ACCY 121 Chapter 16 Practice Quiz Fundamentals of Variance Analysis 101. The Hageness Company has had great difficulty in controlling overhead costs. At a recent convention, the president heard about a control device for overhead costs known as a flexible budget and she has hired you to implement this budgeting program. After some effort, you develop the following cost formulas for the company's machining department. These costs are based on a normal operating range of 15,000 to 23,000 machine-hours per month: setup $0 .20 per machine-hour Lubricants $1.00 per machine-hour plus $8,000 per month Utilities $0.70 per machine-hour Indirect labor $0.60 per machine-hour plus $20,000 per month Depreciation $32,000 per month During March, the first month after your preparation of the above data, the machining department worked 18,000 machine-hours and produced 9,000 units of product. The actual costs of this production were: Machine set-up $ 4,800 Lubricants 24,500 Utilities 12 ,000 Indirect labor 32,500 Depreciation 32,500 $106,300 The department had originally been budgeted to work 19,000 machine-hours during March. Required: Prepare a performance report for the machining department for the month of March including columns for the (a) actual results, (b) flexible budget, (c) flexible budget variance, (d) master budget, and (e) sales activity variance.
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ACCY 121 Chapter 16 Practice Quiz
Fundamentals of Variance Analysis
101 The Hageness Company has had great difficulty in controlling overhead costs At a recent convention the president heard about a control device for overhead costs known as a flexible budget and she has hired you to implement this budgeting program After some effort you develop the following cost formulas for the companys machining department These costs are based on a normal operating range of 15000 to 23000 machine-hours per month
~lachine setup $0 20 per machine-hour Lubricants $100 per machine-hour plus $8000 per month Utilities $070 per machine-hour Indirect labor $0 60 per machine-hour plus $20000 per month Depreciation $32000 per month
During March the first month after your preparation of the above data the machining department worked 18000 machine-hours and produced 9000 units of product The actual costs of this production were
The department had originally been budgeted to work 19000 machine-hours during March Required Prepare a performance report for the machining department for the month of March including columns for the (a) actual results (b) flexible budget (c) flexible budget variance (d) master budget and (e) sales activity variance
l~1 ( b ) (a-b) ( c ) (6- c ) v claquoaie
f g Ottgt fo1 H I oro Mil I AIIi-4 F~ I tjD Mij Flexible Flex B IIaster Sales
Actual Budget Variance Budget Actiyitv V shy-Machine set-up 4800 3600 1200 U 3800 200 F 2-0 tshy
Lubricants 24500 26000 1500 F 27000 1000 F 00 lt2 ~a-o Utilities 12000 12600 600 F 13300 700 F 1 0 e-shyIndirect labor 32500 30800 1700 U 31400 600 F bull C () l-Of (U)
Depreciation 32500 32000 500 U 32000 _0 e- ~lcnru Total costs 106300 105000 1300 U 107500 2500 F
$020 x 19000 $100 x 19000 $070 x 19000 $060 x 19000
Flexible Budget Machine setup $020 x 18000
3800 0 19000 8000 13300 0 11 400 20000
0 32000 47500 60000
Variable 3600
Fixed 0
Total 3600
Lubricants $100 x 18000 18000 8000 26000 Utilities $070 x 18000 12600 0 12600 Indirect labor $060 x 18000 10800 20000 30800 Depreciation 0 32000 32000 Total 45000 60000
Feedback
AACSB Analytic AICPA FN-Decision Making Blooms Analysis L0 5 Difficulty Medium Learning Objectiv DL~ MedL~ Topic Area lexible Budgeting
105000
2
105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below
Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0
actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October
Direct Materials Copper purchased 2600 spools $308spool
Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725
600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices
Overhead Variable $16670 Fixed $ 8800
Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable
3
a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance
a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable
Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances
4
Variance Analysis Template
Standard Quantity Allowed for Actual
Actual Inputs at Output atStandard Actual Costs Standard Prices Price
AQ xAP AQxSP SQ x SP
) 7~ols X ~ 5~ho -
Cl(6D
Direct Materials 2bcro ls )(~3 crn4
~~ j
IL~ -=) t 76QJ shy
I $ l-oB a I I ~300 f I Price Variance Quantity Variance
AH x AR AH x SR qlJO 15 I SH x SR
z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor
~~=3q-I5D~ ~) ~ or --------_ ~ I
350 a I I I 4-~ F I Rate Variance Efficiency Variance
AHxAR
Actual Flex Budget
L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (
- $rC0)1l I $021 U I
Budget Variance
Variable Overhead
Fixed Overhead
( c )
Flexible Sales Actual Budget Flexible Activity Master
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
l~1 ( b ) (a-b) ( c ) (6- c ) v claquoaie
f g Ottgt fo1 H I oro Mil I AIIi-4 F~ I tjD Mij Flexible Flex B IIaster Sales
Actual Budget Variance Budget Actiyitv V shy-Machine set-up 4800 3600 1200 U 3800 200 F 2-0 tshy
Lubricants 24500 26000 1500 F 27000 1000 F 00 lt2 ~a-o Utilities 12000 12600 600 F 13300 700 F 1 0 e-shyIndirect labor 32500 30800 1700 U 31400 600 F bull C () l-Of (U)
Depreciation 32500 32000 500 U 32000 _0 e- ~lcnru Total costs 106300 105000 1300 U 107500 2500 F
$020 x 19000 $100 x 19000 $070 x 19000 $060 x 19000
Flexible Budget Machine setup $020 x 18000
3800 0 19000 8000 13300 0 11 400 20000
0 32000 47500 60000
Variable 3600
Fixed 0
Total 3600
Lubricants $100 x 18000 18000 8000 26000 Utilities $070 x 18000 12600 0 12600 Indirect labor $060 x 18000 10800 20000 30800 Depreciation 0 32000 32000 Total 45000 60000
Feedback
AACSB Analytic AICPA FN-Decision Making Blooms Analysis L0 5 Difficulty Medium Learning Objectiv DL~ MedL~ Topic Area lexible Budgeting
105000
2
105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below
Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0
actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October
Direct Materials Copper purchased 2600 spools $308spool
Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725
600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices
Overhead Variable $16670 Fixed $ 8800
Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable
3
a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance
a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable
Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances
4
Variance Analysis Template
Standard Quantity Allowed for Actual
Actual Inputs at Output atStandard Actual Costs Standard Prices Price
AQ xAP AQxSP SQ x SP
) 7~ols X ~ 5~ho -
Cl(6D
Direct Materials 2bcro ls )(~3 crn4
~~ j
IL~ -=) t 76QJ shy
I $ l-oB a I I ~300 f I Price Variance Quantity Variance
AH x AR AH x SR qlJO 15 I SH x SR
z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor
~~=3q-I5D~ ~) ~ or --------_ ~ I
350 a I I I 4-~ F I Rate Variance Efficiency Variance
AHxAR
Actual Flex Budget
L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (
- $rC0)1l I $021 U I
Budget Variance
Variable Overhead
Fixed Overhead
( c )
Flexible Sales Actual Budget Flexible Activity Master
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
105 Western Company manufactures special electrical equipment and parts Western employs a standard cost accounting system with separate standards established for each product Aspecial transformer is manufactured in the Transformer Department Production volume is measured by direct labor hours in this department and a flexible budget system is used to plan and control department overhead Standard costs for the special transformer are determined annually in September for the coming year The standard cost of a transformer was computed at $5700 as shown below
Ov ere based upon normal and expected monthly ca it b h of which were 4000 direct labor hours ractical capacity for this department i 5000 direct labor hours per mon ana Ie overhead costs are expected to vary with the num er 0 Irec a or 0
actually used During October([OO transformers were producdJThis was below expectations because a work stoppage occurred during contract negotiatio he I orce Once the contract was settled the wage rate was increased to 725hour and overtime as scheduled in an attempt to catch up to expected production levels The following costs were incurred in October
Direct Materials Copper purchased 2600 spools $308spool
Used 2600 spools Direct labor Regular time 2000 hours $700 Overtime 1400 hours $725
600 of the 1400 hours were subject to overtime premium The total overtime premium is included in variable overhead in accordance with company accounting practices
Overhead Variable $16670 Fixed $ 8800
Required Compute each of the following variances showing all your work Be sure to indicate whether the variances are favorable or unfavorable
3
a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance
a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable
Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances
4
Variance Analysis Template
Standard Quantity Allowed for Actual
Actual Inputs at Output atStandard Actual Costs Standard Prices Price
AQ xAP AQxSP SQ x SP
) 7~ols X ~ 5~ho -
Cl(6D
Direct Materials 2bcro ls )(~3 crn4
~~ j
IL~ -=) t 76QJ shy
I $ l-oB a I I ~300 f I Price Variance Quantity Variance
AH x AR AH x SR qlJO 15 I SH x SR
z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor
~~=3q-I5D~ ~) ~ or --------_ ~ I
350 a I I I 4-~ F I Rate Variance Efficiency Variance
AHxAR
Actual Flex Budget
L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (
- $rC0)1l I $021 U I
Budget Variance
Variable Overhead
Fixed Overhead
( c )
Flexible Sales Actual Budget Flexible Activity Master
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
a Direct materials price variance b Direct material efficiency (quantity) variance c Direct labor rate variance d Direct labor efficiency variance e Variable overhead spending variance f Variable overhead efficiency variance g Fixed overhead spending (budget) variance h Production volume variance
a $208 unfavorable b $300 favorable c $350 unfavorable d $1400 favorable e$6470 unfavorable f $600 favorable g $800 unfavorable h $800 unfavorable
Feedback a ($308 bull $300) x 2600 =$208 unfavorable b [2600 bull (3 x 900)] x $300 =$300 favorable c [($700 x 2000) + ($725 x 1400)] bull ($700 x 3400) =$350 unfavorable d [3400middot (4 x 900)] x $700 = $1400 favorable e $16670 bull ($300 x 3400) =$6470 unfavorable f ($300 x 3400) bull [$300 x (4 x 900)] =$600 favorable g $8800 bull ($200 x 4000) = $800 unfavorable h ($200 x 4000) bull [($200 x (4 x 900)] = $800 unfavorable
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Medium Learning Objective 5 Learning Objective 6 Topic Area Variable Cost Variance Analysis Fixed Cost Variances
4
Variance Analysis Template
Standard Quantity Allowed for Actual
Actual Inputs at Output atStandard Actual Costs Standard Prices Price
AQ xAP AQxSP SQ x SP
) 7~ols X ~ 5~ho -
Cl(6D
Direct Materials 2bcro ls )(~3 crn4
~~ j
IL~ -=) t 76QJ shy
I $ l-oB a I I ~300 f I Price Variance Quantity Variance
AH x AR AH x SR qlJO 15 I SH x SR
z OW X ~ 7 J 2CJtsO)Xtf7 6D )( 4-tds l 7 ()t)Direct - hS (hY) Vf gtD k-~ 4T5D f- I ILabor
~~=3q-I5D~ ~) ~ or --------_ ~ I
350 a I I I 4-~ F I Rate Variance Efficiency Variance
AHxAR
Actual Flex Budget
L Lf-tnO lL ofp 1D l ~t ~ (51)____ L- Iyrt (
- $rC0)1l I $021 U I
Budget Variance
Variable Overhead
Fixed Overhead
( c )
Flexible Sales Actual Budget Flexible Activity Master
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
54 What is the actual sales revenue A $156000 B $169000 C $180000 D $191000
First solve for actual variable marketing amp administrative costs =$29250 Second add actual contribution margin to the actual variable costs to find actual sales = $169000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
6
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
55 What is the sales revenue in the flexible budget A $139000 B $156000 C $169000 D $180000
$169000 (actual sales from previous question) bull $13000 =$156000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
56 What is the flexible budget contribution margin A $39000 B $45000 C $52000 D $58000
$156000 bull $91000 bull $26000 =$39000
AACSB Analytic AICPA FNmiddotDecision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
7
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
57 What is the master budget sales revenue A $124000 B $148000 C $156000 D $180000
($15600013000) =$12 selling price $12 x (13000 +2000) =$180000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Variance
58 What is the master budget contribution margin A $52000 B $47500 C $45000 D $39000
$180000 - $105000 - $30000 =$45000
AACSB Analytic AICPA FN-Decision Making Blooms Analysis Difficulty Hard Learning Objective 2 Topic Area Sales Activity Varianc
8
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency
fi~1 fruJ lt31 61SU ] ~O 11-0 l I - F I I 2 o iO 4 Igt_Jo
Rate Variance Efficiency Variance AH xAR AH x SR I SH x SR
Variable Overhead
I I I I Spending Variance Efficiency Variance
Actual Flex Budget Applied
Fixed Overhead
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQxSP SQ x SP
I I I I Price Variance Quantity Variance
SH x SR AH xAR I AH x SR
I I I I Rate Variance Efficiency Variance
I SH x SR AHxAR I AH x SR
I I I I Spending Variance Efficiency Variance
Flex Budget I I AppliedActual
I I I I Budget Variance Volume Variance
Variance Analysis Template
Direct Materials
Direct Labor
Variable Overhead
Fixed Overhead
Standard Quantity Allowed for Actual
Actual Inputs at Output at Standard Actual Costs Standard Prices Price
AQxAP AQ xSP SQ x SP
AH xAR
I Price Variance
I AH x SR
I I
Quantity Variance I l SH x SR
AHxAR
I Rate Variance
I AH x SR
I Efficiency Variance
I SH x SR
Actual
I Spending Variance
I l Flex Budget
I Efficiency Variance
I Applied
I Budget Variance
I I Volume Variance
I
The following information summarizes the standard cost for producing one metal tennis racket frame In addition the variances for one months production are given Assume that all inventory accounts have zero balances at the beginning of the month
Materials Direct Labor 2 hrs $260 Factory Overhead VariabJe Fixed
Variances Material price Material quantity Labor rate Labor efficiency