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Accounting Exam Questions and Answers

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Question: A planning budget based on a single predicted amount of sales or production volume is called a:
Answer: Fixed budget
Question: Static budget is another name for:
Answer: Fixed budget.
Question: An internal report that compares actual cost and sales amounts with budgeted amounts and identifies the differences between them as favorable or unfavorable variances is called a:
Answer: Performance report.
Question: Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:
Answer: Fixed costs remain at $150,000
Variable costs = ($123,000/12,000) x 10,000 units = $102,500
Question: Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?
Answer: Sales = 12,500($10) = $125,000
Variable costs = 12,500($6) = $75,000
Total costs = $75,000 (variable) + ($3 x 10,000) = $105,000
Budgeted operating income = $125,000 (sales) - 105,000 (total costs) = $20,000
Question: Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartel's standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartel's labor rate variance for August?
Answer: Labor rate variance = $250,376 - ($12 x 21,040 hours) = $2,104 favorable
Question: Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartel's standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartel's labor efficiency variance for August?
Answer: Labor efficiency variance = ($12 x 21,040 hours) - (20,000 hrs x $12) = $12,480 unfavorable
Question: The standard materials cost to produce one unit of Product K is 7 pounds of material at a standard price of $32 per pound. In manufacturing 8,000 units, 54,000 pounds of material were used at a cost of $30 per pound. What is the total direct material cost variance?
Answer: Price variance = $2 x 54,000 pounds = $108,000 favorable
Quantity variance = 2,000 pounds x $32 = $64,000 favorable
Total direct material cost variance = $172,000 favorable
Question: A company has a standard of 2 hours of direct labor per unit produced and $18 per hour for the labor rate. During last period, the company used 9,500 hours of direct labor at a $152,000 total cost to produce 4,000 units. Compute the direct labor rate and efficiency variances.
Answer: Rate Variance = (9,500 hours x $18) - $152,000 = $19,000 favorable
Efficiency Variance = ($18 x 9,500 hours) - ($18 x [4,000 units x 2 hours]) = $27,000 unfavorable
Question: A company had a $22,000 favorable direct labor efficiency variance during a time period when the standard rate per direct labor hour was $22 and the actual rate per direct labor hour was $21. If the standard direct labor hours allowed for production were 5,000 what is the amount of actual direct labor hours worked during this period?
Answer: $22 (actual hours - 5,000 hours) = $22,000 F
$22 (1,000) = $22,000 F
The variance is favorable, therefore:
5,000 hours - (actual hours) = 1,000 hours
Actual hours = 4,000 hours
Question: A company had a $22,000 favorable direct labor efficiency variance during a time period when the standard rate per direct labor hour was $22 and the actual rate per direct labor hour was $21. If the standard direct labor hours allowed for production were 5,000 what is the amount of actual direct labor cost during this period?
Answer: $22 (actual hours - 5,000 hours) = $22,000 F
The variance is favorable, therefore:
5,000 hours - (actual hours) = 1,000 hours; actual hours = 4,000
Actual cost = (4,000 hr)($21/hr) = $84,000
Question: Which of the following variances is not used in a standard cost system?
Answer: Fixed overhead efficiency variance
Question: The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:
Answer: Controllable variance.
Question: The difference between the total budgeted overhead cost and the overhead applied to production using the predetermined overhead rate is the:
Answer: Volume variance
Question: A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000. The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units. The total controllable cost variance is:
Answer: Variable costs per unit = $72,000/48,000 units = $1.50 per unit
Total budgeted costs = $1.50(40,000 units) = $60,000 + $64,000 = $124,000
Total controllable cost variance = $124,000 (budgeted) - $122,800 (actual) = $1,200 favorable
Question: Actual fixed overhead for a company during March was $97,612. The flexible budget for fixed overhead this period is $88,000 based on a production level of 5,500 units. If the company actually produced 4,300 units, what is the fixed overhead spending variance for March?
Answer: Fixed overhead spending variance (actual - flexible) = $97,612 - $88,000 = $9,612 unfavorable
Question:
Landlubber Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product. During the past month, actual production was 6,500 units. The material quantity variance was $700 favorable and the material price variance was $470 unfavorable. The entry to charge Goods in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include:
Answer: A debit to Direct Material Price Variance for $470.

asked Jun 29, 2013 by anonymous
edited Jul 8, 2013
  

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