Chapter 23/Performance Evaluation Using Variances From Standard Costs ? 241
The following data is given for the Walker Company:
Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours.
67. The factory overhead controllable variance is:
a. 73,250F b. 73,250U c. 59,400F d. 59,400U ANS: B DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
68. The factory overhead volume variance is:
a. 73,250U b. 73,250F c. 59,400F d. 59,400U ANS: C DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
242 ??Chapter 23/Performance Evaluation Using Variances From Standard Costs
The Joyner Corporation originally budgeted for $360,000 of fixed overhead. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units.
69. Compute the factory overhead controllable variance.
a. 9,000F b. 9,000U c. 5,500F d. 5,500U ANS: C DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
70. Compute the factory overhead volume variance.
a. 9,000F b. 9,000U c. 5,500F d. 5,500U ANS: B DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement Standard Actual Variable OH Rate $3.35 Fixed OH Rate $1.80 Hours 18,900 17,955 Fixed Overhead $46,000 Factory Overhead $101,450
71. Calculate the total factory overhead cost variance using the above information:
a. $4,866.75 Unfavorable b. $4,866.75 Favorable c. $8,981.75 Favorable d. $8,981.75 Unfavorable ANS: D DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
72. Calculate the fixed factory overhead volume variance using the above information:
a. $1,701 Favorable
b. $4,866.75 Unfavorable c. $1,701 Unfavorable d. $4,866.75 Favorable ANS: C DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
Chapter 23/Performance Evaluation Using Variances From Standard Costs ? 243
73. Calculate the variable factory overhead controllable variance using the above information:
a. $8,981.75 Favorable b. $7,280.75 Unfavorable c. $8,981.75 Unfavorable d. $7,280.75 Favorable ANS: B DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
74. A negative fixed overhead volume variance can be caused due to the following except:
a. Sales orders at a low level b. Machine breakdowns c. Employee inexperience d. Increase in utility costs ANS: D DIF: Moderate OBJ: 23-04
NAT: AACSB Analytic | IMA-Performance Measurement
75. At the end of the fiscal year, variances from standard costs are usually transferred to the:
a. direct labor account
b. factory overhead account c. cost of goods sold account d. direct materials account ANS: C DIF: Easy OBJ: 23-05
NAT: AACSB Analytic | IMA-Performance Measurement
76. Variances from standard costs are usually reported to:
a. suppliers b. stockholders c. management d. creditors ANS: C DIF: Easy OBJ: 23-05
NAT: AACSB Analytic | IMA-Performance Measurement
77. If at the end of the fiscal year the variances from standard are significant, the variances should be
transferred to the:
a. work in process account b. cost of goods sold account c. finished goods account
d. work in process, cost of goods sold, and finished goods accounts ANS: D DIF: Difficult OBJ: 23-05
NAT: AACSB Analytic | IMA-Performance Measurement
244 ??Chapter 23/Performance Evaluation Using Variances From Standard Costs
78. Assuming that the Morrita Desk Co. purchases 8,000 feet of lumber at $5.50 per foot and the standard
price for direct materials is $5.00, the entry to record the purchase and unfavorable direct materials price variance is:
a. Direct Materials 40,000 Direct Materials Price Variance 4,000 Accounts Payable 44,000
b. Direct Materials 40,000 Accounts Payable 40,000
c. Direct Materials 44,000 Direct Materials Price Variance 4,000 Accounts Payable 40,000
d. Work in Process 44,000 Direct Materials Price Variance 4,000 Accounts Payable 40,000
ANS: A DIF: Easy OBJ: 23-05
NAT: AACSB Analytic | IMA-Performance Measurement
79. A company records their inventory purchases at standard cost but also records purchase price
variances. The company purchased 5,000 widgets $8.00, the standard cost for the widgets is $7.90. Which of the following would be included in the journal entry? a. $39,500 Debit to Accounts Payable
b. $500 Credit to Direct Materials Price Variance c. $39,500 Credit to Accounts Payable
d. $500 Debit to Direct Materials Price Variance ANS: D DIF: Easy OBJ: 23-05
NAT: AACSB Analytic | IMA-Performance Measurement
80. The use of standards for nonmanufacturing expenses is:
a. not as common as it is for manufacturing costs b. as common as it is for manufacturing costs c. not useful d. impossible ANS: A DIF: Difficult OBJ: 23-06
NAT: AACSB Analytic | IMA-Performance Measurement