1. The following report is given for a blood bank, which collects donated blood to help needy

patients. The company will investigate variances for two of the following items.

Which two should be investigated?

Actual Budget

I. Medical Supplies $1,040 $1,000

II. Blood Tests 1,580 2,000

III. Administration 3,300 3,000

IV. Equipment 1,480 1,200

A. I and II

B. II and III

C. II and IV

D. III and IV

2. If a company purchased a material for less than its standard price, the company will report a:

A. favorable price variance.

B. favorable quantity variance.

C. favorable spending variance.

D. favorable revenue variance.

3. In variance analysis, for materials, SQ (standard quantity) means:

A. quantity of the material allowed for 1 unit of the product.

B. quantity of the material allowed for actual production units of the product

C. quantity of the material allowed for1 unit of the product in the last period.

D. quantity of the material allowed for planned production units of the product

4. Which of the following statements is incorrect about the flexible budget?

A. It makes it possible to compare the actual outcome and the budget in a meaningful way.

B. It shows what amounts of revenues/costs should have been generated/incurred for the actual

activity level.

C. It gives the flexibility to managers so that they can change the activity level.

D. The planning or static budget is different from the flexible budget.

5. A companys manufacturing plans were as follows:

Units to be manufactured: 1,000 units

Budgeted variable costs: $50,000 [50q ($50 per unit)]

Budgeted fixed costs: $30,000

Budgeted mixed costs: $20,000 [14,000 + 6q ($14,000 fixed + $6 per unit)]

Later, the company actually produced 1,200 units, and incurred variable costs of $52,000; fixed costs of $31,000; and mixed costs of $21,000.

1. The flexible budget for 1,200 units will show the total budgeted cost of $_______.
2. The amount of the overall spending (total) variance (for all costs together) is $_______
3. indicate whether it is favorable or unfavorable.

6. Gyne Company makes Product X using special plastic as the main material. The company made 1,000 units of X using 4,500 lbs of plastic. The plastic actually cost the company $22 per lbs (total $99,000). According to the companys standards, each unit of X should require 5 lbs of plastic, at a price of $20 per lbs.

(a) What cost of plastic should have been incurred to make 1,000 units of X?

(b) How much is the spending (total) variance?

(c) Is the spending variance favorable or unfavorable?

(d) Compute the price variance

(e) Is the price variance favorable or unfavorable?

(f) Compute the quantity variance

(g) Is the quantity variance favorable or unfavorable?

7. Cyric Companys labor standard for one unit of a given product is 12 hours, and the standard rate for one hour of labor is $70. The company actually made 300 units of the product, and used 3,300 hours of labor, and incurred $260,000 labor cost.

1. Compute the rate variance
2. Is the rate variance favorable or unfavorable?
3. Compute the efficiency variance
4. Is the efficiency variance favorable or unfavorable?
5. Compute the spending (total) variance
6. Is the spending (total) variance favorable or unfavorable?

8. The Wright Company has a standard costing system. The following data are available:

Actual quantity of direct material.................................................................................... ......................................................................... Actual quantity of direct material purchased and used............................................................................	25,000 pounds
Standard price of direct material.......................................................................	$2 per pound
Total material variance	$7,000, favorable
Material quantity variance......................................................................	$9,500, unfavorable

The actual price per pound of the direct material is: $_____