Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $12 per hour. During August, Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376. What is Hassock's labor efficiency variance for August?

Multiple Choice

• $12,480 favorable.
• $10,376 unfavorable.
• $14,584 unfavorable.
• $4,160 favorable.
• $12,480 unfavorable.

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Item 2

The following information describes a company's usage of direct labor in a recent period. The direct labor rate variance is:

Actual hours used		45,000
Actual rate per hour	$	15.00
Standard rate per hour	$	14.50
Standard hours for units produced		47,000

Multiple Choice

• $29,000 favorable.
• $29,000 unfavorable.
• $22,500 unfavorable.
• $52,500 favorable.

All of the following are associated with the volume variance except:

Multiple Choice

• It results from operating at a different capacity than predicted.
• Failing to meet expected production results from lower customer demand.
• The volume variance is based solely on fixed overhead.
• It is considered to be under management's control.
• It is considered outside the control of the product manager.

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

Multiple Choice

• $34,000.
• $10,000.
• $18,667.
• $16,000.
• $24,000.

Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

Direct labor standard (4 hrs. @ $12/hr.)	$	48	per unit
Actual hours worked		12,250
Actual rate per hour	$	12.50

Multiple Choice

• $6,125 unfavorable.
• $7,000 unfavorable.
• $7,000 favorable.
• $21,000 favorable.
• $14,875 favorable.

Standard costs are:

Multiple Choice

• Actual costs incurred to produce a specific product or perform a service.
• Preset costs for delivering a product or service under normal conditions.
• Established by the IMA.
• Rarely achieved.
• Uniform among companies within an industry.

The following company information is available for March. The direct materials price variance is:

Direct materials purchased and used	2,500 feet @ $55 per foot
Standard costs for direct materials for March production	2,600 feet @ $53 per foot

Multiple Choice

• $5,000 favorable.
• $300 favorable.
• $5,200 unfavorable.
• $5,000 unfavorable.
• $5,200 favorable.

Milltown Company sells used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month.

Multiple Choice

• $22,000 unfavorable.
• $10,000 favorable.
• $22,000 favorable.
• $32,000 unfavorable.
• $32,000 favorable.

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Multiple Choice

• Controllable management.
• Management by variance.
• Performance management.
• Management by objectives.
• Management by exception.

The overhead cost variance is:

Multiple Choice

• The difference between the overhead costs actually incurred and the overhead budgeted at the actual operating level.
• The difference between the actual overhead incurred during a period and the standard overhead applied.
• The difference between actual and budgeted cost caused by the difference between the actual price per unit and the budgeted price per unit.
• The costs that should be incurred under normal conditions to produce a specific product (or component) or to perform a specific service.
• The difference between the total overhead cost that would have been expected if the actual operating volume had been accurately predicted and the amount of overhead cost that was allocated to products using the standard overhead rate.

The following information relating to a company's overhead costs is available.

Budgeted fixed overhead rate per machine hour	$	0.50
Actual variable overhead	$	73,000
Budgeted variable overhead rate per machine hour	$	2.50
Actual fixed overhead	$	17,000
Budgeted hours allowed for actual output achieved		32,000

Based on this information, the total overhead variance is:

Multiple Choice

• $7,000 favorable.
• $6,000 favorable.
• $1,000 unfavorable.
• $6,000 unfavorable.
• $1,000 favorable.

Variable budget is another name for:

Multiple Choice

• Cash budget.
• Flexible budget.
• Fixed budget.
• Manufacturing budget.
• Rolling budget.

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

Multiple Choice

• $12,500.
• $25,000.
• $20,000.
• $30,000.
• $35,000.

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials price variance?

Multiple Choice

• $47,000 unfavorable.
• $47,000 favorable.
• $50,000 unfavorable.
• $50,000 favorable.
• $3,000 favorable.

When recording the journal entry for labor, the Work in Process Inventory account is

Multiple Choice

• Debited for standard labor cost.
• Debited for actual labor cost.
• Credited for standard labor cost.
• Credited for actual labor cost.
• Not used.

Georgia, Inc. has collected the following data on one of its products. The direct materials price variance is:

Direct materials standard (4 lbs. @ $1/lb.)	$	4	per finished unit
Total direct materials cost varianceunfavorable	$	13,750
Actual direct materials used		150,000	lbs.
Actual finished units produced		30,000	units

Multiple Choice

• $13,750 unfavorable.
• $16,250 unfavorable.
• $16,250 favorable.
• $30,000 unfavorable.
• $33,000 favorable.

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the total labor cost variance?

Multiple Choice

• $2,000 unfavorable.
• $3,000 unfavorable.
• $5,500 unfavorable.
• $8,000 unfavorable.
• $9,000 unfavorable.

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of variable costs for 20,000 units would be:

Multiple Choice

• $99,000.
• $90,000.
• $66,000.
• $30,000.
• $150,000.

A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880. The direct materials quantity variance is:

Multiple Choice

• $400 unfavorable.
• $120 favorable.
• $400 favorable.
• $520 favorable.
• $520 unfavorable.

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The variable costs expected if the company produces and sells 16,000 units is:

Multiple Choice

• $48,000.
• $64,000.
• $40,000.
• $24,000.
• $18,000.

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

Multiple Choice

• $2,667.
• $14,000.
• $18,667.
• $24,000.
• $35,000.

Which of the following is not part of the flow of events in variance analysis:

Multiple Choice

• Preparing a standard cost performance report.
• Identifying questions and their answers.
• Taking corrective and strategic actions.
• Computing and analyzing variances.
• Working to ensure that all variances are favorable.

Regent, Inc. uses the following standard to produce a single unit of its product: overhead $6 (2 hrs. @ $3/hr.). The flexible budget for overhead is $100,000 plus $1 per direct labor hour. Actual data for the month show overhead costs of $150,000, and 24,000 units produced. The overhead volume variance is:

Multiple Choice

• $10,000 favorable.
• $12,000 favorable.
• $4,000 unfavorable.
• $16,000 unfavorable.
• $36,000 unfavorable.

Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

Direct materials standard (4 lbs. @ $1/lb.)	$	4	per finished unit
Total direct materials cost varianceunfavorable	$	13,750
Actual direct materials used		150,000	lbs.
Actual finished units produced		30,000	units

Multiple Choice

• $30,000 favorable.
• $13,750 unfavorable.
• $16,250 favorable.
• $30,000 unfavorable.
• $13,750 favorable.

A flexible budget performance report compares the differences between:

Multiple Choice

• Actual performance and budgeted performance based on actual sales volume.
• Actual performance over several periods.
• Budgeted performance over several periods.
• Actual performance and budgeted performance based on budgeted sales volume.
• Actual performance and standard costs at the budgeted sales volume.