Deck 10: Profit and Cost Center Performance Evaluation

Question 1

Why might a material variance arise?

A)More efficient use of materials than the standard.
B)The purchase of inferior raw materials.
C)Both "a" and "b" above.
D)None of the above.

Answer 1

C

Question 2

Activity-based costing is commonly used with standard costing.Using more activity drivers increases the potential for managers to

A)get much more information from activity-based costing than from the traditional approach.
B)get much more information from the traditional approach than from activity-based costing.
C)get the same information from activity-based costing as from the traditional approach.
D)None of the above.

Answer 2

A

Question 3

The production volume variance is the difference between which of the following two costs?

A)Budgeted and applied fixed costs.
B)Actual costs and the budgeted costs.
C)Budgeted and actual fixed costs.
D)Variable costs and the budgeted costs.

Answer 3

A

Question 4

The production price (spending)variance is the difference between which of the following two costs?

A)Budgeted and applied costs.
B)Actual and budgeted costs.
C)Applied and actual costs.
D)Variable and budgeted costs.

Question 5

To help managers in their efforts to control overhead costs,managers and accountants analyze overhead variances using the variable cost variance model by separating variable overhead variances into

A)price and quality components.
B)economy and efficiency components.
C)price and efficiency components.
D)economy and effectiveness components.

Question 6

Tool(s)that managers can use to decide when to investigate variances include which of the following?

A)Use of both tolerance limits and decision models.
B)Use of tolerance limits only.
C)Decision models only.
D)None of the above.

Question 7

Why do direct labor variances occur?

A)Managers do not correctly anticipate changes in wage rates.
B)Poor materials are used in production.
C)Supervisors encounter scheduling problems.
D)All of the above.

Question 8

Activity-based costing is commonly used with standard costing.Using activity-based costing,a company has

A)a single cost driver
B)multiple cost drivers.
C)no cost drivers.
D)the same cost drivers as standard costing.

Question 9

Which of the following might cause a materials variance?

A)Failing to take purchase discounts.
B)Using a better grade of raw material.
C)Changes in the market supply for the raw materials.
D)All of the above.

Question 10

To analyze variances,the variable cost variance model is applied to the calculation of which of the following?

A)Direct materials variances.
B)Direct labor variances.
C)Variable manufacturing overhead price and efficiency variances.
D)All of the above.

Question 11

Which variance(s)are generally calculated to analyze fixed manufacturing overhead costs?

A)Production volume variances only.
B)Price variances only.
C)Production volume and price variances only.
D)Production volume,price,and efficiency variances.

Question 12

Which variance measures the efficiency with which the firm uses inputs to produce outputs?

A)Throughput.
B)Efficiency.
C)Economy.
D)Effectiveness.

Question 13

Why do fixed manufacturing cost variances occur?

A)Managers do not correctly anticipate changes in wage rates.
B)Poor materials are used in production.
C)Supervisors encounter scheduling problems.
D)Actual fixed costs differ from budgeted fixed costs.

Question 14

Which statement is true concerning the fixed overhead production efficiency variance?

A)The production efficiency variance exists as fixed costs are assumed to vary inversely with volume.
B)The production efficiency variance exists as fixed costs are assumed to vary along with volume.
C)The production efficiency variance exists as fixed costs are assumed to vary exponentially with volume.
D)The production efficiency variance does not exist as fixed costs are assumed not to vary with volume.

Question 15

Which of the following is not a major group responsible for variances in organizations?

A)Marketing
B)Consulting
C)Administration
D)Production

Question 16

Which is not a reason direct labor variances may occur?

A)Managers do not correctly anticipate changes in wage rates.
B)Poor materials are used in production.
C)Prices rise with direct materials.
D)All of the above.

Question 17

Fixed production costs variances are calculated as

A)the difference between actual and budgeted fixed costs.
B)(actual hours ´ standard inputs)- budgeted fixed costs.
C)(actual hours ´ standard outputs)- budgeted fixed costs.
D)(actual hours ´ standard outputs)- actual fixed costs.

Question 18

Which of the following terms describes the difference between the budgeted (or standard)price and the actual price paid for each unit of input?

A)Price variance.
B)Efficiency variance.
C)Usage variance.
D)Quantity variance.

Question 19

Which of the following does the cost variance model use to analyze differences between actual and budgeted profits?

A)Flexible production budget.
B)Fixed production budget.
C)Prior period's production budget.
D)Generally accepted accounting principles.

Question 20

What is the term that describes the rate companies frequently use to apply fixed overhead costs to units produced?

A)Actual overhead rate.
B)Predetermined overhead rate.
C)Post-determined overhead rate.
D)Variable overhead rate.

Question 21

Lydia's Delivery Company
Lydia's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Lydia's Delivery Company.What is the variable overhead price variance for fuel costs?

A)$10.00 U
B)$16.00 F
C)$26.00 F
D)$ 6.00F

Question 22

Ben's Delivery Company
Ben's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Ben's Delivery Company.What is the variable overhead flexible budget for March 2010?

A)$374.00
B)$352.00
C)$340.00
D)$320.00

Question 23

For financial reporting purposes,how are fixed manufacturing costs treated?

A)Included in the value of inventory.
B)Not included in the value of inventory.
C)Treated the same as in managerial accounting.
D)Not reported.

Question 24

When substituting computerized equipment for direct labor,a firm should treat labor as which of the following?

A)Fixed (or capacity)costs.
B)Mixed costs.
C)Opportunity costs.
D)Variable costs.

Question 25

What is the result of substituting computerized equipment for direct labor?

A)Less direct material and more manufacturing overhead.
B)Less direct labor and more manufacturing overhead.
C)Less manufacturing overhead and more direct materials.
D)Less direct labor and more direct material.

Question 26

Activity-based costing raises numerous specific questions that managers can address to improve which of the following?

A)Productivity and quality.
B)Price and efficiency.
C)Efficiency only.
D)Productivity only.

Question 27

Ben's Delivery Company
Ben's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Ben's Delivery Company.What is the variable overhead efficiency variance for fuel costs?

A)$32.00 F
B)$ 6.00 U
C)$12.00 F
D)$20.00 U

Question 28

Ben's Delivery Company
Ben's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Ben's Delivery Company.What is the actual fuel cost for March 2010?

A)$374.00
B)$352.00
C)$340.00
D)$320.00

Question 29

When substituting computerized equipment for direct labor,variable overhead may be associated more with

A)labor hours than machine usage.
B)machine usage than labor hours.
C)machine usage than direct materials.
D)machine usage than manufacturing overhead.

Question 30

Doug's Delivery Company
Doug's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Doug's Delivery Company.What is the variable overhead efficiency variance for fuel costs?

A)$20.00 U
B)$20.00 F
C)$18.00 U
D)$18.00 F

Question 31

Lydia's Delivery Company
Lydia's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Lydia's Delivery Company.What is the variable overhead variance for fuel costs?

A)$12.00 U
B)$12.00 F
C)$6.00 U
D)$6.00 F

Question 32

Ben's Delivery Company
Ben's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Ben's Delivery Company.What is the variable overhead price variance for fuel costs?

A)$32.00 F
B)$ 6.00 U
C)$12.00 F
D)$20.00 U

Question 33

Doug's Delivery Company
Doug's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Doug's Delivery Company.What is the variable overhead variance for fuel costs?

A)$20.00 U
B)$20.00 F
C)$2.00 U
D)$2.00 F

Question 34

Lydia's Delivery Company
Lydia's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Lydia's Delivery Company.What is the variable overhead efficiency variance for fuel costs?

A)$10.00 U
B)$16.00 F
C)$26.00 F
D)$ 6.00F

Question 35

Ben's Delivery Company
Ben's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Ben's Delivery Company.What is the variable overhead variance for fuel costs?

A)$12.00 U
B)$12.00 F
C)$6.00 U
D)$6.00 F

Question 36

For external reporting purposes,how are fixed manufacturing costs treated?

A)As period costs.
B)Expensed as incurred.
C)Period costs included in the value of inventory.
D)Product costs included in the value of inventory.

Question 37

How are fixed manufacturing costs treated?

A)Period costs for managerial accounting and product costs for financial accounting purposes.
B)Product costs for managerial accounting and financial accounting purposes.
C)Period cost for managerial accounting and financial accounting purposes.
D)Product costs for managerial accounting and period costs for financial accounting purposes.

Question 38

For managerial accounting purposes,how are fixed manufacturing costs treated?

A)As product costs.
B)As period costs.
C)As opportunity costs.
D)As variable costs.

Question 39

For financial reporting purposes,how are fixed manufacturing costs treated?

A)As period costs.
B)As product costs.
C)As direct materials costs.
D)None of the above.

Question 40

Doug's Delivery Company
Doug's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Doug's Delivery Company.What is the variable overhead price variance for fuel costs?

A)$20.00 U
B)$20.00 F
C)$2.00 U
D)$2.00 F

Question 41

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the direct labor efficiency variance.

A)$11,000 F
B)$9,000 U
C)$20,000 U
D)$9,500 U

Question 42

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the total direct materials variance.

A)$15,500 U
B)$10,500 U
C)$15,500 F
D)$10,500 F

Question 43

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the direct materials price variance.

A)$51,000 U
B)$56,000 U
C)$5,000 U
D)$40,500 U

Question 44

Most companies report which of the following variances?

A)Each type of material.
B)Each category of labor.
C)Major cost components of variable overhead.
D)All of the above.

Question 45

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the direct materials efficiency variance.

A)$5,000 U
B)$10,500 U
C)$5,000 F
D)$10,500 F

Question 46

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the total direct materials variance.

A)$56,000 U
B)$40,500 U
C)$56,000 F
D)$40,500 U

Question 47

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the flexible budget for direct materials.

A)$115,500
B)$105,500
C)$100,000
D)$ 95,500

Question 48

Doug's Delivery Company
Doug's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Doug's Delivery Company.What is the actual fuel cost for March 2010?

A)$240.00
B)$220.00
C)$200.00
D)$180.00

Question 49

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the direct labor price variance.

A)$48,000 F
B)$20,000 F
C)$68,000 F
D)$28,000 F

Question 50

Doug's Delivery Company
Doug's Delivery Company reports the following information for 2010:
Actual:

Standard:

Refer to Doug's Delivery Company.What is the variable overhead flexible budget for March 2010?

A)$180.00
B)$198.00
C)$220.00
D)$240.00

Question 51

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the variable manufacturing overhead variance.

A)$1,000 U
B)$2,000 U
C)$1,000 F
D)$2,000 F

Question 52

Which of the following is an example of a major cost component of variable overhead?

A)Direct material.
B)Direct labor.
C)Indirect material.
D)All of the above.

Question 53

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the total direct labor variance.

A)$48,000 F
B)$20,000 F
C)$68,000 F
D)$28,000 F

Question 54

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the direct labor efficiency variance.

A)$48,000 F
B)$20,000 F
C)$68,000 F
D)$28,000 F

Question 55

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the actual amount paid for coffee.

A)$115,500
B)$105,000
C)$100,000
D)$ 95,500

Question 56

Fred's Fine Roasted Coffee
Fred's Fine Roasted Coffee reports the following data for April 2010 where 500,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Refer to Fred's Fine Roasted Coffee.Calculate the direct materials efficiency variance.

A)$51,000 U
B)$56,000 U
C)$5,000 U
D)$40,500 U

Question 57

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the direct labor price variance.

A)$11,000 F
B)$9,000 U
C)$20,000 U
D)$9,500 U

Question 58

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the total direct labor variance.

A)$11,000 F
B)$9,000 U
C)$20,000 U
D)$9,500 U

Question 59

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the direct materials price variance.

A)$15,500 U
B)$10,500 U
C)$15,500 F
D)$10,500 F

Question 60

Java Gourmet Coffee
Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),
Actual:

Standard:

Refer to Java Gourmet Coffee.Calculate the variable manufacturing overhead variance.

A)$1,000 U
B)$2,000 U
C)$1,000 F
D)$2,000 F

Question 61

What is the relationship between actual,budgeted,and applied fixed manufacturing costs?

Question 62

What tools do managers use to decide when to investigate variances?

Question 63

The yield variance is the portion of the efficiency variance that is not a

A)match variance.
B)mix variance.
C)quantity variance.
D)price variance.

Question 64

KF Company
KF Company uses standard costing.The company reported the following information for the current period:

Refer to KF Company.Calculate the total fixed overhead efficiency variance.

A)$8,000 F
B)$300 F
C)$500 U
D)$1,000 U

Question 65

How do you analyze overhead variances using the variable cost variance model?

Question 66

KF Company
KF Company uses standard costing.The company reported the following information for the current period:

Refer to KF Company.Calculate the total Variable Overhead variance.

A)$1,000 U
B)$ 500 F
C)$1,000 F
D)$ 500 U

Question 67

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the direct materials efficiency variance.

A)$7,150 U
B)$7,500 U
C)$7,150 F
D)$7,500 F

Question 68

What is the difference between price and efficiency variances?

Question 69

Explain how variable production cost variances are calculated and why they occur.

Question 70

How do you apply activity-based costing to variance analysis?

Question 71

How do you analyze variances using the variable cost variance model?

Question 72

KF Company
KF Company uses standard costing.The company reported the following information for the current period:

Refer to KF Company.Calculate the variable overhead efficiency variance.

A)$1,000 U
B)$ 500 F
C)$1,000 F
D)$ 500 U

Question 73

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the direct materials price variance.

A)$350 F
B)$-0-
C)$350 U
D)$7,150 U

Question 74

When multiple inputs are used to produce the output,the efficiency variance can be broken down into which of the following?

A)mix and match variances.
B)mix and yield variances.
C)profit and yield variances.
D)benefit and match variances.

Question 75

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the total direct materials variance.

A)$7,500 U
B)$7,850 U
C)$7,150 U
D)$7,000 U

Question 76

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the direct labor efficiency variance.

A)$70 F
B)$200 U
C)$270 U
D)$130 U

Question 77

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the direct labor price variance.

A)$70 F
B)$200 U
C)$270 U
D)$130 U

Question 78

How are fixed production cost variances calculated and why do they occur?

Question 79

ABC Company
ABC Company reports the following information for the most recent period when 2,750 units were produced.

Refer to ABC Company.Calculate the total direct labor variance.

A)$70 F
B)$200 U
C)$270 U
D)$130 U

Question 80

KF Company
KF Company uses standard costing.The company reported the following information for the current period:

Refer to KF Company.Calculate the variable overhead price variance.

A)$1,000 U
B)$ 500 F
C)$1,000 F
D)$ 500 U