Question 1

Carvelle Cabinets set the following standard cost per unit for 2008. 
The standards were set based on a capacity of 20 000 machine hours.
During the year, 5100 units were produced. 
What was Carvelle's fixed overhead budget variance?

Accepted Answer

A)   $2000 unfavourable
B)   $7000 unfavourable
C)   $5000 unfavourable
D)   $4000 favourableE) All of the above
F) A) and D)

Question 2

Which of the following is used in the calculation of the variable overhead spending variance?

Accepted Answer

A)   
B)   
C)   
D)   E) None of the above
F) A) and B)

Question 3

The sales price variance equals:

Accepted Answer

A)   (actual sales price - budgeted sales price)   ×	imes×  budgeted sales volume.
B)   (actual sales price - budgeted sales price)   ×	imes×  actual contribution margin.
C)   (actual sales price - budgeted sales price)   ×	imes×  actual sales volume.
D)   (actual sales volume - budgeted sales volume)   ×	imes×  budgeted contribution margin. E) A) and B)
F) B) and D)

Question 4

Since variances are temporary accounts, how are they usually handled?

Accepted Answer

A)   Closed directly to cost of goods sold at the end of each month.
B)   Closed directly to cost of goods sold at the end of each accounting period.
C)   Closed directly to cost of goods manufactured at the end of each accounting period.
D)   Closed directly to profit and loss account at the end of the year.E) A) and C)
F) B) and D)

Question 5

As overall productive activity changes, the following should move in the same direction, in roughly the same proportion:

Accepted Answer

A)   total variable overhead cost; standard variable overhead rate.
B)   total variable overhead cost; fixed overhead budget variance.
C)   cost driver; total variable overhead cost.
D)   cost driver; fixed overhead cost.E) A) and D)
F) All of the above

Question 6

An unfavourable fixed overhead budget is likely to the result of

Accepted Answer

A)   an unexpected increase in factory rent.
B)   an unexpected increase in electricity rate.
C)   an incorrect application of fixed overhead rate.
D)   an unexpected increase in factory rent and an unexpected increase in electricity rate.E) A) and B)
F) All of the above

Question 7

Which of the following statements on flexible budgets is false?

Accepted Answer

A)   It enables companies to control overhead costs.
B)   It can be used to calculate direct material and direct labour variances.
C)   It is the same as a static budget.
D)   It provides a useful basis for comparison between actual and expected costs for a given level of activity.E) B) and D)
F) A) and D)

Question 8

Which of the following statements about variable overhead variances is correct?

Accepted Answer

A)   Variable overhead efficiency variance highlights any inefficient uses of variable indirect costs such as electricity.
B)   Variable overhead efficiency variance is not a useful control tool.
C)   Variable overhead spending variance is useful only as a product costing tool.
D)   Variable overhead spending variance may be caused by lower than expected usage of direct labour hours.E) A) and B)
F) A) and C)

Question 9

Felter Company reported that the total variance between actual and budgeted total contribution margin in April was $1000 favourable. The sales price variance was $5000 favourable. The fixed overhead budget variance was $1200 unfavourable. The sales volume variance was

Accepted Answer

A)   $4000 unfavourable.
B)   $4000 favourable.
C)   $5200 unfavourable.
D)   $5200 favourable.E) B) and D)
F) B) and C)

Question 10

Security Doors has a standard variable overhead rate of $4 per direct labour hour. The standard quantity of direct labour per unit of production is 3 hours. The company's static budget was based on 50 000 units. Actual results for the year are as follows. 
What was Security Door's variable overhead efficiency variance?

Accepted Answer

A)   $45 000 favourable
B)   $60 000 favourable
C)   $45 000 unfavourable
D)   $60 000 unfavourableE) A) and B)
F) B) and C)

Question 11

The following table provides information about a company's production. 
If variable costs increased in 2005 by 10 per cent and fixed overheads increased in 2006 by 20 per cent, what was the variable cost per unit in 2004?

Accepted Answer

A)   $3.35
B)   $3.40
C)   $3.45
D)   $3.50E) A) and C)
F) A) and B)

Question 12

Z Company uses a variable costing system. There was no opening or closing stock. The following data is available. 
Use this data to determine Z's sales price variance.

Accepted Answer

A)   $2000 favourable
B)   $10 000 unfavourable
C)   $58 000 unfavourable
D)   $10 000 favourableE) B) and C)
F) None of the above

Question 13

The fixed overhead volume variance

Accepted Answer

A)   is useless, as it does not serve a control purpose. Rather, it is calculated only as a difference between total fixed overhead variance and fixed overhead budget variance.
B)   is useless for control purposes, but allows managers to estimate capacity costs.
C)   is useless for control purposes, but useful for product costing purposes.
D)   is useful only when conducting two-way overhead variance analyses.E) B) and D)
F) None of the above

Question 14

Which of the following formulas is the relationship between activity and total budgeted overhead cost is represented by?

Accepted Answer

A)   Budgeted variable overhead cost per unit  ×	imes×  total activity units
B)   Budgeted variable overhead cost per unit + budgeted fixed overhead cost
C)   (Budgeted variable overhead cost per unit  ×	imes×  total activity units)  + budgeted fixed overhead costs
D)   (Budgeted fixed overhead cost per unit  ×	imes×  total activity units)  + (budgeted variable overhead cost per unit  ×	imes×  total activity units)  E) A) and C)
F) B) and C)

Question 15

In a standard costing system, the total manufacturing overhead variance is measured as

Accepted Answer

A)   the difference between applied overhead based on actual output and actual overhead cost incurred.
B)   the difference between actual overhead costs for two subsequent periods.
C)   the difference between overhead costs in the flexible budget for two subsequent periods.
D)   the difference between standard overhead applied and the overhead cost in the flexible budget.E) B) and C)
F) None of the above

Question 16

Dean Company used a standard cost system to prepare the following budget at normal capacity for the month of May. 
Actual data for May were as follows: 
Determine the fixed overhead budget and volume variances.

Accepted Answer

A)   
B)   
C)   
D)   E) A) and B)
F) A) and C)

Question 17

A correct interpretation of an unfavourable variance is that it measures the cost of underutilising productive capacity.

Accepted Answer

A) True 
 B)False

Question 18

What can create the variable overhead efficiency variance?

Accepted Answer

A)   Efficient or inefficient usage of a specific component of variable overhead (e.g. electricity) 
B)   Production of units for finished goods inventory versus production for sale
C)   Efficient or inefficient use of the cost driver (e.g. machine hours)  for variable overhead
D)   A difference between the planned level of output and the actual level of outputE) B) and C)
F) C) and D)

Question 19

To which ledger account are the standard costs of direct material, direct labour and manufacturing overhead charged?

Accepted Answer

A)   Not used at all.
B)   Used for variances only.
C)   Entered into work in process inventory.
D)   Entered into a standard control account.E) A) and D)
F) A) and C)

Question 20

A static budget is always:

Accepted Answer

A)   based on a specific planned activity level.
B)   based on a range of activity within which the firm may operate.
C)   the same as a flexible budget.
D)   based on maximum capacity.E) B) and D)
F) A) and C)

Exam 11: Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Which of the following statements on flexible budgets is false?

Correct Answer
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Z Company uses a variable costing system. There was no opening or closing stock. The following data is available. Use this data to determine Z's sales price variance.

Correct Answer
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Correct Answer
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Felter Company reported that the total variance between actual and budgeted total contribution margin in April was $1000 favourable. The sales price variance was $5000 favourable. The fixed overhead budget variance was $1200 unfavourable. The sales volume variance was

Correct Answer
verified

A static budget is always:

Correct Answer
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The sales price variance equals:

Correct Answer
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The fixed overhead volume variance

Correct Answer
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Which of the following formulas is the relationship between activity and total budgeted overhead cost is represented by?

Correct Answer
verified

What can create the variable overhead efficiency variance?

Correct Answer
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Which of the following is used in the calculation of the variable overhead spending variance?

Correct Answer
verified

Since variances are temporary accounts, how are they usually handled?

Correct Answer
verified

Carvelle Cabinets set the following standard cost per unit for 2008. The standards were set based on a capacity of 20 000 machine hours. During the year, 5100 units were produced. What was Carvelle's fixed overhead budget variance?

Correct Answer
verified

An unfavourable fixed overhead budget is likely to the result of

Correct Answer
verified

Which of the following statements about variable overhead variances is correct?

Correct Answer
verified

The following table provides information about a company's production. If variable costs increased in 2005 by 10 per cent and fixed overheads increased in 2006 by 20 per cent, what was the variable cost per unit in 2004?

Correct Answer
verified

To which ledger account are the standard costs of direct material, direct labour and manufacturing overhead charged?

Correct Answer
verified

Dean Company used a standard cost system to prepare the following budget at normal capacity for the month of May. Actual data for May were as follows: Determine the fixed overhead budget and volume variances.

Correct Answer
verified

A correct interpretation of an unfavourable variance is that it measures the cost of underutilising productive capacity.

Correct Answer
verified

As overall productive activity changes, the following should move in the same direction, in roughly the same proportion:

Correct Answer
verified

In a standard costing system, the total manufacturing overhead variance is measured as

Correct Answer
verified

Exam 11: Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Which of the following statements on flexible budgets is false?

Correct AnswerverifiedShow Answer

Z Company uses a variable costing system. There was no opening or closing stock. The following data is available. Use this data to determine Z's sales price variance.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Felter Company reported that the total variance between actual and budgeted total contribution margin in April was $1000 favourable. The sales price variance was $5000 favourable. The fixed overhead budget variance was $1200 unfavourable. The sales volume variance was

Correct AnswerverifiedShow Answer

A static budget is always:

Correct AnswerverifiedShow Answer

The sales price variance equals:

Correct AnswerverifiedShow Answer

The fixed overhead volume variance

Correct AnswerverifiedShow Answer

Which of the following formulas is the relationship between activity and total budgeted overhead cost is represented by?

Correct AnswerverifiedShow Answer

What can create the variable overhead efficiency variance?

Correct AnswerverifiedShow Answer

Which of the following is used in the calculation of the variable overhead spending variance?

Correct AnswerverifiedShow Answer

Since variances are temporary accounts, how are they usually handled?

Correct AnswerverifiedShow Answer

Carvelle Cabinets set the following standard cost per unit for 2008. The standards were set based on a capacity of 20 000 machine hours. During the year, 5100 units were produced. What was Carvelle's fixed overhead budget variance?

Correct AnswerverifiedShow Answer

An unfavourable fixed overhead budget is likely to the result of

Correct AnswerverifiedShow Answer

Which of the following statements about variable overhead variances is correct?

Correct AnswerverifiedShow Answer

The following table provides information about a company's production. If variable costs increased in 2005 by 10 per cent and fixed overheads increased in 2006 by 20 per cent, what was the variable cost per unit in 2004?

Correct AnswerverifiedShow Answer

To which ledger account are the standard costs of direct material, direct labour and manufacturing overhead charged?

Correct AnswerverifiedShow Answer

Dean Company used a standard cost system to prepare the following budget at normal capacity for the month of May. Actual data for May were as follows: Determine the fixed overhead budget and volume variances.

Correct AnswerverifiedShow Answer

A correct interpretation of an unfavourable variance is that it measures the cost of underutilising productive capacity.

Correct AnswerverifiedShow Answer

As overall productive activity changes, the following should move in the same direction, in roughly the same proportion:

Correct AnswerverifiedShow Answer

In a standard costing system, the total manufacturing overhead variance is measured as

Correct AnswerverifiedShow Answer

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