# Variance

1. The variance that is most useful in assessing the performance of the purchasing department manager is:

A) the materials quantity variance.

B) the materials price variance.

C) the labor rate variance.

D) the labor efficiency variance.

2. Matt Company uses a standard cost system. Information for raw materials for

Product RBI for the month of October follows:

Standard price per pound of raw materials.............. $1.60

Actual purchase price per point of raw materials.... $1.55

Actual quantity of raw materials purchased............ 2,000 pounds

Actual quantity of raw materials used..................... 1,900 pounds

Standard quantity allowed for actual production..... 1,800 pounds

What is the materials purchase price variance?

A) $90 favorable

B) $90 unfavorable

C) $100 favorable

D) $100 unfavorable

3. Buckler Company manufacturers desks with vinyl tops. The standard material cost for the vinyl used per Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production run of 1,000 desks in March resulted in usage of 12,600 square feet of vinyl at a cost of $2.00 per square foot, a total cost of $25,200. The materials quantity variance resulting from the above production run was:

A) $972 favorable

B) $1,188 unfavorable

C) $1,800 favorable

D) $3,150 favorable

4. Zanny Electronics Company uses a standard cost system to collect costs related to the production its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20.

During the month of August, Zanny=s water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Zanny=s labor rate variance for the month of August?

A) $972 favorable

B) $1,188 unfavorable

C) $2,160 favorable

D) $2,808 unfavorable.

5. The following labor standards have been established for a particular product:

Standard labor-hours per unit of output....... 5.0 hours

Standard labor rate....................................... $18.25 per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked............ 9,800 hours

Actual hours worked............ $176,400

Actual output........................ 1,900 units

What is the labor efficiency variance for the month?

A) $3,025 U

B) $5,400 U

C) $3,025 F

D) $5,475 U

6. The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output........ 1.2 hours

Standard variable overhead rate.......... $10.20 per hour

The following data pertain to operations for the last month:

Actual hours........................................ 5,000 hours

Actual total variable overhead cost..... $52,750

Actual output....................................... 4,000 units

What is the variable overhead efficiency variance for the month?

A) $1,680 F

B) $2,040 U

C) $2,110 U

D) $3,790 U

7. The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output.............. 8.0 hours

Standard variable overhead rate................ $11.55 per hour

The following data pertain to operations for the last month:

Actual hours.............................................. 7,000 hours

Actual total variable overhead cost........... $79,100

Actual output............................................. 600 units

What is the variable overhead spending variance for the month?

A) $23,660 U

B) $1,750 F

C) $24,860 U

D) $1,200 U

8. The purpose of a flexible budget is to:

A) allow management some latitude in meeting goals.

B) eliminate fluctuations in production reports by ignoring variable costs.

C) compare actual and budgeted results at virtually any level of activity.

D) reduce the time to prepare the annual budget

9. The following sots appear in Malgorzata Company=s flexible budget at an activity level of 15,000 mahcine-hours:

Total Cost

Indirect materials............... $7,800

Factory rent........................ $18,000

What would be the flexible budget amounts at an activity level of 12,000 machine-hours if indirect materials is a variable cost and factory rent is a fixed cost?

Indirect Materials Factory Rent

A) $7,800 $14,400

B) $7,800 $18,000

C) $6,240 $14,400

D) $6,240 $18,000

10. Kerekes Manufacturing Corporation has prepared the following overhead budget for next month.

Activity level.................................. 2,500 machine-hours

Variable overhead costs:

Supplies....................................... $12,250

Indirect labor............................... 22,000

Fixed overhead costs:

Supervision................................. 15,500

Utilities....................................... 5,500

Depreciation............................... 6,500

Total overhead cost....................... $61,750

The company=s variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost of next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours? Assume that the activity levels of 2,500 machine-hours and 2,400 machine-hours are within the same relevant range.

A) $59,830.00

B) $59,280.00

C) $60,380.00

D) $61,750.00

11. Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:

Budgeted level of activity............................................... 9,700 MHs

Actual level of activity.................................................... 9,900 MHs

Cost formula for variable manufacturing overhead cost.. $6.30 per MH

Budgeted fixed manufacturing overhead cost.................. $49,000

Actual total variable manufacturing overhead................. $60,390

Actual total fixed manufacturing overhead...................... $47,000

What was the variable overhead spending variance for the month?

A) $2,000 favorable

B) $720 favorable

C) $1,260 unfavorable

D) $1,980 favorable

12. Teall Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:

Budgeted level of activity................................................. 8,500 MHs

Actual level of activity...................................................... 8,600 MHs

Cost formula for variable manufacturing overhead cost... $5.70 per MH

Budgeted fixed manufacturing overhead cost................... $50,000

Actual total variable manufacturing overhead.................. $51,600

Actual total fixed manufacturing overhead....................... $54,000

What was the fixed overhead budget variance for the month?

A) $4,000 unfavorable

B) $4,000 favorable

C) $570 favorable

D) $570 unfavorable

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#### Solution Summary

The solution explains various multiple choice questions relating to variance calculations

Confidence Intervals, Samples, and Unknown Variance

Let (X1, X2,..., Xn) be a sample, where each Xi is a random variable of normal distribution with mean mu and variance sigma². Let us suppose that n = 20, and sigma² = 9. An experiment has yielded the results (X1, X2,..., X20), and we have calculated that the empirical mean x20 = 2.09.

1) Give a confidence interval with level of confidence 90% for mu.

2) How big would the sample have to be for the interval to be half as long?

3) Let us now suppose the variance is not known. Knowing that counting from i=1 to 20 (xi - x20)² = 14.6, give a confidence interval with level of confidence 90% for the value of mu.

4) We now suppose we know mu is known and is equal to 2. Give a confidence interval with a confidence level of 90% for the value of sigma².

5) Same question if we do not know the value of mu.

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