for December would be closest to:
5416
The following labor standards have been established for a particular product: Standard labor-hours per unit of output.... 5.0 hours Standard labor rate........ $19.85 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked.... 7,300 hours Actual total labor cost..... $148,190 Actual output.... 1,400 units
5955U
The labor efficiency variance for July was: A) $6,400 favorable C) $10,320 favorable B) $89,600 favorable D) $6,120 favorable
6400 favorable
Marchi Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below: Activity level 65 guests Variable overhead costs: Supplies..................... $156 Laundry..................... 364 Fixed overhead costs: Utilities..................... 250 Salaries and wages........ 4,480 Depreciation............... 1,330 Total overhead cost......... $6,580 The Inn's variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 70 guests?
6620.00
The total number of units produced in July:
7,700
The materials quantity variance for July was: A) $22,960 unfavorable C) $9,600 unfavorable B) $22,400 unfavorable D) $9,840 unfavorable
9600 unfavorable
A static budget is also known as a planning budget and is:
A budget for a single level of activity
An unfavorable material quantity variance indicates that: A) Actual usage exceeds the standard material allowed for output B) Standard material allowed for output exceeds the actual usage of materials C) Actual material price exceeds standard price D) Standard price exceeds actual material price
Actual usage exceeds the standard material allowed for output
A major weakness of static budgets is that:
All of these
A detailed financial plan for the future is known as a:
Budget
When the actual price paid on credit for a raw material is less than its standard price, the journal entry would include:
Debit to Raw Materials; Credit to Materials Price Variance
If the price a company paid for overhead items, such as utilities, decreased during the year, the company would probably report a
Favorable Spending Variance
When using a Flexible budget, what will occur to fixed costs as the activity level increases within the relevant range
Fixed costs per unit will decrease
When using a flex budget, what will occur to fixed costs as the activity level increases within the relevant range?
Fixed costs per unit will decrease
Comparing actual results to a budget on actual activity for the period is possible with
Flexible Budget
Comparing actual results to a budget on actual activity for the period is possible with the use of a
Flexible Budget
An activity variance is the difference between
How much a cost should have been, given the actual level of activity, and the actual amount of the cost
A flex budget is a budget that
Is updated to reflect the actual level of activity ina period
If the actual cost incurred is greater than what the cost should have been as set forth in the Flex budget, variance is:
Labeled as unfavorable
Poor quality materials could have an unfavorable effect on which of the following variances?
Labor efficiency Variance: YES Materials Quant. Variance: YES
Poor quality materials could have an unfavorable effect on which of the following variances?
Labor efficiency variance: Yes Materials quantity variance: Yes
Cunningham's Deli compares monthly operating results with a static planning budget prepared at the beginning of the year. When actual sales are less than budget, the restaurant would usually report favorable variances on:
Variable food costs but not fixed supervisory salaries
When Preparing a production budget, the required production equals:
budgeted sales - beginning inventory + desired ending inventory
An activity variance is the difference between: A)...in the static planning budget and the same item in the flexible budget B) how much a cost should have been, given the level of activity, and the actual amount of the cost C) a revenue or cost how much the revenue should have been, given the level of activity, and the actual revenue of the period D) none of the above
in the static planning budget and the same item in the flexible budget
A flexible budget is a budget that
is updated to reflect the actual level of activity during the period
The fixed overhead budget variance is measured by
the difference between budgeted fixed overhead cost and actual fixed overhead costs
An unfavorable fixed manufacturing overhead volume variance would be caused by: A) actual fixed manufacturing overhead costs being greater than budgeted fixed manufacturing overhead costs B) actual fixed manufacturing overhead costs being greater than applied fixed manufacturing overhead costs C) fixed manufacturing overhead costs being over applied for the period D)the... hours exceeding the standard hours allowed for the output of a period
the... hours exceeding the standard hours allowed for the output of a period
