Multiple choice Dawson Exam 2

8. The fixed overhead budget variance is measured by:

The difference between fixed overhead cost and actual fixed overhead cost

The direct labor budget is based on

The required production for the period

9. 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.

- 1,080

42. 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. The volume variance would be:

- 1,500 F

33. 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

The materials price variance for March is

1000 F

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

- 108,300

43. 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:

- 14,000 hours

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

44. Cox Company's direct material costs for the month of January were as follows:

- 3,400

28. The materials quantity variance for March is

- 4,500 U

36. 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: What was the fixed manufacturing overhead budget variance for the month?

- 4000 Unfavorable

The material price variance for July was

- 5,360

14. 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

32. 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

41. The following labor standards have been established for a particular product: What is the labor efficiency variance for the month?

- 5,955 U

18. The labor rate variance for July was

- 6,400

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?

- 6,620

10. The total number of units produced in July:

- 7,700

17. The materials quantity variance for July was

- 9,600

22. A static budget is also know as a planning budget and is

- A budget for a single level of activity

39. An unfavorable material quantity variance indicates that:

- Actual usage exceeds the standard material allowed for output

37. A major weakness of static budgets is that:

- All of these

When preparing a production budget, the required production equals

- Budgeted sales-beginning inventory +desired ending inventory

26. 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

19. If the price of a company paid for overhead items, such as utilities decreasing durinf the year, the company would proabaly report a

- Favorable spending variance

13. 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

25. 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

21. Comparing actual results to a budget on actual activity for the period is possible with

- Flexible budget

6. Comparing actual results to a budget on actual activity for the period is possible with the use of a 6.

- Flexible budget

12. 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

23. A flexible budget is a budget that

- Is updated to reflect the actual level of activity during the period

11. A flex budget is a budget that

- Is updated to reflect the actual level of activity in a period

30. If the actual cost incurred is greater than what the cost should have been as set forth in the Flex budget, variance is:

- Labled as unfavorable

15. Poor quality materials could have an unfavorable effect on which of the following variances?

- Labor efficiency variance: YES Materials quantity. Variance: YES

29. The fixed overhead budget variance is measured by

- The difference between budgeted fixed overhead costs and actual fixed overhead costs

34. A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from:

- The purchases and use of lower than standard quality material

40. An unfavorable fixed manufacturing overhead volume variance would be caused by:

- The...hours exceeding the standard hours allowed for the output of a period

20. 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

2. 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

4. 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 July 11,200 units → 1120 * 2 = 2240

5. A detailed financial plan for the future is known as

Budget

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

16. 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 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

24. Poor quality materials could have an unfavorable effect on which of the following variances?

Labor efficiency Variance Materials Quant. Variance - Labor efficiency variance: Yes materials quantity variance: Yes

38. An activity variance is the difference between:

in a static planning budget and the same item in the flexible budget and the same item in the flexible budget