43) James Manufacturing has the following information available for July:
Actual Results Flexible Budget Variance Flexible Budget Sales Activity
Variance Master Budget
Units 13,000 ? 2,000 U ?
Sales revenue ? $ 13,000 F ? ? ?
Less:
Variable manufacturing costs $ 87,750 $ 91,000 ?
$ 105,000
Variable marketing and administrative ? $ 3,250 U ? $ 4,000
F $ 30,000
Contribution margin $ 52,000 ? ? $ 6,000 U
?
What was James’s master budget sales revenue?
A) $124,000.
B) $148,000.
C) $156,000.
D) $180,000.
44) James Manufacturing has the following information available for July:
Actual Results Flexible Budget Variance Flexible Budget Sales Activity
Variance Master Budget
Units 13,000 ? 2,000 U ?
Sales revenue ? $ 13,000 F ? ? ?
Less:
Variable manufacturing costs $ 87,750 $ 91,000 ?
$ 105,000
Variable marketing and administrative ? $ 3,250 U ? $ 4,000
F $ 30,000
Contribution margin $ 52,000 ? ? $ 6,000 U
?
What was James’s master budget contribution margin?
A) $52,000.
B) $47,500.
C) $45,000.
D) $39,000.
45) James Manufacturing has the following information available for July:
Actual Results Flexible Budget Variance Flexible Budget Sales Activity
Variance Master Budget
Units 13,000 ? 2,000 U ?
Sales revenue ? $ 13,000 F ? ? ?
Less:
Variable manufacturing costs $ 87,750 $ 91,000 ?
$ 105,000
Variable marketing and administrative ? $ 3,250 U ? $ 4,000
F $ 30,000
Contribution margin $ 52,000 ? ? $ 6,000 U
?
What was James’s activity variance for variable manufacturing costs?
A) $4,000.
B) $14,000.
C) $24,000.
D) $34,000.
24
46) James Manufacturing has the following information available for July:
Actual Results Flexible Budget Variance Flexible Budget Sales Activity
Variance Master Budget
Units 13,000 ? 2,000 U ?
Sales revenue ? $ 13,000 F ? ? ?
Less:
Variable manufacturing costs $ 87,750 $ 91,000 ?
$ 105,000
Variable marketing and administrative ? $ 3,250 U ? $ 4,000
F $ 30,000
Contribution margin $ 52,000 ? ? $ 6,000 U
?
Was James’s activity variance for variable manufacturing costs favorable or unfavorable?
A) Favorable
B) Unfavorable
47) In analyzing company operations, the controller of the Carson Corporation found a $250,000
favorable flexible budget revenue variance. The variance was calculated by comparing the actual
results with the flexible budget. This variance can be wholly explained by: (CMA adapted)
A) the total flexible budget variance.
B) the total static budget variance.
C) changes in unit selling prices.
D) changes in the number of units sold.
48) The difference between operating profits in the master budget and operating profits in the
flexible budget is called the:
A) sales activity variance.
B) flexible budget variance.
C) production volume variance.
D) total operating profit variance.
49) Which of the following statements is(are) true regarding the sales activity variance?
(A) The sales activity variance is the actual selling price per unit times the difference between
the budgeted units and actual units.
(B) If the sales activity variance for sales revenue is unfavorable, then the contribution margin
sales activity variance will be unfavorable.
A) Only A is true.
B) Only B is true.
C) Neither of these is true.
D) Both of these are true.
50) The sales price variance is the difference between the actual sales revenues and the:
A) budgeted selling price multiplied by the budgeted number of units sold.
B) budgeted selling price multiplied by the actual number of units sold.
C) actual selling price multiplied by the budgeted number of units sold.
D) actual selling price multiplied by the actual number of units sold.
51) Which of the following statements is not true regarding the fixed production cost variance?
A) The fixed production cost variance is the difference between actual and budgeted costs.
B) With respect to this variance, fixed costs are affected by activity levels within a relevant
range.
C) The flexible budget’s fixed costs equal the master budget’s fixed costs.
D) Fixed costs are treated as period costs for purposes of this variance.
52) Which of the following is the name of a form providing standard quantities of inputs required
to produce a unit of output and the standard prices for the inputs?
A) Static budget
B) Standard cost sheet
C) Variance account
D) Master budget
53) If the total materials variance for a given operation is favorable, why must this variance be
further evaluated as to price and usage?
A) There is no need to further evaluate the total materials variance if it is favorable.
B) Generally accepted accounting principles require that all variances be analyzed in three
stages.
C) All variances must appear in the annual report to equity owners for proper disclosure.
D) A further evaluation lets management evaluate the activities of the purchasing and production
functions.
54) Which department is customarily held responsible for an unfavorable materials quantity
variance?
A) Quality control
B) Purchasing
C) Engineering
D) Production
55) When are the following direct materials variances ideally reported?
Quantity Price
A. Purchase Date Purchase Date
B. Time of Use Time of Use
C. Purchase Date Time of Use
D. Time of Use Purchase Date
A) Option A
B) Option B
C) Option C
D) Option D
56) In the general model, a price variance is calculated as:
A) (AP × AQ) – (AP × SQ)
B) (AP × SQ) – (SP × SQ)
C) (AP × AQ) – (SP × AQ)
D) (AP × AQ) – (SP × SQ)
57) In the general model, an efficiency variance is calculated as:
A) (SP × AQ) – (SP × SQ)
B) (AP × SQ) – (SP × SQ)
C) (AP × AQ) – (SP × SQ)
D) (AP × AQ) – (SP × AQ)
30
58) Which of the following direct labor variances uses the standard hours allowed for the actual
number of units produced?
Price Efficiency
A. Yes Yes
B. No No
C. Yes No
D. No Yes
A) Option A
B) Option B
C) Option C
D) Option D
59) Which of the following is the most probable reason a company would experience an
unfavorable labor rate variance and a favorable labor efficiency variance?
A) The mix of workers assigned to the particular job was heavily weighted towards the use of
higher paid experienced individuals.
B) The mix of workers assigned to the particular job was heavily weighted towards the use of
new relatively low paid unskilled workers.
C) Because of the production schedule, workers from other production areas were assigned to
assist this particular process.
D) Defective materials caused more labor to be used in order to produce a standard unit.
60) Which variance will be unfavorable due to employees working more hours than allowed for
the actual number of units produced?
A) Price (rate)
B) Efficiency
C) Sales activity
D) Production volume
61) In general, the direct labor efficiency variance is the responsibility of the:
A) purchasing agent.
B) company president.
C) production manager.
D) industrial engineering.
62) The variable overhead price variance is due to:
A) price items only.
B) efficiency items only.
C) both price and efficiency items.
D) neither price or efficiency items.
63) If overhead is applied to production using direct labor hours and the direct labor efficiency
variance is favorable, then the variable overhead efficiency variance is:
A) favorable.
B) unfavorable.
C) either favorable or unfavorable.
D) neither favorable nor unfavorable.
64) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
What is the direct materials price variance for November?
A) $14,250
B) $14,400
C) $16,000
D) $17,100
65) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
Is the direct materials price variance favorable or unfavorable?
A) Favorable
B) Unfavorable
66) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
What is the direct materials efficiency variance for November?
A) $14,250
B) $14,400
C) $16,000
D) $17,100
67) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
Is the direct materials efficiency variance favorable or unfavorable?
A) Favorable
B) Unfavorable
68) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
What is the direct labor rate variance for November?
A) $1,800
B) $1,900
C) $2,000
D) $2,200
69) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
Is the direct labor rate variance favorable or unfavorable?
A) Favorable
B) Unfavorable
70) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
What is the direct labor efficiency variance for November?
A) $1,800
B) $1,900
C) $2,000
D) $2,090
71) TaskMaster Enterprises employs a standard cost system in which direct materials inventory
is carried at standard cost. TaskMaster has established the following standards for the prime
costs of one unit of product.
Standard Standard Standard
Quantity Price Cost
Direct Materials 8 pounds $ 1.80 per pound $ 14.40
Direct Labor 0.25 hour $ 8.00 per hour 2.00
$ 16.40
During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of
$304,000. The total factory wages for November were $42,000, 90% of which were for direct
labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds
of direct materials and 5,000 direct labor hours.
Is the direct labor efficiency variance favorable or unfavorable?
A) Favorable
B) Unfavorable