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Efficiency variance,flexible budget,volume,material variance

1. Hovland, a maker of widgets, has the following standard and actual costs for materials: actual quantity is 7,100 pounds, standard quantity is 6,000 pounds, actual price is $0.85 per lb. and standard price is $0.75 per lb. The materials efficiency variance is:

a. $825 U
b. $375 U
c. $710 U
d. $660 U

2. Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper while fixed costs are $75,000 per month for volumes up to 850,000 diapers and $112,500 for volumes above 850,000 diapers. The flexible budget would reflect monthly operating income for 800,000 diapers and 900,000 diapers of:

a. $22,500 and $7,500, respectively
b. $60,000 and $45,000, respectively
c. $45,000 and $22,500, respectively
d. $7,500 and $60,000, respectively

3. Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000 while the static budget operating income is $53,000. The sales volume variance for operating income is:

a. $10,000 unfavorable
b. $13,000 favorable
c. $13,000 unfavorable
d. $10,000 favorable

4. Tiger's Golf Center reported actual operating income for the current year of $60,000. The flexible budget operating income for actual volume achieved is $55,000 while the static budget operating income is $58,000. The flexible budget variance for operating income is:

a. $5,000 favorable
b. $3,000 unfavorable
c. $2,000 favorable
d. $5,000 unfavorable

5. Colfax Sales Company budgets cash collections. Records show that 30% of sales are collected in the month of sale, 60% are collected in the following month, and 10% are collected in the second month following the sale. Budgeted sales are $150,000 in August, $200,000 in September, and $220,000 in October. What are budgeted cash collections in October?

a. $187,000
b. $220,000
c. $201,000
d. $66,000

6. Wriston Company predicts cash receipts from customers of $234,600 and cash disbursements of $243,200. The June 30 cash balance is budgeted to be $24,650 and the July 31 cash balance is budgeted to be $26,500. How much cash must Wriston arrange to borrow in July?

a. None
b. $8,600
c. $1,850
d. $10,450

7. Coleman Company has budgeted sales of 25,000 units in June and 28,000 units in July. Coleman's policy is to have on hand at the end of any month inventory equal to 25% of next monthâ's budgeted sales. Accordingly, at the end of May, Coleman had 6,250 units on hand. How many units must Coleman produce during June in order to support the sales goal?

a. 38,250
b. 25,750
c. 28,000
d. 24,250

8. Heath Company has beginning inventory of 21,000 units and expected sales of 48,000 units. If the desired ending inventory is 15,500 units, how many units should be produced?

a. 27,000
b. 42,500
c. 53,500
d. 45,000

9. An unfavorable direct labor price variance and a favorable direct labor efficiency variance might indicate:

a. unskilled workers using more actual hours than standard paid at a higher rate per hour than the standard rate
b. unskilled workers using less actual hours than standard paid a lesser rate per hour than the standard rate
c. skilled workers using more actual hours than standard paid at a higher rate per hour than the standard rate
d. skilled workers using less actual hours than standard paid at a higher rate per hour than the standard rate

10. An unfavorable direct materials efficiency variance and a favorable direct materials price variance might indicate:

a. less expensive, inferior materials requiring more than the standard amount were used in production
b. less expensive, inferior materials requiring less than the standard amount were used in production
c. more expensive, superior materials requiring more than the standard amount were used in production
d. more expensive, superior materials requiring less than the standard amount were used in production

Solution Preview

1 - Material usage/efficiency variance = (7100 - 6000)*0.75 = $825 U

2 - (0.20-0.05)*800000 - 75000 = 45,000
(0.20-0.05)*900000 - 112500 = ...

Solution Summary

The solution answers 10 Problems related to Efficiency variance, flexible budget, volume, material, labor variances

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