1. Variances from standard costs are usually reported to:

a) Suppliers

b) Stockholders

c) Management

d) Creditors

2. Which of the following is not a reason standard costs are separated in two components?

a) The price and quantity variances need to be identified separately to correct the actual major differences.

b) Identifying variances determines which manager must find a solution to major discrepancies.

c) If a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections.

d) Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual.

3. The following data is given for the Zoyza Company:

Budgeted production (at 100% production capacity) 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.

The factory overhead volume variance is:

a) $73,250U

b) $73,250F

c) $59,400F

d) $59,400U

4. 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

5. The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:

Actual: Variable factory overhead $360,000

Fixed factory overhead 104,000

Standard hours allowed for units produced:

60,000 hours

What is the amount of the factory overhead controllable variance?

a) $12,000 unfavorable

b) $12,000 favorable

c) $14,000 Unfavorable

d) $26,000 unfavorable

Answer rating: 100% (QA)

1 c Management 2 d Variances bring att... View the full answer