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UW ACCTG 225 - ACCTG225 Quiz4B

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Accounting 225A Quiz 4B – February 20, 2014 Name:__________________________________________ Score:________/15 Show ALL work on these pages, credit may not be given for correct answers with no support. Attempt all questions. True / False (0.5 point each, 2 points total) T/F 1. For variable costs, comparing actual results to the planning budget is more useful than comparing actual results to the flexible budget. False 2. The spending variance for direct labor can be calculated when the amount of direct materials used does not equal the amount of direct materials purchased. True 3. The spending variance is made up of the quantity variance and the efficiency variance. False 4. A variance in which actual expenses are higher than budgeted expenses is a favorable variance. False Multiple Choice (1 point each, 5 points total) 5. When calculating variances for direct materials, use the quantity purchased rather than the quantity used to calculate: Quantity Variance Price Variance A. No No B. Yes Yes C. Yes No D. No Yes6. At what points in time are each of the following budgets prepared/amounts known, to complete a flexible budget variance analysis? Planning Flexible Actual A. Beginning of period Beginning of period Beginning of period B. End of period End of period End of period C. Beginning of period Beginning of period End of period D. Beginning of period End of period End of period 7. CompuTech Corp planned to produce 5,000 units of its product last month. The inputs for the product consist of 3 pounds of a raw material which costs $2 per pound. Actual production in the month was 4,000 units. There was a favorable materials price variance of $1,240 and an unfavorable materials quantity variance of $960. Based on this information, one could conclude that: A. More materials were purchased than were used. B. More materials were used than were purchased. C. The actual cost per pound for materials was more than the standard cost per pound. D. The actual usage of materials was more than the standard usage. 8. Variable manufacturing overhead is applied to products on the basis of standard direct-labor hours. If there is a favorable direct-labor efficiency variance, the variable overhead efficiency variance will be: A. Unfavorable. B. Favorable. C. The direct-labor efficiency variance does not impact the variable overhead efficiency variance. D. There will be no variable overhead efficiency variance. 9. The variance that is due to a difference between the standard amount of inputs that should be used to produce the actual output versus the actual amount of inputs used is the: A. Spending variance B. Price or Rate variance C. Quantity or Efficiency variance D. Activity varianceProblems 10. (3 points) SharkFin, Inc. manufactures and sells swim fins. The company has provided the following fixed and variable cost data that was used to formulate its budgets: Last April, the company budgeted to produce and sell 6,500 pairs of fins, but actually produced and sold only 6,250 pairs, and provided the following actual results: A. What was the planning budget for selling & administrative expenses for the month? (1 point) 20,500 + (6,500 * 0.75) = 25,375 B. What was the flexible budget for direct labor for the month? (1 point) 0 + (6,250 * 9.50) = 59,375 C. What was the spending variance for direct materials for the month? (1 point) Flexible budget = 0 + (6,250 * 18) = 112,500 112,500 – 108,950 = 3,550 F FC per month VC per unitRevenue ............................................. -$ 45.00$ Direct materials .................................. - 18.00 Direct labor ........................................ - 9.50 Manufacturing overhead ..................... 38,000 3.50 Selling & administrative expenses ........ 20,500 0.75 Revenue ............................................. 271,875$ Direct materials .................................. 108,950 Direct labor ........................................ 61,425 Manufacturing overhead ..................... 58,150 Selling & administrative expenses ........ 26,88011. (5 points) Product A requires 2.5 direct-labor hours per unit at $12.50 per direct-labor hour. Last month 4,200 units of Product A were produced using 11,250 direct-labor hours at a total direct-labor cost of $132,200. A. What is the labor efficiency variance for the month? (1 point) Flexible budget for standard inputs = 4,200 * 2.5 * 12.50 = 131,250 Flexible budget for actual inputs = 11,250 * 12.50 = 140,625 140,625 – 131,250 = 9,375 U B. What is the labor rate variance for the month? (1 point) Flexible budget for actual inputs = 140,625 Actual cost = 132,200 140,625 – 132,200 = 8,425 F(continued) Product A also requires 8 pounds of raw material priced at $4.75 per pound. A total of 31,200 pounds of the material were used last month. Also last month, the company purchased 40,000 pounds of the material for $180,000. C. What is the materials quantity variance for the month? (1 point) Flexible budget for standard inputs = 4,200 * 8 * 4.75 = 159,600 Flexible budget for actual inputs (used) = 31,200 * 4.75 = 148,200 159,600 – 148,200 = 11,400 F D. What is the materials price variance for the month? (2 points) Flexible budget for actual inputs (purchased) = 40,000 * 4.75 = 190,000 Actual cost = 180,000 190,000 – 180,000 = 10,000


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