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Exam 11: Standard Costs and Variance Analysis

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Question 41

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Use the following information for the next 7 questions. A small accounting firm budgets 200 hours of billings for the next month, and 60% of these hours are expected to be for tax return preparation services, with the remaining 40% for bookkeeping services. Tax work is billed at $50 per hour, and bookkeeping work is billed at $40 per hour. The variable costs for both types of services are $10 per hour. During the month 180 hours were billed, 90 of which were for tax work. -(Appendix 11A) The contribution margin sales mix variance was

A) $720 unfavorable
B) $540 favorable
C) $900 unfavorable
D) $180 unfavorable

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Question 42

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Which of the following variances is least likely to provide useful information for making decisions, if calculated as part of a comprehensive set of variances?

A) Variable overhead spending
B) Production volume variance
C) Direct material price
D) Direct labor efficiency

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Question 43

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The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.

Rewarding employees in one production department for meeting or exceeding standard cost benchmarks can create new sets of problems for organizations. Which of the following is not one of them?

Use the following information for the next 4 questions. White, Inc. produces a chemical product whose primary component is purchased on credit and any discounts are always taken. The following material and labor elements make up the costs of the product: Each container of the chemical product contains 5.7 quarts of material. During the process 5% of the material is lost due to waste. Each container of product also requires 1.2 hours of labor. Each day 2 hours are taken for set-up, cleaning, and breaks. Also, the wage rate is $15 per hour and fringes/payroll taxes are 20% of wages. Clients can take a 3% discount if they pay invoices within 10 days; otherwise, the entire invoice amount is due within 30 days. 1 gallon equals 4 quarts. -The standard hours per finished unit is

The fixed overhead spending variance is normally zero because fixed costs are constant within a relevant range of activity.

Which of the following is not a typical step in variance analysis?

Use the following information for the next 5 questions. Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: -The direct materials efficiency variance is

Use the following information for the next 4 questions. Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: -The over- or underapplied overhead was

Use the following information for the next 3 questions. Vashon Corporation had the following activity during a recent period: -The standard price per pound was

The total direct labor variance can be broken down into two components: the efficiency variance and the price variance.

A standard cost variance is a difference between a standard cost and an actual cost.

Use the following information for the next 7 questions. Paris Perfumery sells two perfumes, L'Amor and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: -(Appendix 11A) The contribution margin sales mix variance was

Use the following information for the next 4 questions. Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: -The fixed overhead production volume variance was

Use the following information for the next 2 questions. Bellingham, Inc. incurred the following during a recent period: -(Appendix 11A) Contribution margin sales volume variance can be further subdivided into

Use the following information for the next 5 questions. Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: -The variable overhead spending variance is

Variance analysis is used for monitoring and performance evaluation.

Use the following information for the next 3 questions. Anacortes, Inc. uses a standard cost system. At the beginning of the year, it budgeted $50,000 for fixed overhead. The estimated variable overhead allocation rate was $3.30 per machine hour, and machine hours is the cost allocation base for both variable and fixed overhead. The static budget was based on 16,000 units of production and sales, and each unit was expected to use 2.5 machine hours. Actual total overhead was $170,000, and Anacortes produced and sold 15,000 units during the year. Actual machine hours for the year were 36,000. -(Appendix 11A) The contribution margin sales mix variance will be unfavorable when the

LST Corporation entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from LST. This reduces LST's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

Use the following information for the next 2 questions. Given the following account balances at the end of the first year of operations: -Assuming that variances are considered material, the entry and amount of the direct material price variance allocated to Cost of Goods Sold is