3. Which of the following budgets requires the production budget? a. Direct materials b. Direct labor c. Manufacturing overhead d. Marketing and administrative expenses 4. Which of the following budgets is not required in a merchandising organization? a. Direct materials b. Cost of goods sold c. Manufacturing overhead d. Marketing and administrative expenses 5. Which of the following can be a reason for a favorable efficiency variance for direct materials? a. a decrease in the price of materials due to an oversupply of materials b. an unexpected increase in the price of materials c. less amount of material used during production than planned for actual output d. workers taking less time to produce the products e. more units being produced than expected 6. A firm produces 10,000 units of a good for the month. The standard amount of direct labor hours to produce one unit is 2.5 direct labor hours. For the month of April, the firm actually used 26,000 direct labor hours. The direct labor efficiency variance for this firm is: a. favorable b. unfavorable c. not enough information to tell 7. A firm uses direct labor hours to allocate overhead costs to products. During the month of October, the firm produced 1,000 units of output and used 1,200 DLH. The flexible budget indicated that 1,500 DLH should have been used to produce the 1,000 units. This would imply that the efficiency variance for variable overhead is: a. favorable b. unfavorable c. not enough information to tell