1. What does an unfavorable overhead volume variance mean?

A) Overhead costs are in control.

B) Production was greater than anticipated.

C) Production was less than anticipated.

D) Overhead costs are out of control.

2) The total material variance can be divided into a material ________ variance and a material ___________ variance.

A) quantity, efficiency

B) rate, efficiency

C) controllable, price

D) price, quantity

3) What does a favorable labor efficiency variance mean?

A) Less labor was used than called for by the standard.

B) Labor rates were higher than called for by the standard.

C) More labor was used than called for by the standard.

D) Inexperienced labor was used, causing the rate to be lower than standard.

4) Which of the following would cause a variance to be unfavorable?

A) The actual price is less than the standard price.

B) The standard hours allowed are less than the actual hours worked.

C) The overhead costs incurred are less than the flexible budget amount.

D) All of these answer choices are correct.

5) Why is the point of purchase the best time to compute material price variances?

A) This is when the company is able to determine the total cost of production.

B) This is when the cost of material will be known.

C) This is when the company knows the amount of materials used in production.

D) This is the only point when the company is able to determine a standard material price.

6) Which one of the following is a possible cause of an unfavorable labor rate variance?

A) The company used attainable standards rather than ideal standards.

B) The company hired new, inexperienced employees.

C) The company produced fewer units than had been planned.

D) The company used more experienced workers than planned.

7) Standard cost variances provide definitive evidence that costs are out of control and managers are not performing effectively.

A) True

B) False

8) A favorable variance may be due to a poor management decision.

A) True

B) False

9) Which of the following statements correctly describes an unfavorable material price variance?

A) Less material was used than called for by the standard.

B) More material was used than called for by the standard.

C) Too much material was purchased.

D) A higher price was paid for material purchased compared with the standard price.

10) The labor rate variance is equal to the difference between the actual wage rate and the standard wage rate times the standard number of labor hours worked.

A) True

B) False

11) What does a favorable labor efficiency variance indicate?

A) More labor was used than called for by standards.

B) Labor rates were higher than called for by standards.

C) Inexperienced labor was used, causing the rate to be lower than standard.

D) Less labor was used than called for by standards.