P04 - Standard Costs and Variance Analysis xxx.doc - MANAGEMENT ADVISORY SERVICES CPAR Quizzer Set A SY 2004-2005 1st semester Set B SY 2004-2005 2nd

P04 - Standard Costs and Variance Analysis xxx.doc -...

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Unformatted text preview: MANAGEMENT ADVISORY SERVICES CPAR Quizzer Set A SY 2004-2005 1st semester Set B SY 2004-2005 2nd semester Set C SY 2005-2006 1st semester NORMAL COSTING One-Way Variance Actual Overhead 25.Hayward applies overhead at $5 per machine hour. During March it worked 10,000 hours and overapplied overhead by $3,000. Actual overhead was (E) A. $53,000. C. $47,000. B. $50,000. D. none of the above. L & H 10e Budgeted Overhead 17.Machine hours used to set the predetermined overhead rate were 50,000, actual hours were 48,000, and overhead applied was $120,000. Budgeted overhead for the year was (E) A. $115,200 C. $120,000 B. $118,000 D. $125,000 D, L & H 9e 42.Machine hours used to set the predetermined overhead rate were 80,000, actual hours were 90,000, and overhead applied was $117,000. Budgeted overhead for the year was (E) A. $104,000 C. $131,625 B. $117,000 D. Some other number. D, L & H 9e Applied Overhead 48.Machine hours used to set the predetermined overhead rate were 68,000, actual hours were 64,000, and budgeted overhead was $142,800. Overhead applied for the year was (E) A. $134,400 C. $142,800 B. $136,500 D. $151,725 D, L & H 9e 36.Gonzalez Company uses the equation $520,000 + $2 per direct labor hour to budget manufacturing overhead. Gonzalez has budgeted 150,000 direct labor hours for the year. Actual results were 150,000 direct labor hours and $817,500 total manufacturing CMA EXAMINATION QUESTIONS STANDARD COSTS AND VARIANCE ANALYSIS overhead. The total overhead applied for the year is (E) A. $300,000. C. $817,500. B. $520,000. D. $820,000. L & H 10e Over-Applied Based on direct labor hours 44.Antaya Company uses the equation $375,000 + $1.20 per direct labor hour to budget manufacturing overhead. Antaya has budgeted 75,000 direct labor hours for the year. Actual results were 81,000 direct labor hours, $388,000 fixed overhead, and $98,600 variable overhead. The total overhead variance for the year is (E) A. $14,400 C. $37,200 B. $15,600 D. $30,000. L & H 10e 44.Hughes Company uses the equation $375,000 + $1.20 per direct labor hour to budget manufacturing overhead. Hughes had budgeted 75,000 direct labor hours for the year. Actual results were 81,000 direct labor hours, $397,000 fixed overhead, and $94,500 variable overhead. The total overhead variance for the year is (E) A. $2,700 C. $22,000 B. $10,700 D. $30,000 D, L & H 9e 43.Cooke Company uses the equation $450,000 + $1.50 per direct labor hour to budget manufacturing overhead. Cooke has budgeted 150,000 direct labor hours for the year. Actual results were 156,000 direct labor hours and $697,500 total manufacturing overhead. The total overhead variance for the year is (E) A. $4,500 favorable. C. $4,500 unfavorable. B. $18,000 favorable. D. $18,000 unfavorable. D, L & H 9e 37.Gonzalez Company uses the equation $520,000 + $2 per direct labor hour to budget manufacturing overhead. Gonzalez has budgeted 150,000 direct labor hours for the year. Actual results were 150,000 direct labor hours and $817,500 total manufacturing overhead. The total overhead variance for the year is (E) A. $2,500 favorable. C. $2,500 unfavorable. Page 1 of 175 MANAGEMENT ADVISORY SERVICES B. $12,500 favorable. STANDARD COSTS AND VARIANCE ANALYSIS D. some other number. L & H 10e 37.Gonzales Company uses the equation $540,000 + $2 per direct labor hour to budget manufacturing overhead. Gonzalez has budgeted 160,000 direct labor hours for the year. Actual results were 160,000 direct labor hours and $857,500 total manufacturing overhead. The total overhead variance for the year is (E) A. $2,500 favorable. C. $2,500 unfavorable. B. $12,500 favorable. D. Some other number. D, L & H 9e Overhead applied based on direct labor cost 1 . Watson Company uses a predetermined factory overhead application rate based on direct labor cost. Watson's budgeted factory overhead was $756,000 based on a budgeted volume of 60,000 direct labor hours, at a standard direct labor rate of $7.20 per hour. Actual factory overhead amounted to $775,000 with actual direct labor cost of $450,000 for the year ended December 31. How much was Watson's overapplied factory overhead? (M) A. $12,500 C. $19,000 B. $18,000 D. $37,000 Gleim 2 . Nil Co. uses a predetermined factory O/H application rate based on direct labor cost. For the year ended December 31, Nil’s budgeted factory O/H was $600,000, based on a budgeted volume of 50,000 direct labor hours, at a standard direct labor rate of $6 per hour. Actual factory O/H amounted to $620,000, with actual direct labor cost of $325,000. For the year, over-applied factory O/H was (M) A. $20,000 C. $30,000 B. $25,000 D. $50,000 AICPA 1186 II-29 30.Nil Co. uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs. For the year ended December 31, Nil's estimated manufacturing overhead was $600,000, based on an estimated volume of 50,000 direct labor hours, at a direct labor rate of $6.00 per hour. Actual manufacturing overhead amounted to $620,000, with actual direct labor cost of $325,000. For the year, manufacturing overhead was: (M) CMA EXAMINATION QUESTIONS A. overapplied by $20,000. B. underapplied by $22,000. N 10e C. overapplied by $30,000. D. underapplied by $30,000. G & 24.Palo applies overhead based on direct labor cost. It had budgeted manufacturing overhead of $500,000 and budgeted direct labor of $250,000. Actual overhead was $525,000, actual labor cost was $270,000. Overhead was (E) A. Over-applied by $15,000. C. Over-applied by $25,000. B. Over-applied by $20,000. D. Under-applied by $20,000. D, L & H 9e 24.Spooner applies overhead based on direct labor cost. It had budgeted manufacturing overhead of $50,000 and budgeted direct labor of $25,000. Actual overhead was $52,500, actual labor cost was $27,000. Overhead was (E) A. overapplied by $1,500. C. overapplied by $2,500. B. overapplied by $2,000. D. underapplied by $2,000. L & H 10e 3 . Pane Company uses a job costing system and applies overhead to products on the basis of direct labor cost. Job No. 75, the only job in process on January 1, had the following costs assigned as of that date: direct materials, $40,000; direct labor, $80,000; and factory overhead, $120,000. The following selected costs were incurred during the year: Traceable to jobs: Direct materials $178,000 Direct labor 345,000 $523,000 Not traceable to jobs: Factory materials and supplies 46,000 Indirect labor 235,000 Plant maintenance 73,000 Depreciation on factory 29,000 equipment Other factory costs 76,000 459,000 Pane's profit plan for the year included budgeted direct labor of Page 2 of 175 MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS $320,000 and factory overhead of $448,000. Assuming no work-inprocess on December 31, Pane's overhead for the year was (M) A. $11,000 overapplied. C. $11,000 underapplied. B. $24,000 overapplied. D. $24,000 underapplied. CMA Samp Q3-5 Under-Applied 4 . The Kelley Company uses a predetermined overhead rate of $9 per direct labor hour to apply overhead. During the year, 30,000 direct labor hours were worked. Actual overhead costs for the year were $240,000. The overhead variance is (E) A. $27,000 overlapped C. $30,000 underapplied B. $26,670 underapplied D. $24,000 overapplied H&M 38.Bonds Company uses the equation $300,000 + $1.75 per direct labor hour to budget manufacturing overhead. Bonds has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours, $297,000 fixed overhead, and $194,500 variable overhead. The total overhead variance for the year is (E) A. $1,000. C. $35,000 B. $48,000. D. $36,000. L & H 10e 38.Alcatraz Company uses the equation $400,000 + $1.75 per direct labor hour to budget manufacturing overhead. Alcatraz has budgeted 125,000 direct labor hours for the year. Actual results were 110,000 direct labor hours, $397,000 fixed overhead, and $194,500 variable overhead. The total overhead variance for the year is (E) A. $2,000 C. $47,000 B. $3,000 D. $48,000 D, L & H 9e 29.Malcolm Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. On September 1, the estimates for the month were: Manufacturing overhead $17,000 Direct labor hours 13,600 During September, the actual results were: Manufacturing overhead $18,500 CMA EXAMINATION QUESTIONS Direct labor hours 12,000 The cost records for September will show: (E) G & N 10e A. Overapplied overhead of $1,500. C. Overapplied overhead of $3,500. B. Underapplied overhead of $1,500.D. Underapplied overhead of $3,500. Actual Direct Labor Hours Unfavorable volume variance 5 . Margolos, Inc. ends the month with a volume variance of $6,360 unfavorable. If budgeted fixed factory O/H was $480,000, O/H was applied on the basis of 32,000 budgeted machine hours, and budgeted variable factory O/H was $170,000, what were the actual machine hours (AH) for the month? (M) A. 32,424 C. 31,687 B. 32,000 D. 31,576 J.B. Romal Under-applied overhead given 30.Hoyt Company applies overhead at $6 per direct labor hour. In March Hoyt incurred overhead of $144,000. Under-applied overhead was $6,000. How many direct labor hours did TYV work? (M) A. 25,000 C. 23,000 B. 24,000 D. 22,000 D, L & H 9e . MNO Company applies overhead at P5 per direct labor hour. In March 2001, MNO incurred overhead of P120,000. Under-applied overhead was P5,000. How many direct labor hours did MNO work? (M) A. 25,000 C. 24,000 B. 22,000 D. 23,000 RPCPA 1001 Over-applied overhead given 41.Pinnini Co. uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Last year, Pinnini Company incurred $225,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied $14,500 for the year. If the Page 3 of 175 MANAGEMENT ADVISORY SERVICES STANDARD COSTS AND VARIANCE ANALYSIS predetermined overhead rate was $5.00 per direct labor hour, how many hours did the company work during the year? (M) A. 45,000 hours C. 42,100 hours B. 47,900 hours D. 44,000 hours G & N 10e 42.Parsons Co. uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. Last year Parsons incurred $250,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $12,000 for the year. If the predetermined overhead rate was $8.00 per direct labor hour, how many hours were worked during the year? (M) A. 31,250 hours C. 32,750 hours B. 30,250 hours D. 29,750 hours G & N 10e ACTIVITY-BASED COSTING Questions 116 thru 120 are based on the following information. Horngren Munoz, Inc. produces a special line of plastic toy racing cars. Munoz, Inc. produces the cars in batches. To manufacture a batch of the cars, Munoz, Inc. must set up the machines and molds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is responsible for setting up machines and molds for different styles of car. Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the number of setup-hours. The following information pertains to June 2004. Units produced and sold Batch size (number of units per batch) Setup-hours per batch Variable overhead cost per setup-hour Total fixed setup overhead CMA EXAMINATION QUESTIONS costs 6 . Calculate the efficiency variance for variable setup overhead costs. (D) A. $1,500 unfavorable C. $975 unfavorable B. $525 favorable D. $1,500 favorable 7 . Calculate the spending variance for variable setup overhead costs. (D) A. $1,500 unfavorable C. $975 unfavorable B. $525 favorable D. $1,500 favorable 8 . Calculate the flexible-budget variance for variable setup overhead costs. (M) A. $1,500 unfavorable C. $975 unfavorable B. $525 favorable D. $1,500 favorable 9 . Calculate the spending variance for fixed setup overhead costs. (E) A. $3,200 unfavorable C. $3,600 unfavorable B. $400 unfavorable D. $400 favorable 10 . Calculate the production-volume variance for fixed setup overhead costs.(M) A. $3,200 unfavorable C. $3,600 unfavorable B. $400 unfavorable D. $400 favorable 5 $40 5.25 $38 xxx STATIC BUDGET VARIANCE 4. Main Street Merchandising anticipated selling 24,000 units of a major product and paying sales commissions of $5 per unit. Actual sales and sales commissions totaled 23,600 units and $120,360, respectively. If the company used a static budget for performance evaluations, Main Street would report a cost variance of: A. $360U. C. $2,360U. B. $360F. D. $2,360F. Hilton $14,400 $14,000 Questions 48 thru 50 are based on the following information. Horngren Actual Amounts 15,000 250 Static-budget Amounts 11,250 225 Page 4 of 175 MANAGEMENT ADVISORY SERVICES Abernathy Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. Actual Budgeted Units sold 92,000 units 90,000 units Variable costs $450,800 $432,000 Fixed costs $ 95,000 $100,000 11 . What is the static-budget variance of revenues? (E) A. $20,000 favorable C. $2,000 favorable B. $20,000 unfavorable D. $2,000 unfavorable 12 . What is the static-budget variance of variable costs? (E) A. $1,200 favorable C. $20,000 favorable B. $18,800 unfavorable D. $1,200 unfavorable 13 . What is the static-budget variance of operating income? (E) A. $3,800 favorable C. $6,200 favorable B. $3,800 unfavorable D. $6,200 unfavorable Questions 51 thru 53 are based on the following information. Horngren Bates Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. Actual Budgeted Units sold 495,000 units 500,000 units Variable costs $1,250,000 $1,500,000 Fixed costs $ 925,000 $ 900,000 14 . What is the static-budget variance of revenues? (E) A. $50,000 favorable C. $5,000 favorable B. $50,000 unfavorable D. $5,000 unfavorable 15 . What is the static-budget variance of variable costs? (E) A. $200,000 favorable C. $250,000 favorable B. $50,000 unfavorable D. $250,000 unfavorable CMA EXAMINATION QUESTIONS STANDARD COSTS AND VARIANCE ANALYSIS 16 . What is the static-budget variance of operating income? (E) A. $175,000 favorable C. $225,000 favorable B. $195,000 unfavorable D. $325,000 unfavorable xxx FLEXIBLE BUDGET VARIANCE Total Manufacturing Cost Flexible Budget 17 . Aebi Corporation currently produces cardboard boxes in an automated process. Expected production per month is 20,000 units, direct-material costs are $0.60 per unit, and manufacturing overhead costs are $9,000 per month. Manufacturing overhead is allocated based on units of production. What is the flexible budget for 10,000 and 20,000 units, respectively? (E) A. $10,500; $16,500 C. $15,000; $21,000 B. $10,500; $21,000 D. none of the above Horngren 18 . Hemberger Corporation currently produces baseball caps in an automated process. Expected production per month is 20,000 units, direct material costs are $1.50 per unit, and manufacturing overhead costs are $23,000 per month. Manufacturing overhead is allocated based on units of production. What is the flexible budget for 10,000 and 20,000 units, respectively? (E) A. $26,500; $41,500 C. $38,000; $53,000 B. $26,500; $53,000 D. none of the above Horngren *. Based on normal capacity operations, Sta. Ana Company employs 25 workers in its Refining Department, working 8 hours a day, 20 days per month at a wage rate of P6 per hour. At normal capacity, production in the department is 5,000 units per month. Indirect materials average P0.25 per direct labor hour; indirect labor cost is 12½% of direct labor cost; and other overhead are P0.15 per direct labor hour. The flexible budget at the normal capacity activity level follows: Direct materials P 4,000 Direct labor 24,000 Fixed factory overhead 1,200 Indirect materials 1,000 Page 5 of 175 MANAGEMENT ADVISORY SERVICES Indirect labor 3,000 Other overhead 600 Total P 33,800 Cost per unit P 6.76 The total production cost for one month at 80% capacity is (M) A. P20,760 C. P27,280 B. P21,500 D. P30,160 RPCPA 1082 Cost variance Sales commission 5. Main Street Merchandising anticipated selling 24,000 units of a major product and paying sales commissions of $5 per unit. Actual sales and sales commissions totaled 23,600 units and $120,360, respectively. If the company used a flexible budget for performance evaluations, Main Street would report a cost variance of: A. $360U. C. $2,360U. B. $360F. D. $2,360F. Hilton Manufacturing Cost 19 . A defense contractor for a government space project has incurred $2,500,000 in actual design costs to date for a guidance system whose total budgeted design cost is $3,000,000. If the design phase of the project is 60% complete, what is the amount of the contractor's current overrun or savings on this design work? (M) A. $300,000 savings. C. $500,000 savings. B. $500,000 overrun. D. $700,000 overrun. CIA 0596 III-87 20 . A manufacturing firm planned to manufacture and sell 100,000 units of product during the year at a variable cost per unit of $4.00 and a fixed cost per unit of $2.00. The firm fell short of its goal and only manufactured 80,000 units at a total incurred cost of $515,000. The firm’s manufacturing cost variance was (D) A. $85,000 favorable. C. $5,000 favorable. B. $35,000 unfavorable. D. $5,000 unfavorable. CMA 1293 3-25 CMA EXAMINATION QUESTIONS STANDARD COSTS AND VARIANCE ANALYSIS 7. Lantern Corporation recently prepared a manufacturing cost budget for an output of 50,000 units, as follows: Direct materials $100,000 Direct labor 50,000 Variable overhead 75,000 Fixed overhead 100,000 Actual units produced amounted to 60,000. Actual costs incurred were: direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Lantern evaluated performance by the use of a flexible budget, a performance report would reveal a total variance of: A. $27,000 unfavorable. C. $3,000 favorable. B. $42,000 unfavorable. D. $23,000 favorable. Hilton Operating Income 21 . Clear Plus, Inc. manufactures and sells boxes of pocket protectors. The static master budget and the actual results for May 1995 appear below. Actual Static Budget Unit sales 12,000 10,000 Sales $132,000 $100,000 Variable costs of 70,800 60,000 sales Contribution 61,200 40,000 margin Fixed costs 32,000 30,000 Operating $ 29,200 $ 10,000 income The operating income for Clear Plus, Inc. using a flexible budget for May 1995 is (E) A. $12,000 C. $30,000 B. $19,200 D. $18,000 CMA 0695 3-26 22 . Clear Plus, Inc. manufactures and sells boxes of pocket protectors. The static master budget and the actual results for May 1995 appear below. Actual Static Budget Page 6 of 175 MANAGEMENT ADVISORY SERVICES Unit sales 12,000 10,000 Sales $132,000 $100,000 Variable costs of 70,800 60,000 sales Contribution 61,200 40,000 margin Fixed costs 32,000 30,000 Operating $ 29,200 $ 10,000 income Which one of the following statements concerning Clear Plus, Inc.’s actual results for May 1995 is correct? (M) A. The flexible budget variance is $8,000 favorable. B. The sales price variance is $32,000 favorable. C. The sales volume variance is $8,000 favorable. D. The fixed cost flexible budget variance is $4,000 favorable. CMA 0695 3-27 Comprehensive THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 74 THROUGH 77. Horngren The actual information pertains to the month of August. As part of the budgeting process Alloway’s Fencing Company developed the following static budget for August. Alloway is in the process of preparing the flexible budget and understanding the results. Actual Flexible Static Results Budget Budget Sales volume (in # 20,000 # 25,000 units) Sales revenues $1,000,000 $ $1,250,000 Variable costs 512,000 $ 600,000 Contribution margin 488,0...
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