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People completed the quiz: 287
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Current max score of the quiz: 133.75 points
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Users' average score: 62 points


Questions
1

Which ONE of the following is NOT a purpose of standard costing?

Options Count    
A. Decision-making 9 3%
B. Setting budgets 11 4%
C. Asset valuation 247 81%
D. Performance evaluation 11 4%
E. Inventory valuation 6 2%
2

When would a favourable total sales variance occur? Select ONE that applies.

Options Count    
A. A decrease in price leading to a small increase in sales volume. 10 4%
B. A decrease in price leading to a higher increase in sales volume. 244 88%
C. A decrease in sales volume leading to a price reduction. 6 2%
D. A decrease in output resulting in a favourable total cost variance. 14 5%
3

Jawad PLC has budgeted sales of 450 units at $$30 each. The variable costs are expected to be $$20 per unit and there are no fixed costs. The actual sales were 500 units at $$24 and costs were as expected. What are the selling price variance and the sales volume contribution variance?

Select TWO correct values from the below TWO cells.

{blank1} {blank2}
Options Count    
Correct 240 91%
Incorrect 24 -140%
4

The following information is available for sales by Company A in the month of April. 

  Budget Actual
Sales unit 420 470
Selling price per unit $$55 $$42
Total cost per unit $$23 $$22
Variable cost per unit $$27 $$15

 

Calculate the sales variance using marginal costing and standard revenue per unit.

Sales volume contribution variance  $$ {blank1} F
Sales volume revenue variance  $$ {blank2} F
Options Count    
Correct 185 71%
Incorrect 75 -85%
5

D-Attire Ltd manufactures male t-shirts. The following table contains data that relates to the budget for D-Attire Ltd in February:

Budgeted production and sales (t-shirts) 1,800 units
Standard cost per unit: $$
Direct materials 8.00
Direct labour 3.50
Variable production overhead 0.85
Fixed production overhead 3.15
Total 15.50
Standard sales price 20.50
Standard profit per unit 5.00
Number of t-shirts produced and sold in February 1850 units
Actual sales revenue $$38,000

 

If the company were to use a standard marginal costing system, what would be the sales volume contribution variance?

Options Count    
A. 404.5 F 5 2%
B. 406.5 F 7 3%
C. 407.5 F 245 95%
D. 408.5 F 0 0%
6

The following table contains information for Company X. Using the information from the table, calculate the direct material price variance and direct material quantity variance for Company X (fill in the 2 grey cells).

Quantity of material purchased 15,500
Standard quantity of material allowed 15,000
Actual price for material $$5.00 per unit
Standard price for material $$4.50 per unit
Direct Material Price Variance $$ {blank1} A
Direct Material Usage Variance  $$ {blank2} A
Options Count    
Correct 211 83%
Incorrect 42 -111%
7

The CORRECT formula for calculating the materials price variance is:

Options Count    
A. Standard materials quantity less actual quantity multiplied by standard price. 16 6%
B. Standard price less actual price multiplied by standard quantity. 12 5%
C. Standard price less actual price multiplied by actual quantity. 227 88%
D. Standard hours less actual hours multiplied by actual quantity. 1 0%
8

Kazi & Kazi Manufacturing can produce 4,000 units of finished product with 16,000 pounds of raw materials. The company purchased 17,000 pounds for an amount of $$184,000. The material standards for the product are 4 pounds at $$11 per pound.

What is the material price variance?

Options Count    
A. $8,000 Unfavourable 20 8%
B. $8,000 Favourable 6 2%
C. $3,000 Favourable 210 84%
D. $3,000 Unfavourable 9 4%
9

Jane Margaret Ltd produces a single product with the following budgeted material cost per unit: 3 kg of material X at $$8 per kg.

Actual details:

  • Output 1,000 units.
  • Materials purchased and used 2,200 kg.
  • Material cost $$28,500.

What is the direct material total variance?

Options Count    
A. $3,500 A 4 2%
B. $4,500 A 224 91%
C. $5,500 A 4 2%
D. $6,500 A 13 5%
10

Which ONE of the following statements is NOT a reason for favourable material price variance?

Options Count    
A. A general reduction in the market price level 24 10%
B. A purchase discount on a big order 2 1%
C. A significant increase in the bargaining powers of the suppliers 215 87%
D. Effective price negotiation by the procurement staff 5 2%
11

The following table contains information regarding Company X. Using the information from the table, calculate the direct labour rate variance and direct labour efficiency variance:

Actual hours used 14,000 hours
Standard hours allowed 14,500 hours
Actual rate $$15.50 per unit
Standard rate $$16.00 per unit
Direct Labour Rate Variance $$ {blank1}
Direct Labour Efficiency Variance $$ {blank2}
Options Count    
Correct 194 80%
Incorrect 48 -94%
12

Choose the correct option:

Identify the probable reason for a favourable direct labour rate variance.  {blank1}
Options Count    
Correct 202 83%
Incorrect 42 -102%
13

Which ONE of the following is the CORRECT formula for the labour efficiency variance?

Options Count    
A. Standard hours less actual hours multiplied by standard wage. 210 86%
B. Standard wage rate less actual wage rate multiplied by standard hours. 8 3%
C. Standard wage rate less actual wage rate multiplied by actual hours. 12 5%
D. None of the above. 13 5%
14

How do you calculate the labour rate variance? Select the appropriate formula.

Options Count    
A. (Standard wage rate - actual wage rate) x standard hours worked 12 5%
B. (Budgeted labour costs - actual labour costs) x actual hours worked 9 4%
C. (Standard hours - actual hours) x actual wage rate 13 5%
D. (Standard wage rate - actual wage rate) x actual hours worked 205 85%
15

A manufacturing company produces a single product with the following budgeted/standard information:

Budgeted production – 1,200 units

Labour hours per unit – 3 hours

Labour rate per hour – $$10 per hour

Actual results:

  • Output – 1,250 units
  • Hours paid for and worked – 3,500 hours
  • Labour cost – $$31,500

What are the labour rate and labour efficiency variances?

Direct labour rate variance {blank1} {blank3}
Direct labour efficiency variance {blank2} {blank4}
Options Count    
Correct 185 80%
Incorrect 45 -85%
16

A small manufacturing company is producing a single product.

It has the following budgeted/standard information:

Output 1,500 units
Hours 6,000
Labour Cost $$48,000

 

And the following actual details:

Output 1,100 units
Hours paid 4,500
Hours worked 4,200
Labour cost $$37,500

 

Calculate the appropriate variances for labour.

Direct labour rate variance $$ {blank1}A
Direct labour efficiency variance  $$ {blank2}F
Direct labour idle time $$ {blank3}A
Options Count    
Correct 127 56%
Incorrect 101 -27%
17

Desmond & Haynes Ltd is an IT company based in the USA. Recently, the company has been experiencing a seasonal demand for its product. In the next period, the company is expecting that the average level of idle time will be equivalent to 25% of hours paid. The company’s standard labour rate is $$12 per hour before the adjustment for idle time payments. The standard time to produce one unit of output is four active (productive) hours.

Actual results for the particular period are as follows:

Number of units produced 3,300 units
Actual hours paid for 14,700 hours
Actual active (productive) hours 10,800 hours

 

What is the idle time variance for Desmond & Haynes Ltd?

Options Count    
A. $3400 F 20 9%
B. $3600 A 159 70%
C. $3800 F 13 6%
D. $4600 A 31 14%
18

The following table contains standard direct material and labour costs for a particular product:

Direct material X 2.5 kg * $$4/kg $$10
Direct material Y 0.70 litres * $$8/per litre $$5.60
Direct labour 0.80 hours * $$12 per hour $$9.60
Total   $$25.20

 

On August 20X6, the company made 3,400 units and sold 3,000 units.

The actual production costs were as follows:

Direct material X 8,200 kg $$33,300
Direct material Y 2,530 litres $$15,340
Direct labour 2,300 hours paid (only 2,050 hours worked) $$29,500

 

Calculate the following variances (grey cells):

Direct material X usage variance  $$ {blank1}F
Direct material T usage variance  $$ {blank2}A
Direct labour rate variance $$ 1,900 A
Direct labour idle time  $$ {blank3}A
Direct labour efficiency variance  $$ {blank4}F
Options Count    
Correct 121 56%
Incorrect 94 -21%
19

The budgeted output for Robert & Murdock LLC in May was 1,100 units for Product Y. Each unit requires 2 direct labour hours. Variance overheads are budgeted at $$5 per labour hour.

Actual results:

Output 1,000 units
Labour hours worked 2,100 hours
Variable overheads $$10,100

 

What is the ONE appropriate variance for variable overheads?

Options Count    
A. Variable production overhead expenditure variance $450 F and variable production overhead efficiency variance $510 A. 5 2%
B. Variable production overhead expenditure variance $400 A and variable production overhead efficiency variance $500 F. 13 6%
C. Variable production overhead expenditure variance $500 F and variable production overhead efficiency variance $400 A. 13 6%
D. Variable production overhead expenditure variance $400 F and variable production overhead efficiency variance $500 A. 177 84%
20

The above information is available for Company P.

Number of Units Produced 620
Standard Direct Labour Hours Per Unit 0.8
Actual Direct Labour Hours Used 400
Standard Variable Overhead Rate $$10 per hour

 

Using these figures, calculate the variable overhead efficiency variance. At the end, please add A for adverse or F for favourable. $$ {blank1}
Options Count    
Correct 178 85%
Incorrect 32 -78%
21

Which of the following is a MAJOR reason for a favorable variable overhead variance?

Options Count    
A. An increase in the national minimum wage rate resulting in a higher indirect labour cost. 5 2%
B. A sudden increase in the overall price level of indirect supplies. 5 2%
C. Making an error in planning such as a failure to recognise the increase in unit rates of electricity. 28 13%
D. Achieving economies of scale through proper handling of indirect material. 172 82%
22

ZD Ltd is a manufacturing company that produces wearable gadgets for high-end customers. Their forecasted labour cost is $$25 per hour with a variable overhead rate at $$10 per hour. Assume that the company requires a standard number of 2,500 hours to produce 1,200 wearable gadgets.

However, the actual data shows that the company took 2,800 hours to manufacture all 1,200 gadgets. What will be the variable overhead efficiency variance for ZD Ltd?

Options Count    
A. $7,500 Unfavourable 12 6%
B. $3,000 Favourable 5 2%
C. $3,000 Unfavourable 184 90%
D. $7,500 Favourable 2 1%
23

The following tables list different variable overhead variances. Match each variance outcome with a circumstance that would cause it.

Variance Favourable
Variable overhead expenditure  {blank1}
Variable overhead efficiency  {blank2}

 

Variance Adverse
Variable overhead expenditure  {blank3}
Variable overhead efficiency  {blank4}
Options Count    
Correct 194 95%
Incorrect 11 -94%
24

Smart Digital Experience Ltd is a producer of gadgets and gears. The company is based in the UK. The following table contains information regarding the fixed production overhead costs of manufacturing gadgets in April:

Budgeted fixed production overhead expenditure $$4,475
Budgeted production volume (gadgets & gears) 1,820
Standard fixed production overhead cost (0.40 hours at $$12 per hour) $$4.80
Number of gadgets and gears produced in April 1,870
Actual fixed production overhead expenditure $$4900

 

What is the fixed production overhead expenditure and volume variance in April?

Fixed production overhead expenditure variance {blank1} {blank3}
Fixed production overhead volume variance {blank2} {blank4}
Options Count    
Correct 157 77%
Incorrect 46 -57%
25

The following information is available for Polar MNC for the third quarter of 20x7.

  • Fixed production overheads – $$22,500
  • Units – 6000

The standard time to produce each unit is two hours.

Actual results:

Fixed production overheads

$$24,800

Units

6,470

Labor hours

12,500 hours

Calculate the following variances. Give answers to 1 decimal place.

Fixed overhead capacity variance: USD {blank1} A
Fixed overhead efficiency variance: USD {blank2} F
Fixed overhead volume variance: USD {blank3} A
Options Count    
Correct 52 27%
Incorrect 143 48%
26

The following tables are cost cards for BG-Fruits Ltd.

Budgeted Cost Card:

Fixed Production Overheads $$36,015
Units 6,860
Labour hours 3 hours

 

Actual Cost Card:

Fixed Production Overheads $$37,350
Units 6,750
Labour hours 20,000 hours 

 

If BG-Fruits Ltd utilises an absorption costing system, calculate the following variances:

Fixed overhead expenditure variance USD {blank1} A
Fixed overhead capacity variance USD {blank2} F
Options Count    
Correct 100 52%
Incorrect 92 0%
27

The following tables are cost cards for BG-Fruits Ltd.

Budgeted Cost Card:

Fixed Production Overheads $$36,015
Units 6,860
Labour hours 3 hours

 

Actual Cost Card:

Fixed Production Overheads $$37,350
Units 6,750
Labour hours 20,000 hours 

 

Calculate:

Fixed overhead volume variance (up to 1 decimal place). USD {blank1} A
Options Count    
Correct 93 49%
Incorrect 96 7%
28

Radiant Ltd manufactures a wide range of baby products. The following information relates to one of its core baby products – Product A:

Standard Cost Data:

Selling Price     134
Direct material B 8 kg 24  
Direct material C 6 kg 30  
Direct labour @$$10 per hour 30  
Variable overheads   24  
Fixed overhead   6 114
Profit per unit     20

 

Budgeted details:

The yearly budgeted production for the company is 30,000 units, which is allocated evenly during the year. In terms of sales revenue, March is a bad month as the company forecasted only 2,000 units of sales this month. The expected fixed overhead for the year was $$180,000 and it is absorbed based on a labour hour.

Actual results:

Actual sales for the month of March were 2,600 units at a price of $$124. The stock of finished goods and raw materials remained unchanged. During that month, the purchases of raw material B was 21,100 kg at $$2.80 per kg and 15,100 for material C at $$5.30 per kg. 5,900 labour hours were worked at a rate of $$10.10 per hour and 1,800 hours at $$10.30. The actual variable overheads for the period were $$60,000 and the fixed overhead $$15,500.

The company uses an absorption costing system and values the raw materials at standard cost. Calculate the actual profit and standard profit per unit.

Calculate the actual profit. Input to the nearest $$000. $$ {blank1} 000
Calculate the standard profit per unit. Input to the nearest full number. $$ {blank2} per unit
Options Count    
Correct 38 26%
Incorrect 107 62%
29

Which ONE of the following statements is NOT true?

Options Count    
A. Variances should be identified and reported at the beginning of each control period. 145 81%
B. A variance report or operating statement might include a reconciled profit statement. 17 9%
C. Different types of operating statement can be prepared, including reports or statements for senior management and individual managers. 6 3%
D. There is a strong possibility that a variance report’s information might be considered ‘out of date’. 11 6%
30

The following information is for SOS Hospital, which specialises in minor surgical procedures.

Staff: Patient Ratio is 0.8:1

Standard Cost Card:

Nursing Costs 3 days * 0.80 * $$400 per day $$960
Space and food costs 3 days * $$200 per day $$600
Drugs and specific materials   $$150
Hospital overheads 3 days * 140 per day $$420
Total standard cost   $$2,130

 

Actual details:

The actual details for SOS Hospital for one single patient (having a minor surgical procedure) showed that the patient had stayed in the hospital for four days. The cost of drugs and materials for this patient was $$450. There were 0.9 nurses per patient on duty during the patient’s stay in the hospital. The regular rates for nursing pay, hospital overheads and space and food were as expected.

What would be the actual cost for that patient?

Options Count    
A. $3400 121 79%
B. $2400 12 8%
C. $3600 16 10%
D. $4800 4 3%
31

The following information is for SOS Hospital, which specialises in minor surgical procedures.

Staff: Patient Ratio is 0.8:1

Standard Cost Card:

Nursing Costs 3 days * 0.80 * $$400 per day $$960
Space and food costs 3 days * $$200 per day $$600
Drugs and specific materials   $$150
Hospital overheads 3 days * 140 per day $$420
Total standard cost   $$2,130

 

Actual details:

The actual details for SOS Hospital for one single patient (having a minor surgical procedure) showed that the patient had stayed in the hospital for four days. The cost of drugs and materials for this patient was $$450. There were 0.9 nurses per patient on duty during the patient’s stay in the hospital. The regular rates for nursing pay, hospital overheads and space and food were as expected.

What would be the actual cost for that patient?

Options Count    
A. $3250 124 86%
B. $2400 3 2%
C. $3600 12 8%
D. $4800 3 2%
32

When a variance report is prepared, company executives and managers can investigate the current situation of the company properly. They can investigate the situation by evaluating which ONE of the following?

Options Count    
A. The financial risk to the company from following specific trends. 107 60%
B. Valuation of the inventory level to identify the reasons behind variances. 32 18%
C. Forecasting the expected cost level for each unit of cost. 38 21%
33

The following information is related to Company ABC’s ordering activity for a particular period:

  Budgeted Actual
Output 25,000 units 27,000 units
Activity level 4,500 orders 4,000 orders
Activity cost $$315,000 $$285,000

 

Calculate the overhead expenditure variance and the overhead efficiency variance for the ordering activity.   {blank1}
Options Count    
Correct 89 55%
Incorrect 74 11%
34

Zen Fan Ltd has prepared an activity-based budget for all of its store’s departments. The budgeted costs are:

  Cost Driver Budgeted Cost
Receiving goods Number of deliveries $$85 per delivery
Issuing goods from store Number of stores Requistions $$45 per requisitions
Ordering Number of orders $$30 per order
Counting stock Number of stock counts $$1,200 per count

 

Keeping records: $$30,000 each year and supervision – $$36,000

Actual results for June were:

  Activity Actual Cost 
Receiving goods 50 orders delivered $$4,000
Issuing goods from store 120 requistions $$5,600
Ordering 40 orders $$1,260
Counting stock 3 stock counts $$3,300 
Record keeping   $$2,400
Supervision $$3,200

 

Prepare a variance report for the month using the below format:

Activity Expected cost Actual Cost Variance
Receiving goods no. of orders delivered  {blank1}  {blank6}  {blank11}
Issuing goods no. of requisitions  {blank2}  {blank7}  {blank12}
Ordering no. of orders 1,200 1,260 60 A
Counting no. of stock counts   {blank3}  {blank8}  {blank13}
Record keeping  {blank4}  {blank9}  {blank14}
Supervision  {blank5}  {blank10}  {blank15}
Total 19,950 19,760 190 F
Options Count    
Correct 84 71%
Incorrect 35 16%
35

Using an ABC costing system for variance analysis would impact which ONE the following cost variance units?

Options Count    
A. Direct material cost variances 7 4%
B. Overhead cost variances 160 95%
C. Sales variances 0 0%
D. Direct labour cost variances 1 1%
36

XYZ Company manufactures a certain product and all overheads are related to the delivery of the product’s units to the customers. The budgeted overhead during the year 20XX was $$8,000 and the budgeted output was 4,000 units and 40 customer deliveries. The actual details for the company include an overhead of $$7,800 and an output of 4,200 units with 38 customer deliveries.

Calculate the cost variance for XYZ Company using activity-based costing.

Efficiency variance  $$ {blank1}F
Expenditure variance  $$ {blank2}A
Cost variance  $$ {blank3}F
Options Count    
Correct 37 27%
Incorrect 101 63%
37

Which ONE of the following standards assumes the optimum level of efficiency?

Options Count    
A. Current standards 5 3%
B. Ideal standards 139 85%
C. Basic standards 3 2%
D. Attainable standards 16 10%
38

Identify ONE statement that is INCORRECT.

Options Count    
A. Budgetary control deals with controlling total costs and, in contrast, standard costing and variance analysis deals with unit costs. 10 6%
B. In standard costing, a standard unit must be made, whereas budgetary control is flexible in controlling costs. 9 6%
C. A standard costing system works as an external reporting system, but budgetary control is integrated with an actual accounting system. 122 77%
D. Budgetary control is used for research development, but standard costing is used for unit-level costs such as direct labour. 18 11%
39

How can cost variances be measured? Choose ONE correct answer.

Options Count    
A. By comparing standard costs with actual costs 159 99%
B. By comparing actual costs with historical costs 2 1%
C. By comparing standard costs with historical costs 0 0%
D. By comparing ideal standards to standard costs 0 0%
40

Under nearly perfect operating conditions, which of the following can be achieved? Identify ONE correct answer.

Options Count    
A. Practical standards 2 1%
B. Perfection standards 100 62%
C. Attainable standards 46 28%
D. Exceptional standards 13 8%
41

Indicate whether the following are TRUE or FALSE:

The standard direct material quantity is considered the total amount of direct material required to manufacture a finished product. This includes allowances for normal waste or inefficiency. {blank1}
The standard direct material price is the total delivered cost, which is calculated after subtracting the purchase discount. {blank2}
The standard direct labour quantity includes all direct labour required to produce one unit of product or service. {blank3}
The standard direct labour rate is the total hourly cost of compensation that is calculated after subtracting fringe benefits. {blank4}
Options Count    
Correct 55 35%
Incorrect 100 45%
42

Which ONE of the following is NOT a criticism of standard costing in today's manufacturing environment?

Options Count    
A. With an automated system, large variances will occur. 48 30%
B. A shorter product lifecycle indicates that standards are relevant for a short period of time. 81 51%
C. Standard costing puts too much emphasis on cost direct labour efficiency. 21 13%
D. If the variances are calculated too late, they will not be useful. 9 6%
43

Which ONE of the following terms is used to explain the level of efficiency that all trained, resourced and motivated employees achieve in the long-term?

Options Count    
A. Standard ex ante 12 8%
B. Standard hours 60 38%
C. Standard performance 66 42%
D. Standard ex post 21 13%
44

Under a standard costing system, a manager must compare the following:

{blank1} with or against {blank2}.

Options Count    
Correct 57 35%
Incorrect 104 43%
45

Variance is the difference between standard and actual costs. It arises because actual costs might differ from standard costs in the long term. However, it is also possible that both types of costs can cancel each other out if everything is under control.

What are the TWO reasons why variances occur?

Options Count    
A. Poor budgeting control 109 69%
B. Lack of vision and mission 1 1%
C. Poor management decisions 17 11%
D. Lack of efficiency in operations 143 91%
E. Unproductive employees 42 27%
46

Which ONE of the following statements is NOT an important factor for investigating variances?

Options Count    
A. If any variance exceeds its standard costs by 5%, it should be investigated properly. 20 13%
B. The probable cause of a particular variance that is unknown or the managers are not aware of it. 94 61%
C. Every investigation for a variance will cost the company a good sum of money. This cost needs to be taken into consideration before conducting an investigation. 12 8%
D. There is an interrelationship between adverse and favourable variance, for example, an adverse variance has a correlation with another favourable variance within an organisation. 29 19%
47

Which of the following BEST describes the term "management by exception"?

Options Count    
A. Inspecting all unfavourable cost variances. 8 5%
B. Examining all favourable cost variances. 1 1%
C. Investigating significant cost variances. 116 76%
D. Setting standards that are acceptable to management. 28 18%
48

How do managerial accountants set cost standards? Select ONE correct statement.

Options Count    
A. Analysis of historical data and management by exception. 34 22%
B. Analysis of historical data and variance analysis. 46 29%
C. Analysis of historical data and task analysis. 63 40%
D. Task analysis and a statistical approach. 14 9%
49

Which ONE of the following terms refers to the only investigation of variance for which the advantages of correcting the variances will exceed the costs of follow-up?

Options Count    
A. Variance analysis 5 3%
B. Controllability 7 4%
C. Low-cost variance investigation 24 15%
D. Management by exception 104 67%
E. None of the above 16 10%
50

Which ONE of the following terms recognises the variance that is expected to occur if particular conditions affect operations?

Options Count    
A. Industry volume variance 12 8%
B. Yield variance 45 29%
C. Sales activity variance 19 12%
D. Market share variance 9 6%
E. None of the above 71 46%
51

Identify ONE possible cause of a material usage variance from the list below.

Options Count    
A. Terminating the contract of a long-term supplier, resulting in a more expensive supply line. 1 1%
B. Suddenly the supplier has increased the price of raw material. 7 4%
C. Due to high delivery charges, the purchasing cost of raw material has exceeded expectations. 2 1%
D. Adopting more efficient work procedures that will result in a better material usage rate. 146 93%
52

Which ONE of the following statements is a possible reason for sales volume variance?

Options Count    
A. Excess discounts offered to customers for purchasing products in bulk. 32 21%
B. In a marketing campaign, the unexpected effects of a low-priced offer. 19 12%
C. Unable to satisfy the demand of the customers due to a production problem. 99 64%
D. Adverse market conditions bring in an industry-wide price change. 5 3%
53

Which ONE of the following is NOT an advantage of standard costing?

Options Count    
A. Standard costing is critical for sensible cost comparison. 6 4%
B. Standard costing helps managers to employ management by exception. 11 7%
C. Standard costing offers a smooth performance evaluation process with employee rewards. 13 8%
D. Standard costing is more expensive than an actual product-costing system. 124 81%
54

Match the variance to the most likely cause:

Variance Likely Cause
 {blank1} More units were produced than was budgeted
 {blank2} New competition entered the market
 {blank3} New production staff were recruited
 {blank4} New suppliers were used
Options Count    
Correct 147 97%
Incorrect 5 -47%
55

ABC Company manufactures a single product and the following information is available for that particular product:

Standards per unit of product:

Direct material 4 kg at $$3 per kg
Direct labour 2 hours at $$6.40 per hour

 

Actual details for the financial period:

Output produced in units    $$38,000
Direct materials 180,000 kg for  
Purchased    $$504,000
Issued to production 154,000 KG    
Direct labour 78,000 hours worked for  $$546,000

 

There was no work in progress at the beginning or end of the period.

From this information, the following variances have been calculated.

Variance Favourable USD Adverse USD
Direct labour efficiency   12,800
Direct labour rate   46,800
Direct material usage   6,000
Direct material price 30,800  
Based on issues to production    

 

According to the above scenario, which of the following variances is consistent?

Options Count    

A. Direct labour efficiency variance

20 13%

B. Direct labour rate variance

31 21%

C. Direct materials price variance

70 47%

D. Direct materials usage variance

19 13%