Chapter 10—Variance Analysis—A Tool for Cost Control and Performance Evaluation
MULTIPLE CHOICE
1. A budget for a single unit of a product or service is called a:
a.
fixed cost.
b.
real cost.
c.
standard cost.
d.
full cost.
2. Which of the following statements regarding the standard cost for direct materials is true?
a.
It would be used on a static budget but not a flexible budget.
b.
It would consist of two components – a standard quantity and a standard price.
c.
It must be determined after materials are purchased for the year.
d.
It can not be determined if a company uses a just-in-time inventory system.
3. Variance analysis compares:
a.
practical standards and ideal standards.
b.
static budgets and flexible budgets.
c.
standard costs and actual costs.
d.
product costs and period costs.
4. Which of the following statements is false regarding task analysis?
a.
It examines the production process in detail.
b.
It may involve the use of engineers.
c.
It emphasizes what it should cost to produce a product rather than historical costs.
d.
It uses actual historical data in the determination of current standard costs.
5. Task analysis:
a.
is used to determine the tasks that production employees should complete on a daily basis.
b.
is used to evaluate employee performance.
c.
is used to set standard costs.
d.
emphasizes the historical costs of a product.
6. A(n) ____ is attainable only when near-perfect conditions exist.
a.
practical standard
b.
ideal standard
c.
static budget
d.
favorable variance
7. In most companies, machines break down occasionally and employees are often less than perfect.
Which type of standard acknowledges these characteristics when determining the standard cost of a
product?
a.
Efficiency standard
b.
Ideal standard
c.
Practical standard
d.
Budgeted standard
8. The type of budget that budgets standard costs for the actual volume of production is a:
a.
standard budget.
b.
static budget.
c.
flexible budget.
d.
fixed budget.
NARRBEGIN: Rogers Rods & Reels
Rogers Rods & Reels Ltd.
Rogers Rods & Reels Ltd. manufactures and sells various types of fishing equipment. At the end of
2008, Rogers had estimated for the production and sale of 15,000 bass fishing rods. Each rod has a
standard calling for 1.5 pounds of direct material at a standard cost of $8.00 per pound and 15 minutes
of direct labor time at a standard cost of $.18 per minute. During 2009, Rogers actually produced and
sold 16,000 rods. These 16,000 rods had an actual direct materials cost of $179,200 (25,600 pounds at
$7.00 per pound) and an actual direct labor cost of $44,800 (224,000 minutes at $.20 per minute). Each
rod sells for $50.
NARREND
9. Refer to the Rogers Rods & Reels Ltd. information above. What is Rogers’ net income (loss) based on
a flexible budget?
a.
$579,500
b.
$564,800
c.
$576,000
d.
$590,000
Managerial ACCT Test Bank Chapter 10 3
10. Refer to the Rogers Rods & Reels Ltd. information above. What is Rogers’ flexible budget variance?
a.
$11,200 F
b.
$11,200 U
c.
$ 3,500 F
d.
$ 3,500 U
NARRBEGIN: Mary’s Fine Fashions
Mary’s Fine Fashions
Mary’s Fine Fashions manufactures and sells various types of women’s clothing. At the end of 2008,
Mary had estimated for the production and sale of 25,000 short-sleeve shirts. Each shirt has a standard
calling for 2.5 yards of direct material at a standard cost of $1.25 per yard and 12 minutes of direct
labor time at a standard cost of $.20 per minute. During 2009, the company actually produced and sold
23,000 shirts. These 23,000 shirts had an actual direct materials cost of $77,142 (59,340 yards at $1.30
per yard) and an actual direct labor cost of $63,250 (253,000 minutes at $.25 per minute). Each shirt
sells for $20.
NARREND
11. Refer to the Mary’s Fine Fashions information above. What is Mary’s net income (loss) based on a
flexible budget?
a.
$332,925
b.
$361,875
c.
$347,400
d.
$307,400
12. Refer to the Mary’s Fine Fashions information above. What is Mary’s flexible budget variance?
a.
$14,475 F
b.
$28,950 U
c.
$42,267 F
d.
$13,317 U
NARRBEGIN: Supreme Catering
Supreme Catering
At the end of January, Supreme Catering prepared the following budget for the upcoming month
of February estimating that they would serve 3,000 people:
Sales revenue per guest
$20
Variable costs per guest
8
Total fixed costs
$5,000
During February, there were 2,700 guests actually served. Actual costs incurred were $27,000 for
variable costs and $6,500 for fixed costs. Each guest was charged $20.
NARREND
Managerial ACCT Test Bank Chapter 10 4
13. Refer to the Supreme Catering information above. Supreme Catering’s flexible budget for February
would show net income of:
a.
$31,000
b.
$20,500
c.
$27,400
d.
$19,000
14. Refer to the Supreme Catering information above. Supreme Catering’s flexible budget variance for
February would show a variance of:
a.
$ 6,900 U
b.
$ 6,900 F
c.
$10,500 U
d.
$10,500 F
15. Trina makes handmade leis in Hawaii which she sells to local tourists. She anticipates August to be a
busy month with the sale of 500 leis. She has prepared the following static budget for August:
Sales revenue (500 units)
$5,000
Variable costs:
Direct materials
1,000
Direct labor
1,000
Overhead
375
Fixed costs
200
Net income
$2,425
During August, Trina actually produced and sold 400 leis. What should be Trina’s net income in
August based on a flexible budget?
a.
$1,940
b.
$1,825
c.
$1,425
d.
$1,900
16. Hathaway Inc. produces and sells golf umbrellas to local resorts. Hathaway anticipates April to be a
busy month with the sale of 1,000 umbrellas. The company has prepared the following static budget
for April:
Sales revenue (1,000 units)
$40,000
Variable costs:
Direct materials
5,000
Direct labor
6,000
Overhead
1,500
Fixed costs
4,000
Net income
$23,500
During April, Hathaway actually produced and sold 1,200 umbrellas. What should be Hathaway’s
net income in April based on a flexible budget?
a.
$29,000
b.
$28,200
c.
$31,500
d.
$29,300
17. Hoppe Inc. manufactures widgets. Management has determined that each widget has a standard
materials cost of $3.50 when 2.5 ounces of raw material at a cost of $1.40 per ounce are used. The
static budget for the month of December showed an estimated production of 4,000 widgets in
December. During December, 4,300 widgets were actually produced. The actual cost for each widget
was $3.60 when 2.25 ounces of raw material at a cost of $1.60 per ounce were purchased and used.
What should be the total direct materials cost according to Hoppe’s flexible budget for December?
a.
$14,400
b.
$15,050
c.
$14,000
d.
$15,480
18. Violetta Inc. manufactures plastic storage boxes. Management has determined that each medium-sized
box has a standard materials cost of $1.20 when 4 pounds of raw material at a cost of $.30 per pound
are used. The static budget for the month of March showed an estimated production of 15,000 boxes in
March. During March, 17,000 boxes were actually produced. The actual cost for each box was $1.56
when 3.9 pounds of raw material at a cost of $.40 per pound were purchased and used. What should be
the total direct materials cost according to Violetta’s flexible budget for March?
a.
$20,400
b.
$26,520
c.
$18,000
d.
$23,400
19. Holt Products manufactures desk-top computers. Management has determined that each computer has
a standard labor cost of $48.00 when 4 hours of labor at a cost of $12.00 per hour are used. The static
budget for the month of April showed an estimated production of 3,900 computers. During April,
4,200 computers were actually produced. The actual direct labor cost for each computer was $57.60
when 4.5 hours of labor at a cost of $12.80 per hour was used. What should be the total direct labor
cost according to Holt’s flexible budget for April?
a.
$224,640
b.
$187,200
c.
$201,600
d.
$241,920
20. Summerlin Law Offices applies overhead to clients based on direct labor hours. The office
manager determined that overhead will be applied at a rate of $25 per direct labor hour. The static
budget for the month of November showed an estimated 2,500 direct labor hours would be
incurred. During November, 2,800 direct labor hours were actually incurred and actual overhead
costs were $58,800. What should be the total overhead cost according to the firm’s flexible budget
for November?
a.
$70,000
b.
$58,800
c.
$62,500
d.
$52,500
21. The difference between operating income on a flexible budget and actual operating income is called
the:
a.
sales price variance.
b.
efficiency variance.
c.
standard variance.
d.
flexible budget variance.
22. The flexible budget variance:
a.
directs management’s attention to specific reasons for why budgeted income differed from
actual income.
b.
compares the static budget to the flexible budget.
c.
removes any differences between budgeted operating income and actual income that are
attributable to differences in budgeted and actual volume.
d.
is most often used to determine whether or not there is sufficient demand for a company’s
product.
23. Dorffman Inc. has a $12,000 favorable flexible budget variance for May. If May’s actual net income
was $68,000, which of the following statements is true?
a.
Dorffman’s static budget must have showed net income of $56,000.
b.
Dorffman’s static budget must have showed net income of $80,000.
c.
Dorffman’s flexible budget must have showed net income of $56,000.
d.
Dorffman’s flexible budget must have showed net income of $80,000.
24. Prevo Products Inc. has a $15,000 unfavorable flexible budget variance for July. If July’s actual net
income was $300,000, which of the following statements is true?
a.
Prevo’s static budget must have showed net income of $315,000.
b.
Prevo’s static budget must have showed net income of $285,000.
c.
Prevo’s flexible budget must have showed net income of $315,000.
d.
Prevo’s flexible budget must have showed net income of $285,000.
25. Taylor Products Inc. has an $8,000 unfavorable flexible budget variance for October. If October’s
flexible budget net income was $175,000, which of the following statements is true?
a.
Taylor’s static budget must have showed net income of $183,000.
b.
Taylor’s static budget must have showed net income of $167,000.
c.
Taylor’s actual net income must have been $183,000.
d.
Taylor’s actual net income must have been $167,000.
26. Smith Corp. has a $6,000 favorable flexible budget variance for January. If January’s flexible budget
net income was $100,000, which of the following statements is true?
a.
Smith’s static budget must have showed net income of $106,000.
b.
Smith’s static budget must have showed net income of $94,000.
c.
Smith’s actual net income must have been $106,000.
d.
Smith’s actual net income must have been $94,000.
27. Chapman Products has a favorable materials usage variance. Which of the following would be the
most likely reason for this variance?
a.
The company overbudgeted the quantity of material to be used for each unit.
b.
The company purchased material at a price for less than what was expected.
c.
The company’s employees were less trained than expected.
d.
The company’s machines were better maintained resulting in less waste of materials.
28. Miller Company has an unfavorable materials price variance. Which of the following would be the
least likely reason for this variance?
a.
The company purchased a higher quality material than was budgeted.
b.
The company did not take advantage of purchase discounts.
c.
The company used more material than was budgeted for in each unit.
d.
The company underbudgeted the standard price for materials.
29. For purposes of the calculation for the direct materials price variance, when the quantity of materials
purchased and used are different, which quantity of materials is relevant?
a.
Standard quantity allowed
b.
Actual quantity purchased
c.
Actual quantity used
d.
The lower of the standard quantity allowed or actual quantity purchased
30. For purposes of the calculation for the direct materials usage variance when the quantity of materials
purchased and used are different, which quantity of materials is relevant?
a.
Actual quantity purchased
b.
Actual quantity used
c.
The lower of the standard quantity allowed or actual quantity purchased
d.
The lower of the actual quantity used or actual quantity purchased
31. Byron Products has a favorable materials price variance. Which of the following would be the least
likely reason for this variance?
a.
The company overbudgeted the standard price for materials.
b.
The company took advantage of purchase discounts from their suppliers.
c.
The company’s employees were more efficient with the use of their production time.
d.
The company purchased a substandard material at a cheaper price.
32. Lukey Products has an unfavorable materials usage variance. Which of the following would be the
most likely reason for this variance?
a.
The company underbudgeted the quantity of material to be used for each unit.
b.
The company purchased material at a price for less than what was expected.
c.
The company budgeted for a lower sales volume than what actually occurred.
d.
The company did not use up all the material that had been purchased.
33. Tulley Manufacturing has an unfavorable direct labor rate variance. Which of the following would be
the most likely reason for this variance?
a.
The company used lower-paid workers than they had expected.
b.
Employees took a longer amount of time to produce the product than expected.
c.
The company gave employees an unexpected raise due to union negotiations.
d.
Employees used more direct materials in the production process than expected.
34. Bukowitz Inc. has a favorable direct labor rate variance. Which of the following would be the most
likely reason for this variance?
a.
The company used lower-paid workers in the production process more than they had
expected.
b.
Employees took a shorter amount of time to produce the product than expected.
c.
The company used a standard direct labor rate that was too low.
d.
Employees used less direct materials in the production process than expected.
35. Dabney Inc. has a favorable direct labor efficiency variance. Which of the following would be the
most likely reason for this variance?
a.
The company used lower-paid workers in the production process more than they had
expected.
b.
Employees took a shorter amount of time to produce the product than expected.
c.
The company used a standard direct labor rate that was too low.
d.
Employees used less direct materials in the production process than expected.
NARRBEGIN: Coppelli Inc.
Coppelli Inc.
In early 2009, Coppelli Inc. had budgeted for the production and sale of 24,000 units. The standard
sales price and variable cost per unit were budgeted to be $6.00 and $2.00, respectively. Actual sales
for 2009 totaled 25,300 units, and the actual sales price and variable cost per unit were $6.50 and
$2.10, respectively. Both budgeted and actual fixed costs were $30,000.
NARREND
36. Refer to the Coppelli Inc. information above. What was Coppelli’s sales price variance for 2009?
a.
$12,650 F
b.
$12,650 U
c.
$12,000 F
d.
$12,000 U
NARRBEGIN: Fox Manufacturing
Fox Manufacturing
At the beginning of the year, Fox Manufacturing had budgeted for the production and sale of 84,000
units. The standard sales price and variable cost per unit were budgeted to be $25.00 and $10.00,
respectively. Actual sales for the year totaled 81,000 units, and the actual sales price and variable cost
per unit were $24.00 and $10.00, respectively. Both budgeted and actual fixed costs were $75,000.
NARREND
37. Refer to the Fox Manufacturing information above. What was Fox’s sales price variance for the year?
a.
$81,000 F
b.
$81,000 U
c.
$84,000 F
d.
$84,000 U
38. Differences in sales revenue between the flexible budget and actual results can be attributable to:
a.
the sales volume variance.
b.
the flexible budget variance.
c.
the sales price variance.
d.
the variable overhead efficiency variance.
39. Martin Corp. had an unfavorable sales price variance of $4,800 for 2009. Martin had budgeted for
sales of 10,000 units at a sales price of $5 each. Actual sales in 2009 totaled 12,000 units. What was
the actual sales price per unit?
a.
$5.40
b.
$4.60
c.
$4.52
d.
$5.48
NARRBEGIN: JAX Inc.
JAX Inc.
In early 2009, JAX Inc. had budgeted for the production and sales of 6,000 units at a sales price of $20
per unit. The following information is available regarding the standard cost for each unit:
Direct materials:
2 pounds at $3.00 per lb
Direct labor:
30 minutes of assembly at $.25 per minute
Actual results for 2009 were determined to be as follows:
Number of units produced
and sold:
6,800 units
Sales revenue:
$149,600 ($22 per unit)
Direct materials cost:
$ 43,384 (14,960 lbs purchased and used at $2.90 per lb)
Direct labor cost:
$ 59,024 (210,800 minutes at $.28 per minute)
NARREND
40. Refer to the JAX Inc. information above. What was JAX Inc.’s sales price variance for 2009?
a.
$29,600 F
b.
$29,600 U
c.
$13,600 F
d.
$13,600 U
41. Refer to the JAX Inc. information above. What was JAX Inc.’s direct materials price variance for
2009?
a.
$1,496 F
b.
$1,496 U
c.
$1,360 F
d.
$1,360 U
42. Refer to the JAX Inc. information above. What was JAX Inc.’s direct materials usage variance for
2009?
a.
$4,080 F
b.
$4,080 U
c.
$2,584 F
d.
$2,584 U
43. Refer to the JAX Inc. information above. What was JAX Inc.’s direct labor rate variance for 2009?
a.
$1,904 F
b.
$1,904 U
c.
$6,324 F
d.
$6,324 U
44. Refer to the JAX Inc. information above. What was JAX Inc.’s direct labor efficiency variance for
2009?
a.
$1,700 F
b.
$1,700 U
c.
$6,120 F
d.
$6,120 U
NARRBEGIN: Carlton Corporation
Carlton Corporation
Carlton Corporation produces and sells faux-leather handbags. In the current year, the company
budgeted for the production and sale of 1,000 handbags; however, 900 handbags were actually
produced and sold. Each bag has a standard requiring two yards of material at a cost of $4.00 per yard
and 1 hour of assembly time at a cost of $9.50 per hour. Actual costs for the production of 900 bags
were $7,215 for materials (1,850 yards purchased and used @ $3.90 per yard) and $10,125 for labor
(1,125 hours @ $9.00 per hour).
NARREND
45. Refer to the Carlton Corporation information above. Carlton’s direct materials price variance is:
a.
$195 U
b.
$ 15 U
c.
$185 F
d.
$180 F
46. Refer to the Carlton Corporation information above. Carlton’s direct materials usage variance is:
a.
$585 U
b.
$600 U
c.
$195 F
d.
$200 U
47. Refer to the Carlton Corporation information above. Carlton’s direct labor rate variance is:
a.
$562.50 F
b.
$562.50 U
c.
$450.00 F
d.
$450.00 U
48. Refer to the Carlton Corporation information above. Carlton’s direct labor efficiency variance is:
a.
$ 562.50 F
b.
$2,137.50 U
c.
$1,187.50 U
d.
$2,025.00 F
NARRBEGIN: Moreland Manufacturing
Moreland Manufacturing Inc.
Moreland Manufacturing Inc. produces and sells stainless steel faucets. In the current year, the
company had budgeted for the production and sale of 6,000 faucets but, due to unexpected demand,
7,000 faucets were actually produced and sold. Each faucet has a standard requiring 15 ounces of
direct material at a cost of $.40 per ounce and 15 minutes of assembly time at a cost of $.20 per
minute. Actual costs for the production of 7,000 faucets were $41,359.50 for materials (106,050
ounces purchased and used @ $.39 per ounce) and $21,560 for labor (98,000 minutes @ $.22 per
minute).
NARREND
49. Refer to the Moreland Manufacturing Inc. information above. Moreland’s direct materials price
variance is:
a.
$1,050.00 F
b.
$1,050.00 U
c.
$1,060.50 F
d.
$1,060.50 U
50. Refer to the Moreland Manufacturing Inc. information above. Moreland’s direct materials usage
variance is:
a.
$ 420 U
b.
$ 420 F
c.
$6,420 U
d.
$6,420 F
51. Refer to the Moreland Manufacturing Inc. information above. Moreland’s direct labor rate variance is:
a.
$2,100 F
b.
$1,800 F
c.
$1,960 U
d.
$ 560 U
52. Refer to the Moreland Manufacturing Inc. information above. Moreland’s direct labor efficiency
variance is:
a.
$1,600 U
b.
$1,400 F
c.
$2,100 U
d.
$2,100 F
NARRBEGIN: Paw-Paw Products
Paw-Paw Products
Paw-Paw Products produces and sells flannel covered dogbeds. In the current year, Paw-Paw had
expected to sell 8,000 beds but actually produced and sold 8,500 beds. The following information is
available regarding the standard cost to produce a single dogbed:
Direct materials:
5 yards at $1.50 per yard
Direct labor:
40 minutes at $.20 per minute
In the current year, 44,000 yards of material were purchased and used at a cost of $1.60 per yard and
365,500 direct labor minutes were incurred at a cost of $.23 per minute.
NARREND
53. Refer to the Paw-Paw Products information above. The company’s direct material price variance for
the current year was:
a.
$4,250 F
b.
$6,650 U
c.
$4,400 U
d.
$3,750 F
54. Refer to the Paw-Paw Products information above. The company’s direct material usage variance for
the current year was:
a.
$3,750 U
b.
$2,250 U
c.
$6,000 U
d.
$6,650 U
55. Refer to the Paw-Paw Products information above. The company’s direct labor rate variance for the
current year was:
a.
$ 2,550 F
b.
$10,200 F
c.
$10,965 U
d.
$16,065 U
56. Refer to the Paw-Paw Products information above. The company’s direct labor efficiency variance for
the current year was:
a.
$ 5,100 U
b.
$ 9,100 U
c.
$ 5,865 F
d.
$20,065 F
NARRBEGIN: Meow Products Ltd.
Meow Products Ltd.
Meow Products Ltd. produces and sells scratching posts for cats. In the current year, the company had
expected to sell 12,000 posts but actually produced and sold 10,000 posts. The following information
is available regarding the standard cost to produce a single post:
Direct materials:
3 feet @ 1.75 per foot
Direct labor:
15 minutes @ $.30 per minute
In the current year, 38,000 feet of material were purchased out of which 35,000 feet were used at a cost
of $1.55 per foot, and 160,000 direct labor minutes were incurred at a cost of $.32 per minute.
NARREND
57. Refer to the Meow Products Ltd. information above. The company’s direct materials price variance
for the current year was:
a.
$2,350 F
b.
$7,600 F
c.
$7,000 U
d.
$4,100 U
58. Refer to the Meow Products Ltd. information above. The company’s direct materials usage variance
for the current year was:
a.
$14,000 F
b.
$ 1,750 F
c.
$ 3,500 U
d.
$ 8,750 U
59. Refer to the Meow Products Ltd. information above. The company’s direct labor rate variance for the
current year was:
a.
$ 200 F
b.
$ 200 U
c.
$3,200 F
d.
$3,200 U
60. Refer to the Meow Products Ltd. information above. The company’s direct labor efficiency variance
for the current year was:
a.
$ 3,000 U
b.
$ 3,000 F
c.
$12,000 U
d.
$12,000 F
NARRBEGIN: Chile Products Ltd.
Chilé Products Ltd.
Chilé Products Ltd. bottles and sells hot pepper sauce. In 2009, the company had expected to sell
60,000 bottles but actually bottled and sold 70,000 bottles. The standard direct materials cost for each
bottle is $.28 comprised of .80 ounces at a cost of $.35 per ounce. During 2009, 68,000 ounces of
material were purchased out of which 55,000 ounces were used at a cost of $.32 per ounce.
NARREND
61. Refer to the Chilé Products Ltd. information above. The direct materials price variance for 2009 was:
a.
$2,040 F
b.
$2,040 U
c.
$1,650 F
d.
$1,650 U
62. Refer to the Chilé Products Ltd. information above. The direct materials usage variance for 2009 was:
a.
$ 350 F
b.
$ 350 U
c.
$4,200 F
d.
$4,200 U
NARRBEGIN: Mystic Falls Inc.
Mystic Falls Inc.
Mystic Falls Inc. bottles and sells a popular soft drink. In 2009, the company had expected to sell
1,000,000 bottles but actually bottled and sold 900,000 bottles. The standard direct materials cost for
each bottle is $.40 comprised of 10 ounces at a cost of $.04 per ounce. During 2009, 10,000,000
ounces of material were purchased out of which 9,200,000 ounces were used at a cost of $.05 per
ounce.
NARREND
63. Refer to the Mystic Falls Inc. information above. The direct materials price variance for 2009 was:
a.
$ 92,000 U
b.
$ 92,000 F
c.
$100,000 U
d.
$100,000 F
64. Refer to the Mystic Falls Inc. information above. The direct materials usage variance for 2009 was:
a.
$ 8,000 U
b.
$ 8,000 F
c.
$40,000 U
d.
$40,000 F
65. Peterson Inc. uses direct labor hours as the cost driver for variable overhead. In order to calculate the
variable overhead spending variance, which of the following items does not need to be known?
a.
Actual overhead costs
b.
Actual direct labor hours
c.
Standard variable overhead rate per direct labor hour
d.
Standard direct labor hours allowed
66. Bellow Ltd. uses direct labor hours as the cost driver for variable overhead. In order to calculate the
variable overhead efficiency variance, which of the following items does not need to be known?
a.
Actual overhead costs
b.
Actual direct labor hours
c.
Standard variable overhead rate per direct labor hour
d.
Standard direct labor hours allowed
67. The variable overhead efficiency variance:
a.
is interpreted in the same manner as the direct labor efficiency variance.
b.
measures the efficient use of factory utilities, factory maintenance, and factory supplies.
c.
measures the efficient use of the cost driver used in the flexible budget.
d.
measures the efficient use of direct materials.
NARRBEGIN: Sampson Apparel Inc.
Sampson Apparel Inc.
Sampson Apparel Inc. incurred actual variable overhead expenses of $62,000 in the current year for
the production of 10,000 units. Variable overhead was applied at a rate of $2.00 per direct labor hour
and 3 direct labor hours were budgeted for each unit. The company used 29,000 direct labor hours for
production.
NARREND
68. Refer to the Sampson Apparel Inc. information above. What was Sampson’s variable overhead
spending variance?
a.
$4,000 U
b.
$4,000 F
c.
$2,000 U
d.
$2,000 F
69. Refer to the Sampson Apparel Inc. information above. What was Sampson’s variable overhead
efficiency variance?
a.
$4,000 U
b.
$4,000 F
c.
$2,000 U
d.
$2,000 F
NARRBEGIN: Latimer Textiles
Latimer Textiles Inc.
Latimer Textiles Inc. incurred actual variable overhead expenses of $27,000 in the current year for the
production of 8,000 units. Variable overhead was applied at a rate of $1.75 per direct labor hour and 2
direct labor hours were budgeted for each unit. The company used 17,400 direct labor hours for
production.
NARREND
70. Refer to the Latimer Textiles Inc. information above. What was Latimer’s variable overhead spending
variance?
a.
$3,450 U
b.
$3,450 F
c.
$2,450 U
d.
$2,450 F
71. Refer to the Latimer Textiles Inc. information above. What was Latimer’s variable overhead efficiency
variance?
a.
$3,450 U
b.
$3,450 F
c.
$2,450 U
d.
$2,450 F