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104. Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of
materials were purchased at $2.20 a pound. The actual quantity of materials used was
6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.
Edgar, Inc.’s materials quantity variance is
a. $1,200 U.
b. $1,200 F.
c. $1,320 F.
d. $1,320 U.
105. Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of
materials were purchased at $2.20 a pound. The actual quantity of materials used was
6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.
Edgar, Inc.’s total materials variance is
a. $2,400 U.
b. $2,400 F.
c. $2,520 U.
d. $2,520 F.
106. The standard quantity allowed for the units produced was 4,500 pounds, the standard
price was $2.50 per pound, and the materials quantity variance was $375 favorable. Each
unit uses 1 pound of materials. How many units were actually produced?
a. 4,350
b. 4,500
c. 11,625
d. 4,650
107. The matrix approach to variance analysis
a. will yield slightly different variances than the formula approach.
b. is more accurate than the formula approach.
c. does not separate the price and quantity variance calculations.
d. provides a convenient structure for determining each variance.
108. Labor efficiency is measured by the
a. materials quantity variance.
b. total labor variance.
c. labor quantity variance.
d. labor rate variance.
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109. An unfavorable labor quantity variance may be caused by
a. paying workers higher wages than expected.
b. misallocation of workers.
c. worker fatigue or carelessness.
d. higher pay rates mandated by union contracts.
110. The investigation of materials price variance usually begins in the
a. first production department.
b. purchasing department.
c. controller’s office.
d. accounts payable department.
111. The investigation of a materials quantity variance usually begins in the
a. production department.
b. purchasing department.
c. sales department.
d. controller’s department.
112. If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor,
the responsibility rests with the
a. sales department.
b. production department.
c. budget office.
d. controller’s department.
113. Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour.
During January, 2,000 products are produced using 6,300 direct labor hours. Monster’s
actual payroll during January was $98,280. What is the labor quantity variance?
a. $2,280 U
b. $4,800 F
c. $2,520 F
d. $4,800 U
114. A company developed the following per-unit standards for its product: 2 gallons of direct
materials at $8 per gallon. Last month, 3,000 gallons of direct materials were purchased
for $22,800. The direct materials price variance for last month was
a. $22,800 favorable.
b. $600 favorable.
c. $1,200 favorable.
d. $1,200 unfavorable.
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115. The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month,
11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000
units of product. The direct materials quantity variance for last month was
a. $4,000 favorable.
b. $3,000 favorable.
c. $4,000 unfavorable.
d. $7,000 unfavorable.
116. The per-unit standards for direct labor are 1.5 direct labor hours at $15 per hour. If in
producing 2,400 units, the actual direct labor cost was $46,000 for 3,000 direct labor
hours worked, the total direct labor variance is
a. $2,400 unfavorable.
b. $8,000 favorable.
c. $5,000 unfavorable.
d. $8,000 unfavorable.
117. The standard rate of pay is $12 per direct labor hour. If the actual direct labor payroll was
$47,040 for 4,000 direct labor hours worked, the direct labor price (rate) variance is
a. $960 unfavorable.
b. $960 favorable.
c. $1,200 unfavorable.
d. $1,200 favorable.
118. The standard number of hours that should have been worked for the output attained is
10,000 direct labor hours and the actual number of direct labor hours worked was 10,500.
If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay
was $12 per direct labor hour, what was the actual rate of pay for direct labor?
a. $11 per direct labor hour
b. $9 per direct labor hour
c. $13 per direct labor hour
d. $12 per direct labor hour
119. A company purchases 12,000 pounds of materials. The materials price variance is $6,000
favorable. What is the difference between the standard and actual price paid for the
materials?
a. $1.00
b. $.50
c. $2.00
d. $6.00
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120. A company uses 40,000 gallons of materials for which they paid $7.00 a gallon. The
materials price variance was $80,000 favorable. What is the standard price per gallon?
a. $2
b. $5
c. $7
d. $9
121. All Urban Company produces a product requiring 4 pounds of material costing $3.50 per
pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and
used the material to produce 500 products. What was the materials price variance for
December?
a. $560 F
b. $588 F
c. $112 U
d. $672 U
122. Shipp, Inc. manufactures a product requiring two pounds of direct material. During 2013,
Shipp purchases 24,000 pounds of material for $99,200 when the standard price per
pound is $4. During 2013, Shipp uses 22,000 pounds to make 12,000 products. The
standard direct material cost per unit of finished product is
a. $8.27.
b. $9.01.
c. $8.00.
d. $8.53.
123. Clark Company manufactures a product with a standard direct labor cost of two hours at
$18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per
hour. The labor quantity variance was
a. $3,660 F.
b. $3,600 U.
c. $2,460 U.
d. $3,660 U.
124. Clark Company manufactures a product with a standard direct labor cost of two hours at
$18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per
hour. The labor price variance was
a. $1,260 U.
b. $4,860 U.
c. $4,860 F.
d. $3,600 U.
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125. A company developed the following per unit materials standards for its product: 3 pounds
of direct materials at $5 per pound. If 12,000 units of product were produced last month
and 37,500 pounds of direct materials were used, the direct materials quantity variance
was
a. $4,500 favorable.
b. $7,500 unfavorable.
c. $4,500 unfavorable.
d. $7,500 favorable.
126. The standard direct labor cost for producing one unit of product is 5 direct labor hours at a
standard rate of pay of $20. Last month, 15,000 units were produced and 73,500 direct
labor hours were actually worked at a total cost of $1,350,000. The direct labor quantity
variance was
a. $30,000 unfavorable.
b. $45,000 unfavorable.
c. $45,000 favorable.
d. $30,000 favorable.
127. Atkins, Inc. produces a product requiring 8 pounds of material at $1.50 per pound. Atkins
produced 10,000 units of this product during 2013 resulting in a $30,000 unfavorable
materials quantity variance. How many pounds of direct material did Atkins use during
2013?
a. 100,000 pounds
b. 80,000 pounds
c. 160,000 pounds
d. 125,000 pounds
128. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing
2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon’s total
variance is
a. $450 F.
b. $135 U.
c. $465 U.
d. $600 U.
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129. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing
2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon’s
materials price variance is
a. $135 U.
b. $465 F.
c. $600 F.
d. $1,050 F.
130. Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing
2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon’s
materials quantity variance is
a. $135 F.
b. $465 U.
c. $600 U.
d. $1,050 U.
131. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000
units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon’s total labor
variance is
a. $1,030 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
132. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000
units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon’s labor price
variance is
a. $770 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
133. Dillon has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000
units, Dillon used 3,850 hours of labor at a total cost of $46,970. Dillon’s labor quantity
variance is
a. $770 U.
b. $770 F.
c. $1,800 F.
d. $1,930 F.
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134. Which one of the following describes the total overhead variance?
a. The difference between what was actually incurred and the flexible budget amount
b. The difference between what was actually incurred and overhead applied
c. The difference between the overhead applied and the flexible budget amount
d. The difference between what was actually incurred and the total production budget
135. Manufacturing overhead costs are applied to work in process on the basis of
a. actual hours worked.
b. standard hours allowed.
c. ratio of actual variable to fixed costs.
d. actual overhead costs incurred.
136. The total overhead variance is the difference between the
a. actual overhead costs and overhead costs applied based on standard hours allowed.
b. actual overhead costs and overhead costs applied based on actual hours.
c. overhead costs applied based on actual hours and overhead costs applied based on
standard hours allowed.
d. the actual overhead costs and the standard direct labor costs.
137. The predetermined overhead rate for Zane Company is $5, comprised of a variable
overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at
normal capacity of $150,000 was divided by normal capacity of 30,000 direct labor hours,
to arrive at the predetermined overhead rate of $5. Actual overhead for June was $9,500
variable and $6,050 fixed, and standard hours allowed for the product produced in June
was 3,000 hours. The total overhead variance is
a. $3,050 F.
b. $550 F.
c. $550 U.
d. $3,050 U.
138. The predetermined overhead rate for Zane Company is $5, comprised of a variable
overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at
normal capacity of $150,000 was divided by normal capacity of 30,000 direct labor hours,
to arrive at the predetermined overhead rate of $5. Actual overhead for June was $8,900
variable and $5,400 fixed, and 1,500 units were produced. The direct labor standard is 2
hours per unit produced. The total overhead variance is
a. $1,800 F.
b. $700 F.
c. $700 U.
d. $1,800 U.
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139. Which of the following is true?
a. The form, content, and frequency of variance reports vary considerably among
companies.
b. The form, content, and frequency of variance reports do not vary among companies.
c. The form and content of variance reports vary considerably among companies, but the
frequency is always weekly.
d. The form and content of variance reports are consistent among companies, but the
frequency varies.
140. Denmark Corporation’s variance report for the purchasing department reports 1,000 units
of material A purchased and 2,400 units of material B purchased. It also reports standard
prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for
Material A and $2.80 for Material B. Denmark should report a total price variance of
a. $380 F.
b. $340 F.
c. $340 U.
d. $380 U.
141. When is a variance considered to be ‘material’?
a. When it is large compared to the actual cost
b. When it is infrequent
c. When it is unfavorable
d. When it could have been controlled more effectively
142. Variance reports are
a. external financial reports.
b. SEC financial reports.
c. internal reports for management.
d. all of these.
143. In using variance reports, management looks for
a. total assets invested.
b. significant variances.
c. competitors’ costs in comparison to the company‘s costs.
d. more efficient ways of valuing inventories.
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144. Parnell Company prepared its income statement for internal use. How would amounts for
cost of goods sold and variances appear?
a. Cost of goods sold would be at actual costs, and variances would be reported
separately.
b. Cost of goods sold would be combined with the variances, and the net amount
reported at standard cost.
c. Cost of goods sold would be at standard costs, and variances would be reported
separately.
d. Cost of goods sold would be combined with the variances, and the net amount
reported at actual cost.
145. Alex Co. prepared its income statement for management using a standard cost
accounting system. Which of the following appears at the “standard” amount?
a. Sales
b. Selling expenses
c. Gross profit
d. Cost of goods sold
146. The costing of inventories at standard cost for external financial statement reporting
purposes is
a. not permitted.
b. preferable to reporting at actual costs.
c. in accordance with generally accepted accounting principles if significant differences
exist between actual and standard costs.
d. in accordance with generally accepted accounting principles if significant differences
do not exist between actual and standard costs.
147. Income statements prepared internally for management often show cost of goods sold at
standard cost and variances are
a. separately disclosed.
b. deducted as other expenses and revenues.
c. added to cost of goods sold.
d. closed directly to retained earnings.
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148. In Zero Company’s income statement, they report gross profit of $55,000 at standard and
the following variances:
Materials price $ 420 F
Materials quantity 600 F
Labor price 420 U
Labor quantity 1,000 F
Overhead 900 F
Zero would report actual gross profit of
a. $51,660.
b. $52,500.
c. $57,500.
d. $58,340.
149. In Zero Company’s income statement, they report actual gross profit of $52,500 and the
following variances:
Materials price $ 420 F
Materials quantity 600 F
Labor price 420 U
Labor quantity 1,000 F
Overhead 900 F
Zero would report gross profit at standard of
a. $46,660.
b. $47,500.
c. $55,000.
d. $53,340.
150. The balanced scorecard
a. incorporates financial and nonfinancial measures in an integrated system.
b. is based on financial measures.
c. is based on nonfinancial measures.
d. does not use financial or nonfinancial measures.
151. Which is not one of the four most commonly used perspectives on a balanced scorecard?
a. The financial perspective
b. The customer perspective
c. The external process perspective
d. The learning and growth perspective
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152. The balanced scorecard approach
a. uses only financial measures to evaluate performance.
b. uses rather vague, open statements when setting objectives in order to allow
managers and employees flexibility.
c. normally sets the financial objectives first, and then sets the objectives in the other
perspectives to accomplish the financial objectives.
d. evaluates performance using about 10 different perspectives in order to effectively
incorporate all areas of the organization.
153. The customer perspective of the balanced scorecard approach
a. is the most traditional view of the company.
b. evaluates the internal operating processes critical to the success of the organization.
c. evaluates how well the company develops and retains its employees.
d. evaluates the company from the viewpoint of those people who buy its products or
services.
154. The perspectives included in the balanced scorecard approach include all of the following
except the
a. internal process perspective.
b. capacity utilization perspective.
c. learning and growth perspective.
d. customer perspective.
a155. If 10,000 pounds of direct materials are purchased for $9,300 on account and the
standard cost is $.90 per pound, the journal entry to record the purchase is
a. Raw Materials Inventory ………………………………………………. 9,300
Accounts Payable ……………………………………………….. 9,300
b. Work In Process Inventory …………………………………………… 9,300
Accounts Payable ……………………………………………….. 9,000
Materials Quantity Variance …………………………………. 300
c. Raw Materials Inventory ………………………………………………. 9,300
Accounts Payable ……………………………………………….. 9,000
Materials Price Variance ………………………………………. 300
d. Raw Materials Inventory ………………………………………………. 9,000
Materials Price Variance ……………………………………………… 300
Accounts Payable ……………………………………………….. 9,300
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a156. Debit balances in variance accounts represent
a. unfavorable variances.
b. favorable variances.
c. favorable for price variances; unfavorable for quantity variances.
d. favorable for quantity variances; unfavorable for price variances.
a157. If a company purchases raw materials on account for $19,830 when the standard cost is
$18,900, it will
a. debit Materials Price Variance for $930.
b. credit Materials Price Variance for $930.
c. debit Materials Quantity Variance for $930.
d. credit Material Quantity Variance for $930.
a158. If a company issues raw materials to production at a cost of $18,900 when the standard
cost is $18,300, it will
a. debit Materials Price Variance for $600.
b. credit Materials Price Variance for $600.
c. debit Materials Quantity Variance for $600.
d. credit Material Quantity Variance for $600.
a159. If a company incurs direct labor cost of $82,000 when the standard cost is $84,000, it will
a. debit Labor Price Variance for $2,000.
b. credit Labor Price Variance for $2,000.
c. debit Labor Quantity Variance for $2,000.
d. credit Labor Quantity Variance for $2,000.
a160. If a company assigns factory labor to production at a cost of $84,000 when standard cost
is $80,000, it will
a. debit Labor Price Variance for $4,000.
b. credit Labor Price Variance for $4,000.
c. debit Labor Quantity Variance for $4,000.
d. credit Labor Quantity Variance for $4,000.
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a161. The overhead variances measure whether overhead costs
Are Effectively Managed Were Used Effectively
a. Controllable Controllable and Volume
b. Controllable Volume
c. Controllable and Volume Controllable
d. Volume Controllable
a162. The overhead volume variance is
a. actual overhead less overhead budgeted for actual hours.
b. actual overhead less overhead budgeted for standard hours allowed.
c. overhead budgeted for actual hours less applied overhead.
d. the fixed overhead rate times the difference between normal capacity hours and
standard hours allowed.
a163. Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor
hours is $6 per hour variable and $4 per hour fixed. In May, $310,000 of overhead was
incurred in working 31,500 hours when 32,000 standard hours were allowed.
The overhead controllable variance is
a. $5,000 favorable.
b. $2,000 favorable.
c. $10,000 favorable.
d. $10,000 unfavorable.
a164. Budgeted overhead for Cinnabar Industries at normal capacity of 30,000 direct labor hours
is $6 per hour variable and $4 per hour fixed. In May, $310,000 of overhead was incurred in
working 31,500 hours when 32,000 standard hours were allowed.
The overhead volume variance is
a. $8,000 favorable.
b. $11,000 favorable.
c. $5,000 favorable.
d. $10,000 favorable.
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a165. Budgeted overhead for Haft, Inc. at normal capacity of 60,000 direct labor hours is $3 per
hour variable and $2 per hour fixed. In May, $310,000 of overhead was incurred in
working 63,000 hours when 64,000 standard hours were allowed. The overhead
controllable variance is
a. $5,000 favorable.
b. $2,000 favorable.
c. $10,000 favorable.
d. $10,000 unfavorable.
a166. Budgeted overhead for Haft, Inc. at normal capacity of 60,000 direct labor hours is $3 per
hour variable and $2 per hour fixed. In May, $310,000 of overhead was incurred in
working 63,000 hours when 64,000 standard hours were allowed. The overhead volume
variance is
a. $8,000 favorable.
b. $11,000 favorable.
c. $5,000 favorable.
d. $10,000 favorable.
a167. An overhead volume variance is calculated as the difference between normal capacity
hours and standard hours allowed
a. times the total predetermined overhead rate.
b. times the predetermined variable overhead rate.
c. times the predetermined fixed overhead rate.
d. divided by actual number of hours worked.
a168. Which of the following statements is false?
a. The overhead volume variance indicates whether plant facilities were used efficiently
during the period.
b. The costs that cause the overhead volume variance are usually controllable costs.
c. The overhead volume variance relates solely to fixed costs.
d. The overhead volume variance is favorable if standard hours allowed for output are
greater than the standard hours at normal capacity.
a169. If the standard hours allowed are less than the standard hours at normal capacity,
a. the overhead volume variance will be unfavorable.
b. variable overhead costs will be underapplied.
c. the overhead controllable variance will be favorable.
d. variable overhead costs will be overapplied.
IMA: Cost Management
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a170. Which of the following statements about overhead variances is false?
a. Standard hours allowed are used in calculating the controllable variance.
b. Standard hours allowed are used in calculating the volume variance.
c. The controllable variance pertains solely to fixed costs.
d. The total overhead variance pertains to both variable and fixed costs.
a171. The overhead volume variance relates only to
a. variable overhead costs.
b. fixed overhead costs.
c. both variable and fixed overhead costs.
d. all manufacturing costs.
a172. What does the controllable variance measure?
a. Whether a company incurred more or less fixed overhead costs compared to the
amount of overhead applied
b. Whether a company incurred more or less overhead costs than allowed
c. The efficiency of using variable overhead resources
d. Whether the production manager is able to control the production facility
a173. The overhead controllable variance is calculated as the difference between actual
overhead costs incurred and the budgeted
a. overhead costs for the standard hours allowed.
b. overhead costs applied to the product.
c. overhead costs at the normal level of activity.
d. fixed overhead costs.
a174. If the standard hours allowed are less than the standard hours at normal capacity, the
volume variance
a. cannot be calculated.
b. will be favorable.
c. will be unfavorable.
d. will be greater than the controllable variance.
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a175. The budgeted overhead costs for standard hours allowed and the overhead costs applied
to the product are the same amount
a. for both variable and fixed overhead costs.
b. only when standard hours allowed are less than normal capacity.
c. for variable overhead costs.
d. for fixed overhead costs.
a176. The following information was taken from the annual manufacturing overhead cost budget
of Fergie Manufacturing.
Variable manufacturing overhead costs $92,400
Fixed manufacturing overhead costs $55,440
Normal production level in labor hours 30,800
Normal production level in units 5,775
Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual
manufacturing overhead was $151,200. Actual fixed manufacturing overhead costs
equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis
of direct labor hours. Fergie’s total overhead rate is
a. $2.40.
b. $4.00.
c. $6.40.
d. $6.53.
a177. The following information was taken from the annual manufacturing overhead cost budget
of Fergie Manufacturing.
Variable manufacturing overhead costs $92,400
Fixed manufacturing overhead costs $55,440
Normal production level in labor hours 30,800
Normal production level in units 5,775
Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual
manufacturing overhead was $151,200. Actual fixed manufacturing overhead costs
equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis
of direct labor hours. Fergie’s total overhead variance is
a. $1,680 U.
b. $6,160 U.
c. $7,840 U.
d. $22,400 U.
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a178. The following information was taken from the annual manufacturing overhead cost budget
of Fergie Manufacturing.
Variable manufacturing overhead costs $92,400
Fixed manufacturing overhead costs $55,440
Normal production level in labor hours 30,800
Normal production level in units 5,775
Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual
manufacturing overhead was $151,200. Actual fixed manufacturing overhead costs
equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis
of direct labor hours. Fergie’s controllable overhead variance is
a. $1,680 U.
b. $6,160 U.
c. $7,840 U.
d. $22,400 U.
a179. The following information was taken from the annual manufacturing overhead cost budget
of Fergie Manufacturing.
Variable manufacturing overhead costs $92,400
Fixed manufacturing overhead costs $55,440
Normal production level in labor hours 30,800
Normal production level in units 5,775
Standard labor hours per unit 4
During the year, 5,600 units were produced, 18,340 hours were worked, and the actual
manufacturing overhead was $151,200. Actual fixed manufacturing overhead costs
equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis
of direct labor hours. Fergie’s volume overhead variance is
a. $1,680 U.
b. $6,160 U.
c. $7,840 U.
d. $22,400 U.
180. All of the following are advantages of standard costs except they
a. facilitate management planning.
b. are useful in setting selling prices.
c. simplify costing in inventories.
d. increase net income.
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181. Standards based on the optimum level of performance under perfect operating conditions
are
a. attainable standards.
b. ideal standards.
c. normal standards.
d. practical standards.
182. The direct materials price standard should include an amount for all of the following
except
a. receiving costs.
b. storing costs.
c. handling costs.
d. normal spoilage costs.
183. The standard unit cost is used in the calculation of which of the following variances?
Materials Price Variance Materials Quantity Variance
a. No No
b. No Yes
c. Yes No
d. Yes Yes
184. The difference between the actual labor rate multiplied by the actual labor hours worked
and the standard labor rate multiplied by the standard labor hours is the
a. total labor variance.
b. labor price variance.
c. labor quantity variance.
d. labor efficiency variance.
185. The formula for the labor price variance is
a. (AH) x (SR) less (SH) x (SR).
b. (AH) x (AR) less (AH) x (SR).
c. (AH) x (AR) less (SH) x (SR).
d. (AH) x (SR) less (AH) x (SR).
186. Which department is usually responsible for a labor price variance attributable to
misallocation of workers?
a. Quality control
b. Purchasing
c. Engineering
d. Production
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187. In reporting variances,
a. promptness is relatively unimportant.
b. management normally investigates all variances.
c. the reports should facilitate management by exception.
d. the reports are not departmentalized.
a188. A standard cost system may be used in
Job Order Costing Process Costing
a. No No
b. Yes No
c. No Yes
d. Yes Yes
a189. The formula for computing the overhead volume variance is
a. fixed overhead rate times (actual hours less standard hours allowed).
b. variable overhead rate times (actual hours less standard hours allowed).
c. fixed overhead rate times (normal capacity hours less standard hours allowed).
d. variable overhead rate times (normal capacity hours less standard hours allowed).
a190. The overhead controllable variance is the difference between the
a. budgeted overhead based on standard hours allowed and the overhead applied to
production.
b. budgeted overhead based on standard hours allowed and budgeted overhead based
on actual hours worked.
c. actual overhead and the overhead applied to production.
d. actual overhead and budgeted overhead based on standard hours allowed.
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Answers to Multiple Choice Questions
BRIEF EXERCISES
BE 191
Seven Manufacturing Corporation uses both standards and budgets. The company estimates that
production for the year will be 100,000 units of Product Fast. To produce these units of Product
Fast, the company expects to spend $600,000 for materials and $800,000 for labor.
Instructions
Compute the estimates for (a) a standard cost and (b) a budgeted cost.