Multiple Choice Questions:

1) Which of the following is a key point to investigate while analyzing overhead costs?

A) Whether costs incurred are product costs or period costs

B) Whether direct materials prices are higher than standards

C) Whether certain overhead costs are controllable or not

D) Whether labor costs can be reduced

2) Discount Sales Company uses standard costing to manage their direct costs and overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Discount Sales had a favorable cost variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

A) The actual number of direct labor hours was lower than the budgeted hours.

B) The actual variable overhead costs were higher than the budgeted costs.

C) The actual variable overhead costs were lower than the budgeted costs.

D) The actual number of direct labor hours was higher than the budgeted hours.

3) Discount Sales Company uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Discount Sales had a favorable efficiency variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

A) The actual number of direct labor hours was lower than the budgeted hours.

B) The actual variable overhead costs were higher than the budgeted costs.

C) The actual variable overhead costs were lower than the budgeted costs.

D) The actual number of direct labor hours was higher than the budgeted hours.

4) Quality Brand Products uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Quality Brand had an unfavorable cost variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

A) The actual number of direct labor hours was lower than the budgeted hours.

B) The actual variable overhead costs were higher than the budgeted costs.

C) The actual variable overhead costs were lower than the budgeted costs.

D) The actual number of direct labor hours was higher than the budgeted hours.

5) Quality Brand Products uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Quality Brand had an unfavorable efficiency variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

A) The actual number of direct labor hours was lower than the budgeted hours.

B) The actual variable overhead costs were higher than the budgeted costs.

C) The actual variable overhead costs were lower than the budgeted costs.

D) The actual number of direct labor hours was higher than the budgeted hours.