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Exam 25: Budgetary Control and Responsibility Accounting

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Question 91

Multiple Choice

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In reporting variances,

A) promptness is relatively unimportant.
B) management normally investigates all variances.
C) the reports should facilitate management by exception.
D) the reports are not departmentalized.

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Question 92

Multiple Choice

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The investigation of materials price variance usually begins in the

A) first production department.
B) purchasing department.
C) controller's office.
D) accounts payable department.

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Question 93

Multiple Choice

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Finney Co. manufactures a product requiring two pounds of direct material. During 2011, Finney purchases 24,000 pounds of material for $74,400 when the standard price per pound is $3.00. During 2011, Finney uses 22,000 pounds to make 12,000 products. The standard direct material cost per unit of finished product is

In developing a standard cost for direct materials used in making a product, consideration should be given to two factors: (1) __________________ per unit of direct materials and (2) the __________________ of direct materials to produce one unit of product.

A standard is a unit amount, whereas a budget is a total amount.

Cinelli Company purchased 6,000 units of raw material on account for $11,700, when the standard cost was $12,000. Later in the month, Cinelli Company issued 5,600 units of raw materials for production, when the standard units were 5,800. Instructions Journalize the transactions for Cinelli Company to account for this activity.

Griffith Co. incurred direct labor costs of $48,000 for 6,000 hours. The standard labor cost was $48,600. During the month, Griffith assigned 6,000 direct labor hours costing $48,000 to production. The standard hours were 6,200. Instructions Journalize the transactions for Griffith Co. to account for this activity.

It is possible that a company's financial statements may report inventories at

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 2,800 gallons of direct materials that actually cost $10,600 were used to produce 1,500 units of product. The direct materials quantity variance for last month was

The formula for computing the overhead volume variance is

The difference between actual quantity of materials times the standard price and standard quantity times the standard price is the materials ________________ variance.

The overhead controllable variance is calculated as the difference between actual overhead costs incurred and the budgeted

A manufacturing company would include setup and downtime in their direct

In using variance reports, management looks for

Stumfoll Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. During the month of April, the company manufactures 250 units and incurs the following actual costs. Instructions Compute the total, price, and quantity variances for materials and labor.

Standard costs

The following direct materials data pertain to the operations of Osborn Manufacturing Company for the month of December. Standard materials price $4.00 per pound Actual quantity of materials purchased and used 16,500 pounds The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 5% from the standard price. In December, 4,000 units of finished product were manufactured. Instructions Prepare a matrix for materials and calculate the materials variances.

A standard cost system may be used in

Which of the following statements is false?

What does the controllable variance measure?