Deck 18: Standard Costing and Variance Analysis 2: Further Aspects

Question 1

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: During April, the following actual production information was provided:
Refer to Figure 18-4. What is the materials mix variance?

A) £5,000 (F)
B) £10,000 (U)
C) £10,000 (F)
D) £15,000 (F)

Answer 1

B

Question 2

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: During April, the following actual production information was provided:
Refer to Figure 18-4. What is the materials yield variance?

A) £4,000 (F)
B) £8,000 (F)
C) £8,000 (U)
D) £9,000 (U)

Answer 2

C

Question 3

Figure 18-2
Allende Company has developed capacity standards. Information is as follows for a value-added activity:
Refer to Figure 18-2. The unused capacity variance is

A) £20,000 favourable.
B) £40,000 favourable.
C) £60,000 favourable.
D) There is no variance.

Answer 3

C

Question 4

When should variances be investigated?

A) when they fall out of the accepted range or the control limit
B) when the variances are unfavourable
C) when the variances are over £10,000
D) All variances should be investigated.

Question 5

Figure 18-3
Pippen Company's activity-based performance report revealed that actual inspection costs totaled £100,000 at an actual activity level of 50 inspections. Further analysis of inspection costs revealed the following: Fixed inspection costs consist of the salaries of two inspectors, who are paid £14,250. Each inspector is capable of efficiently conducting inspections of 30 batches.
Variable inspection costs consist of materials used during the inspections.
Refer to Figure 18-3. The volume variance is

A) £26,250 U.
B) £26,250 F.
C) £28,500 U.
D) £28,500 F.

Question 6

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: During April, the following actual production information was provided:
Refer to Figure 18-4. What is the materials usage variance?

A) £10,000 (U)
B) £ 8,000 (U)
C) £ 8,000 (F)
D) £18,000 (U)

Question 7

When should a variance be investigated?

Question 8

Figure 18-3
Pippen Company's activity-based performance report revealed that actual inspection costs totaled £100,000 at an actual activity level of 50 inspections. Further analysis of inspection costs revealed the following: Fixed inspection costs consist of the salaries of two inspectors, who are paid £14,250. Each inspector is capable of efficiently conducting inspections of 30 batches.
Variable inspection costs consist of materials used during the inspections.
Refer to Figure 18-3. The fixed spending variance is

A) £1,500 U.
B) £1,500 F.
C) £2,100 U.
D) £2,100 F.

Question 9

Roberts Company uses a standard costing system. The following information pertains to direct materials for the month of July: Roberts Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?

Question 10

Figure 18-1
Froelech Company has developed capacity standards. Information is as follows:
Refer to Figure 18-1. The volume variance is

A) £20,000 unfavourable.
B) £30,000 unfavourable.
C) £50,000 unfavourable.
D) There is no variance.

Question 11

Laune Co.'s standard cost is £200,000, and its allowable deviation is £20,000. Laune's upper and lower control limits are

A) £220,000 and £200,000.
B) £200,000 and £180,000.
C) £220,000 and £180,000.
D) £210,000 and £190,000.

Question 12

Figure 18-1
Froelech Company has developed capacity standards. Information is as follows:
Refer to Figure 18-1. The unused capacity variance is

A) £20,000 favourable.
B) £30,000 favourable.
C) £50,000 favourable.
D) There is no variance.