Calculation of Various Variances and Costs of Goods-Multiple Choice Questions

Question

1)Jordan Company produces basketballs and uses a standard costing system. Budgeted fixed overhead was $275,000. Rent increased during the year, causing actual fixed overhead to be $292,000. Jordan Company applies overhead on the basis of basketballs produced. They projected 1,100,000 basketballs would be produced during the year. They actually produced 1,200,000 basketballs. Which of the following pairs of variances is correct?

a) FOH Budget Variance: $8, 000 favorable ; FOH volume Variance: $17,000

b) FOH Budget Variance: $25, 000 favorable ; FOH volume Variance: $17,000

c) FOH Budget Variance: $17, 000 favorable ; FOH volume Variance: $8,000

d) FOH Budget Variance: $17, 000 favorable ; FOH volume Variance: $25,000

e) An amount other than those above

2) Druid Company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. They recently used 2,000 labor hours to produce 400 units. According to their standards, each unit is anticipated to take 6 hours. The company anticipated making 600 units. Actual VOH totaled $40,000. The company budgeted $54,000 of VOH. Which of the following pairs of variances is correct?

a) VOH Spending Variance: $6,000 favorable; VOH Efficiency Variance: $10,000 unfavorable

b) VOH Spending Variance: $10,000 favorable; VOH Efficiency Variance: $6,000 unfavorable

c) VOH Spending Variance: $14,000 favorable; VOH Efficiency Variance: $0 unfavorable

d) VOH Spending Variance: $4,000 favorable; VOH Efficiency Variance: $18,000 unfavorable

e) An amount other than those above

3)A firm calculates the standard labor cost for the 100,000 widgets is produced to be $250,000, and calculates DL rate and efficiency variance at $20,000UF and $25,000U. What are the entries to record the production?

a) Inventory     $250,000

Labor rate variance    $20,000

                                                       Labor efficiency variance    $25,000

                                                                     Wages payable                     $ 245,000

b) Inventory $250,000

Labor rate variance    $25,000

 

                                                       Labor efficiency variance    $20,000

                                                                     Wages payable                     $ 255,000

c) Inventory                 $255,000

Labor rate variance    $20,000

 

                                                       Labor efficiency variance    $25,000

                                                                    Wages payable                     $ 250,000

d) Inventory                 $245,000

Labor rate variance    $25,000

 

                                                       Labor efficiency variance    $20,000

                                                                     Wages payable                     $ 250,000

4) A firm with a standard costing system applies $30,000 of fixed overhead (FOH) and $25,000 of variable overhead (VOH), and records the following overhead variances:

Which of the following entries would be made to record variances at the end of the period, assuming that overhead is applied at standard costs over the course of the period?

a) Work-in-process inventory $55,000

                                                                 MOH                       $55,000

b) Work-in-process inventory $55,000

VOH efficiency variance      $2,000

                                                            VOH spending variance   $1,000

                                                                           FOH budget variance       $ 3,000

                                                                           MOH                                $ 53,000

c) Work-in-process inventory $53,000

VOH efficiency variance     $1,000

 FOH budget variance         $ 3,000

                                                            VOH spending variance   $2,000

                                                                       MOH                                $ 55,000

d) Work-in-process inventory $55,000

VOH efficiency variance     $2,000

 

COGS                                  $2,000

                                                            VOH spending variance   $1,000

                                                                           FOH budget variance       $ 3,000

                                                                           MOH                                $ 55,000

5) A firm with a standard costing system budgets 5,000 direct labor hours at $20 per hour to make 2,000 units. The firm actually produced 3,000 units using 7,000 direct labor hours at $23 per hour. Which of the following entries reflects the debits and credits made to the wages payable and work-in-process accounts during the period (i.e. before variances were closed out)?

a) Work-in-process inventory: Debit of $150,000 ; Wages Payable: Credit of $161,000

b) Work-in-process inventory: Debit of $161,000 ; Wages Payable: Credit of $161,000

c) Work-in-process inventory: Debit of $150,000 ; Wages Payable: Credit of $150,000

d) Work-in-process inventory: Debit of $161,000 ; Wages Payable: Credit of $150,000

e) Some other amount not listed here

6) Likert Company manufactures extremely accurate scales. They use a standard costing system. Last year the company projected that 300,000 scales would be produced. When Likert company closed out manufacturing overhead, they recorded a $114,000 debit to the FOH Budget Variance and a $160,000 credit to the FOH Volume Variance. Likert company budgeted $2,400,000 of fixed overhead. How many units did they actually produce and what was the actual amount of fixed overhead?

a) Units Produced: 280,000 ; Incurred FOH: 2,446,000

b) Units Produced: 320,000 ; Incurred FOH: 2,446,000

c) Units Produced: 280,000 ; Incurred FOH: 2,286,000

d) Units Produced: 320,000 ; Incurred FOH: 2,286,000

e) Units Produced: 280,000 ; Incurred FOH: 2,446,000

f) Some amount/combination not listed here

7) Alpha company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. For the most recent period, VOH spending variance was $80,000F, and VOH Efficiency was $110,000U. The company budgeted making 4,800 units at 3.5 hours each with $924,000 of VOH. The company actually produced 4,000 units. How many direct labor hours were used and what was the actual VOH?

a) DLH: 18,800 ; Actual VOH: $954,000

b) DLH: 16,000 ; Actual VOH: $800,000

c) DLH: 15,667 ; Actual VOH: $954,000

d) DLH: 13,333 ; Actual VOH: $800,000

e) Some amount/combination not listed here

8) Li Pong Company uses a standard costing system. Last year they incurred $300,000 of overhead and had he following variances before closing entries.

How much overhead was applied to inventory over the course of the year?

a) $301,000

b) $299,000

c) $315,000

d) $303,000

9) Manning Football produces autographed footballs and uses a standard costing system. Budgeted fixed overhead was $1,200,000. Actual fixed overhead was $1,257,000. Manning applies the same amount of overhead to each football. They projected 150,000 footballs would be produced during the year. They actually produced 160,000 footballs. Which of the following indicates the correct balance in the FOH variance accounts?

a) FOH Budget variance: $80,000 credit ; FOH Volume Variance: $57,000 debit

b) FOH Budget variance: $57,000 debit ; FOH Volume Variance: $80,000 credit

c) FOH Budget variance: $23,000 credit ; FOH Volume Variance: $80,000 debit

d) FOH Budget variance: $23,000 credit ; FOH Volume Variance: $57,000 debit

e) An amount other than those.

10) Mike’s Machines, Inc. uses a standard costing system. Last year the company incurred $1,200,000 of fixed overhead (FOH) and applied $1,300,000. The company’s FOH budget variance was $200,000 (unfavorable). Assuming every unit produced is identical, how many units did Mike’s Machines produce, relative to what they budgeted to produce?

a) Actual Production was 100% of Budgeted Production (the same)

b) Actual Production was about 7.69% more than budgeted Production

c) Actual Production was about 7.69% less than budgeted Production

d) Actual Production was about 8.33 % more than budgeted Production

e) Actual Production was about 8.33% less than budgeted Production

f) None of the above

11) Geyser Company makes a single product and uses a standard costing system that applies overhead on the basis of direct labor hours. They recently used 4,000 labor hours to produce 2,000 units, generating actual VOH of $400,000. According to their standards, each unit is anticipated to take 1.75 hours. The company anticipated making 2,400 units at a budgeted VOH cost of $462,000. Which of the following pairs of variance is correct?

a) VOH Spending Variance: $62,000 favorable ; VOH efficiency Variance: $44,000 unfavorable

b) VOH Spending Variance: $62,000 favorable ; VOH efficiency Variance: $40,000 unfavorable

c) VOH Spending Variance: $55,000 unfavorable ; VOH efficiency Variance: $40,000 favorable

d) VOH Spending Variance: $40,000 favorable ; VOH efficiency Variance: $55,000 unfavorable

e) VOH Spending Variance: $35,000 favorable ; VOH efficiency Variance: $50,000 unfavorable

f) An amount other than those

12) HydrateMe, Inc. makes water bottles and uses standard costing. The company recently used 750 labor hours to produce 6,000 units. According to their standards, each unit is anticipated to take 6 minutes, the company’s actual payroll cost amounted to $13,500. If the standard labor cost per hour is $20, which of the following pairs of variance is correct?

a) Labor Rate Variance: $3,000 unfavorable ; Labor Efficiency Variance: $ 1,500 favorable

b) Labor Rate Variance: $1,500 favorable ; Labor Efficiency Variance: $ 3,000 unfavorable

c) Labor Rate Variance: $2,700 unfavorable ; Labor Efficiency Variance: $ 1,200 favorable

d) Labor Rate Variance: $1,200 favorable ; Labor Efficiency Variance: $ 2,700 unfavorable

e) An amount other than those

 

 

 

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