1.Which of the following is a reason for a favorable material price variance?

A. The purchasing manager bargaining effectively with suppliers

B. The purchasing manager giving orders for small quantity to reduce storage cost

C. The purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material

D. The personnel manager hiring underskilled workers

2. To prepare a journal entry to record favorable material quantity variances, the direct material quantity variances are ________.

A. Always credits

B. Always debits

C. Debited to the Work-in-Process Inventory account

D. Debited to the Raw Material Inventory account

3. What situation most likely explains a debit balance in the labor usage variance account?

A. The production manager found lower cost workers

B. The factory superintendent reduced fringe benefits for factory workers

C. The production manager automated several parts of the production process with robots, eliminating the need for as much labor

D. More than expected, factory workers worked long hours, including weekends and holidays

4. Which one of these variances is more controllable at the departmental level?

A. Volume variance

B. Budget variance

C. Overhead variance

D. Production variance

5. When inventory levels increase, what happens to absorption method net income versus variable method?

A. Both increases and decreases

B. Decreases

C. Increases

D. Stays the same