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The actual hourly rate paid above or below the standard hourly rate, multiplied by the actual number of hours worked is the:


A) Labor rate variance.
B) Labor efficiency variance.
C) Labor usage variance.
D) Labor direct variance.

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

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One possible explanation for a company that experiences a favorable labor efficiency variance, but an unfavorable labor rate variance could be:


A) The company paid the workers overtime.
B) The company hired more experienced workers.
C) The company purchased materials that were hard to work with.
D) The workers "goofed around" and wasted time.

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

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The fixed overhead application rate is a function of a predetermined "normal" activity level. If standard hours allowed for good output equal this "normal" activity level for a given period, the volume variance will be:


A) Zero.
B) Favorable.
C) Unfavorable.
D) Either favorable or unfavorable depending on the budgeted overhead.

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

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The following information pertains to the Braun Company for March: The following information pertains to the Braun Company for March: Using the four-variance method of factory overhead variance analysis, what is the volume variance? A) $1,200 favorable B) $1,800 unfavorable C) $3,000 favorable D) $1,200 unfavorable Using the four-variance method of factory overhead variance analysis, what is the volume variance?


A) $1,200 favorable
B) $1,800 unfavorable
C) $3,000 favorable
D) $1,200 unfavorable

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

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Elgin Company's budgeted fixed factory overhead costs are $50,000 per month plus a variable factory overhead rate of $4.00 per direct labor hour. The standard direct labor hours allowed for October production were 20,000. An analysis of the factory overhead indicates that in October, Elgin had an unfavorable budget (controllable) variance of $1,500 and a favorable volume variance of $500. Elgin uses a two-variance analysis of overhead variances. The applied factory overhead in October is:


A) $129,500.
B) $128,000.
C) $130,000.
D) $130,500.

E) A) and B)
F) All of the above

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Overapplied factory overhead would result if:


A) Factory overhead costs incurred were greater than standard costs charged to production.
B) The plant was operated at less than normal capacity.
C) Factory overhead costs incurred were less than standard costs charged to production.
D) Factory overhead costs incurred were unreasonably large in relation to units produced.

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

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If a company uses a two-variance analysis for overhead variances and uses a predetermined rate for absorbing manufacturing overhead, the volume variance is the:


A) Underapplied or overapplied variable cost element of overhead.
B) Underapplied or overapplied fixed cost element of overhead.
C) Difference in budgeted costs and actual costs of fixed overhead items.
D) Difference in budgeted costs and actual costs of variable overhead items.

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

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The data below relate to the month of April for Monroe, Inc., which uses a standard cost system and a two-variance analysis of factory overhead: The data below relate to the month of April for Monroe, Inc., which uses a standard cost system and a two-variance analysis of factory overhead: What was Monroe's volume variance for April? A) $187.50 favorable B) $187.50 unfavorable C) $437.50 favorable D) $437.50 unfavorable What was Monroe's volume variance for April?


A) $187.50 favorable
B) $187.50 unfavorable
C) $437.50 favorable
D) $437.50 unfavorable

E) All of the above
F) A) and C)

Correct Answer

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In a standard cost system,when the materials price variance is recorded at the time the material is purchased, the materials purchase price variance is obtained by multiplying the:


A) Actual price by the difference between actual quantity purchased and standard quantity used.
B) Actual quantity purchased by the difference between actual price and standard price.
C) Standard price by the difference between standard quantity purchased and standard quantity used.
D) Standard quantity purchased by the difference between actual price and standard price.

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

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Palek Company has adopted the following standards: Palek Company has adopted the following standards: Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data: Assuming Palek uses the four-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable: a.Factory overhead spending variance b.Factory overhead efficiency variance c.Factory overhead budget variance d.Factory overhead volume variance Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data: Palek Company has adopted the following standards: Palek's January budget was based on normal volume of 40,000 standard labor hours. During January, Palek produced 7,900 units with records indicating the following data: Assuming Palek uses the four-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable: a.Factory overhead spending variance b.Factory overhead efficiency variance c.Factory overhead budget variance d.Factory overhead volume variance Assuming Palek uses the four-variance method of analyzing factory overhead, compute the following variances for the month of January and indicate whether each is favorable or unfavorable: a.Factory overhead spending variance b.Factory overhead efficiency variance c.Factory overhead budget variance d.Factory overhead volume variance

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Factory overhead spending variance = Act...

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Thomas Company uses a standard cost system and recognizes the materials purchase price variance at the time materials are purchased. Information for raw materials for Product RBI for the month of October follows: Thomas Company uses a standard cost system and recognizes the materials purchase price variance at the time materials are purchased. Information for raw materials for Product RBI for the month of October follows: What is the materials purchase price variance? A) $390 favorable B) $390 unfavorable C) $400 favorable D) $400 unfavorable What is the materials purchase price variance?


A) $390 favorable
B) $390 unfavorable
C) $400 favorable
D) $400 unfavorable

E) B) and C)
F) All of the above

Correct Answer

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Earl Company's direct labor costs for the month of January follow: Earl Company's direct labor costs for the month of January follow: What was Earl's direct labor efficiency variance? A) $6,500 favorable B) $6,400 unfavorable C) $1,800 favorable D) $6,400 favorable What was Earl's direct labor efficiency variance?


A) $6,500 favorable
B) $6,400 unfavorable
C) $1,800 favorable
D) $6,400 favorable

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

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Taking appropriate action on variances includes all of the following except:


A) Ignoring the cause of favorable variances.
B) Revising the standard because it was set incorrectly.
C) Improving the manufacturing process.
D) Looking for new suppliers.

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

Correct Answer

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The following information pertains to the Braun Company for March: The following information pertains to the Braun Company for March: Using the four-variance method of factory overhead variance analysis, what is the efficiency variance? A) $1,200 unfavorable B) $200 unfavorable C) $1,000 favorable D) $200 favorable Using the four-variance method of factory overhead variance analysis, what is the efficiency variance?


A) $1,200 unfavorable
B) $200 unfavorable
C) $1,000 favorable
D) $200 favorable

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

Correct Answer

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Fill in the missing figures below: Fill in the missing figures below:

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(a) Standard hours allowed = units produ...

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Information relating to direct labor for the Newstead Company follow: Information relating to direct labor for the Newstead Company follow: The labor efficiency variance is: A) $2,800 unfavorable B) $1,900 unfavorable C) $4,600 unfavorable D) $1,800 unfavorable The labor efficiency variance is:


A) $2,800 unfavorable
B) $1,900 unfavorable
C) $4,600 unfavorable
D) $1,800 unfavorable

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

Correct Answer

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Andrews Corporation purchased 3,000 gallons of raw materials for $9,200. The standard price is $3.00 per gallon. If Andrews records the price variance at the earliest possible time, the entry to record the purchase of the material is: Andrews Corporation purchased 3,000 gallons of raw materials for $9,200. The standard price is $3.00 per gallon. If Andrews records the price variance at the earliest possible time, the entry to record the purchase of the material is:

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C
If the price variance is recorded at t...

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If a company follows a practice of isolating variances at the earliest point in time, what would be the appropriate time to isolate and recognize a direct material price variance?


A) When material is purchased
B) When material is used in production
C) When purchase order is originated
D) When material is issued

E) All of the above
F) B) and D)

Correct Answer

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What is the normal year-end treatment of immaterial variances recognized in a cost accounting system utilizing standards?


A) Reclassified to deferred charges until all related production is sold
B) Closed to cost of goods sold in the period in which they arose
C) Allocated among cost of goods manufactured and ending work in process inventory
D) Capitalized as a cost of ending finished goods inventory

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

Correct Answer

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A manufacturer generally wants to set a standard that:


A) Can be achieved only under the most efficient operating conditions.
B) Is high enough to provide motivation and promote efficiency, but is still attainable.
C) Makes no allowance for normal was or spoilage.
D) None of these is correct.

E) A) and D)
F) All of the above

Correct Answer

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