Question 1

A direct labor cost variance can be divided into price and quantity variances, which are almost always called controllable and volume variances.

Accepted Answer

A) True 
 B)False

Question 2

Define standard costs. How do they assist management?

Accepted Answer

Standard costs are preset costs for deli...

Question 3

When computing a price variance, the price is held constant.

Accepted Answer

A) True 
 B)False

Question 4

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 variable costs for 20,000 units would be:

Accepted Answer

A)   $99,000.
B)   $90,000.
C)   $66,000.
D)   $30,000.
E)   $150,000.F) C) and E)
G) A) and E)

Question 5

The difference between the total actual cost incurred and the total standard cost is called the:

Accepted Answer

A)   Flexible variance.
B)   Usage variance.
C)   Cost variance.
D)   Controllable variance.
E)   Volume variance.F) D) and E)
G) All of the above

Question 6

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 direct labor efficiency variance?

Accepted Answer

A)   $27,500 unfavorable.
B)   $22,000 unfavorable.
C)   $16,000 unfavorable.
D)   $22,000 favorable.
E)   $6,000 unfavorable.F) B) and C)
G) A) and E)

Question 7

A fixed budget is also called a ________ budget.

Accepted Answer

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

Question 8

LJ Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. LJ's standard labor cost is $11.00 per hour. During March, LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is LJ's labor rate variance for March?

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> *$133,920...

Question 9

What are sales variances? How are they used?

Accepted Answer

Sales variances reflect differences in p...

Question 10

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

Accepted Answer

Unfavorable variances are recorded with ...

Question 11

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:

Accepted Answer

A)   Production variance.
B)   Quantity variance.
C)   Volume variance.
D)   Price variance.
E)   Controllable variance.F) All of the above
G) A) and E)

Question 12

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called ________ and ________ variances.

Accepted Answer

rate; effi...

Question 13

When recording variances in a standard cost system:

Accepted Answer

A)   Only unfavorable material variances are debited.
B)   Only unfavorable material variances are credited.
C)   Both unfavorable material and labor variances are credited.
D)   All unfavorable variances are debited.
E)   All unfavorable variances are credited.F) All of the above
G) B) and C)

Question 14

The difference between the actual sales and the flexible budget sales is called the ________ variance.

Accepted Answer

The answer of The difference between the actual sales and...

Question 15

Milltown Company sells used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month.

Accepted Answer

A)   $22,000 unfavorable.
B)   $10,000 favorable.
C)   $22,000 favorable.
D)   $32,000 unfavorable.
E)   $32,000 favorable.F) B) and D)
G) C) and D)

Question 16

In sales variance analysis, the budgeted amount of unit sales is the predicted activity level and the budgeted cost of the goods sold can be treated as a "standard" price.

Accepted Answer

A) True 
 B)False

Question 17

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.F) A) and D)
G) D) and E)

Question 18

When computing a price variance, the quantity is held constant.

Accepted Answer

A) True 
 B)False

Question 19

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity)  is called a(n) :

Accepted Answer

A)   Sales budget performance report.
B)   Flexible budget performance report.
C)   Master budget performance report.
D)   Static budget performance report.
E)   Operating budget performance report.F) C) and D)
G) None of the above

Question 20

Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.) . Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

Accepted Answer

A)   $6,000F.
B)   $6,000U.
C)   $78,000U.
D)   $78,000F.
E)   $0.F) B) and D)
G) A) and E)

Exam 8: Flexible Budgets and Standard Costs

The difference between the actual sales and the flexible budget sales is called the ________ variance.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedUnfavorable variances are recorded with ...View AnswerShow Answer

Milltown Company sells used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month.

Correct AnswerverifiedShow Answer

When computing a price variance, the price is held constant.

Correct AnswerverifiedShow Answer

In sales variance analysis, the budgeted amount of unit sales is the predicted activity level and the budgeted cost of the goods sold can be treated as a "standard" price.

Correct AnswerverifiedShow Answer

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:

Correct AnswerverifiedShow Answer

A fixed budget is also called a ________ budget.

Correct AnswerverifiedShow Answer

A direct labor cost variance can be divided into price and quantity variances, which are almost always called controllable and volume variances.

Correct AnswerverifiedShow Answer

Define standard costs. How do they assist management?

Correct AnswerverifiedStandard costs are preset costs for deli...View AnswerShow Answer

What are sales variances? How are they used?

Correct AnswerverifiedSales variances reflect differences in p...View AnswerShow Answer

When recording variances in a standard cost system:

Correct AnswerverifiedShow Answer

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 variable costs for 20,000 units would be:

Correct AnswerverifiedShow Answer

When computing a price variance, the quantity is held constant.

Correct AnswerverifiedShow Answer

Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.) . Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

Correct AnswerverifiedShow Answer

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called ________ and ________ variances.

Correct Answerverifiedrate; effi...View AnswerShow Answer

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity) is called a(n) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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 direct labor efficiency variance?

Correct AnswerverifiedShow Answer

The difference between the total actual cost incurred and the total standard cost is called the:

Correct AnswerverifiedShow Answer

LJ Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. LJ's standard labor cost is $11.00 per hour. During March, LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is LJ's labor rate variance for March?

Correct Answerverified *$133,920...View AnswerShow Answer

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Unfavorable variances are recorded with ...
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Standard costs are preset costs for deli...
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Sales variances reflect differences in p...
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Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called and variances.

Correct Answer
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rate; effi...
View Answer

Correct Answer
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*$133,920...
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