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Exam 16: Fundamentals of Variance Analysis

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Question 31

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Blue Company produces Trivets.Based on its master budget,the company should produce 1,000 Trivets each month,working 2,500 direct labor hours.During May,only 900 Trivets were produced.The company worked 2,400 direct labor hours.The standard hours allowed for May production would be

A) 2,500 hours.
B) 2,400 hours.
C) 2,250 hours.
D) 1,800 hours.

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Question 32

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If the budgeted activity level is greater than the actual activity level,then the total budgeted costs of the master budget will be greater than the total budgeted costs of the flexible budget.

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Question 33

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What were the actual quantity of materials used during the month?

Which of the following statements regarding variances is (are) false? (A) In general and holding all other things constant,an unfavorable variance decreases operating profits. (B) A favorable variance is not always good,and an unfavorable variance is not always bad.

Tub Company uses a standard cost system.The following information pertains to direct labor for product B for the month of October: What were the actual hours worked for the month of October?

Both the actual material used and the standard quantity allowed for material is based on the actual output attained.

Is the fixed overhead spending (budget) variance favorable or unfavorable?

When a manager is concerned with monitoring total cost,total revenue,and net profit conditioned upon the level of productivity,an accountant should normally recommend (CPA adapted)

The budget for the month of May was for 9,000 units at a direct materials cost of $15 per unit.Direct labor was budgeted at 45 minutes per unit for a total of $81,000.Actual output for the month was 8,500 units with $127,500 in direct materials and $77,775 in direct labor expense.The direct labor standard of 45 minutes was obtained throughout the month.Variance analysis of the performance for the month of May would show a(n) (CMA adapted)

The most fundamental variance analysis compares

In the general model,a price variance is calculated as

It is possible to have a favorable direct material price variance and an unfavorable direct material efficiency variance.

When using a flexible budget,what will happen to variable costs on a per-unit basis as production increases within the relevant range?

What is the production volume variance for May?

The budget (or spending)variance for fixed production costs is the difference between the actual fixed costs and the budgeted fixed costs on the master budget.

Variance analysis for fixed production costs is virtually the same as for variable production costs.

Which of the following variances will always be favorable when actual sales exceeds budgeted sales?

Is the direct materials price variance favorable or unfavorable?

What is the flexible budget contribution margin?

Variances are the difference between actual results and budgeted results.