1)Which of the following is one of the steps in effective management of variance
ID: 2568775 • Letter: 1
Question
1)Which of the following is one of the steps in effective management of variance analysis?
a.Identifying questions and their explanations
b.Preparing standard cost performance reports
c.Taking corrective and strategic actions
d.Computing and analyzing variances
e.All of the above
2)Which formula may be used to compute the material usage variance?
a.(Actual quantity - Standard quantity) x Actual price
b.(Actual quantity - Standard quantity) x Standard price
c.(Actual price - Standard price) x Actual quantity
d.(Actual price - Standard price) x Standard quantity
3)Budgeted materials are 24,000 units at $5 per unit for 6,000 units of finished product. Actual materials usage was 24,900 units at $4.80 for the 6,000 units of finished product. What was the total direct materials variance?
a.$480, favorable
b.$480, unfavorable
c.$4,800, unfavorable
d.$4,800, favorable
4)Leland Manufacturing produced 3,700 units of finished product, using 15,000 pounds of raw material.The actual price was $9.90 per pound. The material standards for the product are 4 pounds per unit at $10 per pound. How much are the materials quantity variance and the materials price variance, respectively?
a.$2,000 unfavorable; $1,500, favorable.
b.Cannot be determined from the information given.
c.$2,000 unfavorable; $1,500, unfavorable.
d.$2,000 favorable; $1,500, unfavorable.
e.$2,000 favorable; $1,500, favorable.
5)Jan-Lee Outlets recorded actual sales of 7,200 units at $11 per unit. The flexible budget for 7,200 units shows sales at $79,440. What is the sales price variance?
a.$510, unfavorable
b.$240, favorable
c.$510, favorable
d.$240, unfavorable
Explanation / Answer
1
1) Which of the following is one of the steps in effective management of variance analysis?
Ans
all of the above
Identifying questions and their explanations and Preparing standard cost performance reports, Taking corrective and strategic actions, Computing and analyzing variances all are essential steps in management of variance analysis
2
2) Which formula may be used to compute the material usage variance?
Ans
b.(Actual quantity - Standard quantity) x Standard price ids correct formula
3
3) Budgeted materials are 24,000 units at $5 per unit for 6,000 units of finished product. Actual materials usage was 24,900 units at $4.80 for the 6,000 units of finished product. What was the total direct materials variance?
Budgeted material cost = 24,000*5
$120,000
Actual cost 24,900*$4.80
$119,520
Variance favourable since actual cost is less than budgeted
$480
Ans
a.$480, favourable
4
4) Leland Manufacturing produced 3,700 units of finished product, using 15,000 pounds of raw material. The actual price was $9.90 per pound. The material standards for the product are 4 pounds per unit at $10 per pound. How much are the materials quantity variance and the materials price variance, respectively?
Material Quantity variance = (standard qty-Actual qty)*standard rate
Material Quantity variance= ((4*3700)-15,000)*$10 = 2000 Unfavourable (Standard is less than actual)
Material price variance = (standard price per unit-actual price per unit)*Actual units
Material price variance = ($10-$9.90)*(15,000) = $1,500 Favourable
Ans
a.$2,000 unfavourable; $1,500, favourable. Is correct
5
5) Jan-Lee Outlets recorded actual sales of 7,200 units at $11 per unit. The flexible budget for 7,200 units shows sales at $79,440. What is the sales price variance?
Actual sales (7,200*$11) = $79200
Standard sales for 7200 units = $79,440
Price variance = ($79,200-$79,440) = $240 Unfavourable
Ans
d.$240, unfavourable
1
1) Which of the following is one of the steps in effective management of variance analysis?
Ans
all of the above
Identifying questions and their explanations and Preparing standard cost performance reports, Taking corrective and strategic actions, Computing and analyzing variances all are essential steps in management of variance analysis
2
2) Which formula may be used to compute the material usage variance?
Ans
b.(Actual quantity - Standard quantity) x Standard price ids correct formula
3
3) Budgeted materials are 24,000 units at $5 per unit for 6,000 units of finished product. Actual materials usage was 24,900 units at $4.80 for the 6,000 units of finished product. What was the total direct materials variance?
Budgeted material cost = 24,000*5
$120,000
Actual cost 24,900*$4.80
$119,520
Variance favourable since actual cost is less than budgeted
$480
Ans
a.$480, favourable
4
4) Leland Manufacturing produced 3,700 units of finished product, using 15,000 pounds of raw material. The actual price was $9.90 per pound. The material standards for the product are 4 pounds per unit at $10 per pound. How much are the materials quantity variance and the materials price variance, respectively?
Material Quantity variance = (standard qty-Actual qty)*standard rate
Material Quantity variance= ((4*3700)-15,000)*$10 = 2000 Unfavourable (Standard is less than actual)
Material price variance = (standard price per unit-actual price per unit)*Actual units
Material price variance = ($10-$9.90)*(15,000) = $1,500 Favourable
Ans
a.$2,000 unfavourable; $1,500, favourable. Is correct
5
5) Jan-Lee Outlets recorded actual sales of 7,200 units at $11 per unit. The flexible budget for 7,200 units shows sales at $79,440. What is the sales price variance?
Actual sales (7,200*$11) = $79200
Standard sales for 7200 units = $79,440
Price variance = ($79,200-$79,440) = $240 Unfavourable
Ans
d.$240, unfavourable
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