Deck 13: Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Question 1

A(n)___________ is attainable only when near-perfect conditions exist.

A) practical standard
B) ideal standard
C) static budget
D) favourable variance

Answer 1

B

Question 2

What is Rogers' flexible budget variance?

A) $11 200 F
B) $11 200 U
C) $ 3500 F
D) $ 3500 U

Answer 2

A

Question 3

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

Answer 3

C

Question 4

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.

Question 5

Hathaway Inc.produces and sells golf umbrellas to local resorts.Hathaway anticipates April to be a busy month with the sale of 1000 umbrellas.The company has prepared the following static budget for April:
$\begin{array}{lr} \text {Sales revenue (1000 units) } &\$5000\\ \text { Variable costs:} &\\ \text { Direct materials } &5000\\ \text { Direct labour} &6000\\ \text { Overhead } &1500\\ \text { Fixed costs} &\underline{4000}\\ \text { Net income}&\underline{\$23500}\end{array}$

During April,Hathaway actually produced and sold 1200 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

Question 6

Hoppe Inc.manufactures widgets.Management has determined that each widget has a standard materials cost of $3.50 when 2.5 grams of raw material at a cost of $1.40 per gram are used.The static budget for the month of December showed an estimated production of 4000 widgets in December.During December,4300 widgets were actually produced.The actual cost for each widget was $3.60 when 2.25 grams of raw material at a cost of $1.60 per gram 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

Question 7

What is Mary's flexible budget variance?

A) $14 475 F
B) $28 950 U
C) $42 267 F
D) $13 317 U

Question 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.

Question 9

Holt Products manufactures desk-top computers.Management has determined that each computer has a standard labour cost of $48.00 when 4 hours of labour at a cost of $12.00 per hour are used.The static budget for the month of April showed an estimated production of 3900 computers.During April,4200 computers were actually produced.The actual direct labour cost for each computer was $57.60 when 4.5 hours of labour at a cost of $12.80 per hour was used.What should be the total direct labour cost according to Holt's flexible budget for April?

A) $224 640
B) $187 200
C) $201 600
D) $241 920

Question 10

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.

Question 11

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:
$\begin{array}{lr} \text {Sales revenue (500 units) } &\$5000\\ \text { Variable costs:} &\\ \text { Direct materials } &1000\\ \text { Direct labour} &1000\\ \text { Overhead } &375\\ \text { Fixed costs} &\underline{200}\\ \text { Net income}&\underline{\$2425}\end{array}$

During August,Trina actually produced and sold 400 leis.What should be Trina's net income in August based on a flexible budget?

A) $1940
B) $1825
C) $1425
D) $1900

Question 12

Violetta Inc.in the US 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

Question 13

Supreme Catering
At the end of January, Supreme Catering prepared the following budget for the upcoming month of February estimating that they would serve 3000 people:
$\begin{array}{lr} \text { Sales revenue per guest } &\$20\\ \text { Variable costs per guest} &8\\ \text { Total fixed costs } &\$5000\\\end{array}$

During February, there were 2700 guests actually served. Actual costs incurred were $27 000 for variable costs and $6500 for fixed costs. Each guest was charged $20.

-Supreme Catering's flexible budget for February would show net income of:

A) $31 000
B) $20 500
C) $27 400
D) $19 000

Question 14

What is Mary's net income (loss)based on a flexible budget?

A) $332 925
B) $361 875
C) $347 400
D) $307 400

Question 15

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 emphasises 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.

Question 16

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) emphasises the historical costs of a product.

Question 17

Supreme Catering
At the end of January, Supreme Catering prepared the following budget for the upcoming month of February estimating that they would serve 3000 people:
$\begin{array}{lr} \text { Sales revenue per guest } &\$20\\ \text { Variable costs per guest} &8\\ \text { Total fixed costs } &\$5000\\\end{array}$

During February, there were 2700 guests actually served. Actual costs incurred were $27 000 for variable costs and $6500 for fixed costs. Each guest was charged $20.

-Supreme Catering's flexible budget variance for February would show a variance of:

A) $ 6900 U
B) $ 6900 F
C) $10 500 U
D) $10 500 F

Question 18

Summerlin Law Offices applies overhead to clients based on direct labour hours.The office manager determined that overhead will be applied at a rate of $25 per direct labour hour.The static budget for the month of November showed an estimated 2500 direct labour hours would be incurred.During November,2800 direct labour 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

Question 19

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.

Question 20

What is Rogers' net income (loss)based on a flexible budget?

A) $579 500
B) $564 800
C) $576 000
D) $590 000

Question 21

Miller Company has an unfavourable 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.

Question 22

Prevo Products Inc.has a $15 000 unfavourable 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.

Question 23

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

Question 24

Lukey Products has an unfavourable 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.

Question 25

Tulley Manufacturing has an unfavourable direct labour 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.

Question 26

JAX Inc.
In early 2009, US company JAX Inc. had budgeted for the production and sales of 6000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:
Number of units produced
$\begin{array}{ll}\quad \text { and sold: } & 6800 \text { units } \\\text { Sales revenue: } & \$ 149600(\$ 22 \text { per unit) } \\\text { Direct materials cost: } & \$ 43384(14960 \text { lbs purchased and used at } \$ 2.90 \text { per lb) } \\\text { Direct labour cost: } & \$ 59024(210800 \text { minutes at } \$ .28 \text { per minute })\end{array}$

-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

Question 27

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.

Question 28

Bukowitz Inc.has a favourable direct labour 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 labour rate that was too low.
D) Employees used less direct materials in the production process than expected.

Question 29

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.

Question 30

Chapman Products has a favourable 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.

Question 31

Dabney Inc.has a favourable direct labour 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 labour rate that was too low.
D) Employees used less direct materials in the production process than expected.

Question 32

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

Question 33

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.

Question 34

Taylor Products Inc.has an $8000 unfavourable 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.

Question 35

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

Question 36

Martin Corp.had an unfavourable sales price variance of $4800 for 2009.Martin had budgeted for sales of 10 000 units at a sales price of $5 each.Actual sales in 2009 totalled 12 000 units.What was the actual sales price per unit?

A) $5.40
B) $4.60
C) $4.52
D) $5.48

Question 37

Byron Products has a favourable 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.

Question 38

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

Question 39

Dorffman Inc.has a $12 000 favourable 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.

Question 40

Smith Corp.has a $6 000 favourable 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.

Question 41

Carlton's direct labour rate variance is:

A) $562.50 F
B) $562.50 U
C) $450.00 F
D) $450.00 U

Question 42

Meow Products Ltd.
Meow Products Ltd. in the US 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:
$\begin{array}{ll}\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \\\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }\end{array}$
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 labour minutes were incurred at a cost of $.32 per minute.

-The company's direct materials usage variance for the current year was:

A) $14 000 F
B) $ 1750 F
C) $ 3500 U
D) $ 8750 U

Question 43

Moreland's direct materials usage variance is:

A) $ 420 U
B) $ 420 F
C) $6420 U
D) $6420 F

Question 44

The company's direct material usage variance for the current year was:

A) $3750 U
B) $2250 U
C) $6000 U
D) $6650 U

Question 45

Meow Products Ltd.
Meow Products Ltd. in the US 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:
$\begin{array}{ll}\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \\\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }\end{array}$
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 labour minutes were incurred at a cost of $.32 per minute.

-The company's direct labour efficiency variance for the current year was:

A) $ 3000 U
B) $ 3000 F
C) $12 000 U
D) $12 000 F

Question 46

Moreland's direct materials price variance is:

A) $1050.00 F
B) $1050.00 U
C) $1060.50 F
D) $1060.50 U

Question 47

Meow Products Ltd.
Meow Products Ltd. in the US 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:
$\begin{array}{ll}\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \\\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }\end{array}$
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 labour minutes were incurred at a cost of $.32 per minute.

-The company's direct labour rate variance for the current year was:

A) $ 200 F
B) $ 200 U
C) $3200 F
D) $3200 U

Question 48

Carlton's direct materials price variance is:

A) $195 U
B) $ 15 U
C) $185 F
D) $180 F

Question 49

Meow Products Ltd.
Meow Products Ltd. in the US 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:
$\begin{array}{ll}\text { Direct materials: } & 3 \text { feet } @ 1.75 \text { per foot } \\\text { Direct labour: } & 15 \text { minutes } @ \$ .30 \text { per minute }\end{array}$
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 labour minutes were incurred at a cost of $.32 per minute.



-The company's direct materials price variance for the current year was:

A) $2350 F
B) $7600 F
C) $7000 U
D) $4100 U

Question 50

The company's direct material price variance for the current year was:

A) $4250 F
B) $6650 U
C) $4400 U
D) $3750 F

Question 51

Carlton's direct labour efficiency variance is:

A) $ 562.50 F
B) $2 137.50 U
C) $1 187.50 U
D) $2 025.00 F

Question 52

JAX Inc.
In early 2009, US company JAX Inc. had budgeted for the production and sales of 6000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:
Number of units produced
$\begin{array}{ll}\quad \text { and sold: } & 6800 \text { units } \\\text { Sales revenue: } & \$ 149600(\$ 22 \text { per unit) } \\\text { Direct materials cost: } & \$ 43384(14960 \text { lbs purchased and used at } \$ 2.90 \text { per lb) } \\\text { Direct labour cost: } & \$ 59024(210800 \text { minutes at } \$ .28 \text { per minute })\end{array}$

-What was JAX Inc.'s direct labour efficiency variance for 2009?

A) $1700 F
B) $1700 U
C) $6120 F
D) $6120 U

Question 53

Moreland's direct labour efficiency variance is:

A) $1600 U
B) $1400 F
C) $2100 U
D) $2100 F

Question 54

The company's direct labour rate variance for the current year was:

A) $ 2550 F
B) $10 200 F
C) $10 965 U
D) $16 065 U

Question 55

JAX Inc.
In early 2009, US company JAX Inc. had budgeted for the production and sales of 6000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:
Number of units produced
$\begin{array}{ll}\quad \text { and sold: } & 6800 \text { units } \\\text { Sales revenue: } & \$ 149600(\$ 22 \text { per unit) } \\\text { Direct materials cost: } & \$ 43384(14960 \text { lbs purchased and used at } \$ 2.90 \text { per lb) } \\\text { Direct labour cost: } & \$ 59024(210800 \text { minutes at } \$ .28 \text { per minute })\end{array}$

-What was JAX Inc.'s direct materials usage variance for 2009?

A) $4080 F
B) $4080 U
C) $2584 F
D) $2584 U

Question 56

JAX Inc.
In early 2009, US company JAX Inc. had budgeted for the production and sales of 6000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:
Number of units produced
$\begin{array}{ll}\quad \text { and sold: } & 6800 \text { units } \\\text { Sales revenue: } & \$ 149600(\$ 22 \text { per unit) } \\\text { Direct materials cost: } & \$ 43384(14960 \text { lbs purchased and used at } \$ 2.90 \text { per lb) } \\\text { Direct labour cost: } & \$ 59024(210800 \text { minutes at } \$ .28 \text { per minute })\end{array}$

-What was JAX Inc.'s direct labour rate variance for 2009?

A) $1904 F
B) $1904 U
C) $6324 F
D) $6324 U

Question 57

The company's direct labour efficiency variance for the current year was:

A) $ 5100 U
B) $ 9100 U
C) $ 5865 F
D) $20 065 F

Question 58

JAX Inc.
In early 2009, US company JAX Inc. had budgeted for the production and sales of 6000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:
Number of units produced
$\begin{array}{ll}\quad \text { and sold: } & 6800 \text { units } \\\text { Sales revenue: } & \$ 149600(\$ 22 \text { per unit) } \\\text { Direct materials cost: } & \$ 43384(14960 \text { lbs purchased and used at } \$ 2.90 \text { per lb) } \\\text { Direct labour cost: } & \$ 59024(210800 \text { minutes at } \$ .28 \text { per minute })\end{array}$

-What was JAX Inc.'s direct materials price variance for 2009?

A) $1496 F
B) $1496 U
C) $1360 F
D) $1360 U

Question 59

Moreland's direct labour rate variance is:

A) $2100 F
B) $1800 F
C) $1960 U
D) $ 560 U

Question 60

Carlton's direct materials usage variance is:

A) $585 U
B) $600 U
C) $195 F
D) $200 U

Question 61

Armstrong's fixed overhead volume variance is:

A) $2000
B) $6000
C) $8000
D) $ 0

Question 62

Which of the following variances is generally not reported as being favourable or unfavourable?

A) Variable overhead efficiency variance
B) Direct labour rate variance
C) Fixed overhead volume variance
D) Direct materials usage variance

Question 63

The variable overhead efficiency variance:

A) is interpreted in the same manner as the direct labour 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.

Question 64

Hayward Inc.
Hayward Inc. produces a unique item. Hayward’s management team wishes to perform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labour hours as its cost driver. The company’s managerial accountant has compiled the following information:
$\begin{array}{l}\begin{array}{lr}\underline{\text { Projected data: }}\\\text { Estimated direct labour hours } & 50000 \text { hours } \\\text { Estimated fixed overhead } & \$ 75000\end{array}\\\\\underline{\text { Actual data:} }\\\begin{array}{lr}\text { Actual production } & 104000 \text { units } \\\text { Actual direct labour hours used } & 52000 \text { hours } \\\text { Actual fixed overhead } & \$ 80000\end{array}\end{array}$


-Hayward's fixed overhead spending variance is:

A) $2000 F
B) $2000 U
C) $5000 F
D) $5000 U

Question 65

What was Sampson's variable overhead spending variance?

A) $4000 U
B) $4000 F
C) $2000 U
D) $2000 F

Question 66

The fixed overhead volume variance is calculated by taking the difference between:

A) actual fixed overhead and budgeted fixed overhead.
B) budgeted fixed overhead and budgeted variable overhead.
C) budgeted fixed overhead and applied fixed overhead.
D) budgeted fixed overhead per the flexible budget and budgeted fixed overhead per the static budget.

Question 67

What was Latimer's variable overhead efficiency variance?

A) $3450 U
B) $3450 F
C) $2450 U
D) $2450 F

Question 68

Peterson Inc.uses direct labour 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 labour hours
C) Standard variable overhead rate per direct labour hour
D) Standard direct labour hours allowed

Question 69

The direct materials usage variance for 2009 was:

A) $ 350 F
B) $ 350 U
C) $4200 F
D) $4200 U

Question 70

The direct materials price variance for 2009 was:

A) $2040 F
B) $2040 U
C) $1650 F
D) $1650 U

Question 71

The direct materials usage variance for 2009 was:

A) $ 8000 U
B) $ 8000 F
C) $40 000 U
D) $40 000 F

Question 72

Atkinson Landscaping
Atkinson Landscaping applies variable overhead based on direct labour hours. At the beginning of the current year, Atkinson had estimated the following:
$\begin{array}{lr}\text { Estimated variable overhead } & \$ 56000 \\\text { Estimated units of production } & 10000 \text { units } \\\text { Standard direct labour hours per unit } & 2.5 \text { hours }\end{array}$
During the year, 11 000 units were produced using a total of 27 200 direct labour hours and actual overhead costs were $60 000.

-Atkinson's variable overhead spending variance for the year was:

A) $ 672 F
B) $ 928 F
C) $4000 U
D) $ 145 U

Question 73

What was Sampson's variable overhead efficiency variance?

A) $4000 U
B) $4000 F
C) $2000 U
D) $2000 F

Question 74

Armstrong's fixed overhead spending variance is:

A) $8000 F
B) $8000 U
C) $2000 F
D) $2000 U

Question 75

Bellow Ltd.uses direct labour 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 labour hours
C) Standard variable overhead rate per direct labour hour
D) Standard direct labour hours allowed

Question 76

Hayward Inc.
Hayward Inc. produces a unique item. Hayward’s management team wishes to perform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labour hours as its cost driver. The company’s managerial accountant has compiled the following information:
$\begin{array}{l}\begin{array}{lr}\underline{\text { Projected data: }}\\\text { Estimated direct labour hours } & 50000 \text { hours } \\\text { Estimated fixed overhead } & \$ 75000\end{array}\\\\\underline{\text { Actual data:} }\\\begin{array}{lr}\text { Actual production } & 104000 \text { units } \\\text { Actual direct labour hours used } & 52000 \text { hours } \\\text { Actual fixed overhead } & \$ 80000\end{array}\end{array}$


-Hayward's fixed overhead volume variance is:

A) $5000
B) $2000
C) $3000
D) $2500

Question 77

Atkinson Landscaping
Atkinson Landscaping applies variable overhead based on direct labour hours. At the beginning of the current year, Atkinson had estimated the following:
$\begin{array}{lr}\text { Estimated variable overhead } & \$ 56000 \\\text { Estimated units of production } & 10000 \text { units } \\\text { Standard direct labour hours per unit } & 2.5 \text { hours }\end{array}$
During the year, 11 000 units were produced using a total of 27 200 direct labour hours and actual overhead costs were $60 000.

-Atkinson's variable overhead efficiency variance for the year was:

A) $ 672 F
B) $ 928 F
C) $4000 U
D) $ 145 U

Question 78

Which of the following types of companies would not have a need to calculate a fixed overhead volume variance?

A) A company that uses variable costing
B) A company that uses absorption costing
C) A company that applies fixed overhead based on direct labour hours
D) A company that uses activity-based costing (ABC)

Question 79

The direct materials price variance for 2009 was:

A) $ 92 000 U
B) $ 92 000 F
C) $100 000 U
D) $100 000 F

Question 80

What was Latimer's variable overhead spending variance?

A) $3450 U
B) $3450 F
C) $2450 U
D) $2450 F