Test Bank Chapter 13 Standard Costing And Variance Analysis

Chapter 13: Standard Costing and Variance Analysis

Test Bank

Type: multiple response question

Title: Chapter 13 Question 01

1) Which of the following words do you associate with standard costing?

Please select all that apply.

Heading reference: What is standard costing?

a. Expected

b. Predictive

c. Actual

d. Planned

Type: multiple choice question

Title: Chapter 13 Question 02

2) Which one of the following statements does not describe variance analysis?

a. Variance analysis is a comparison of actual outcomes with expectations.

Heading reference: What is standard costing?, Variance analysis

b. Variances are used to explain the difference between actual and budgeted results.

Heading reference: What is standard costing?, Variance analysis

c. Variances represent expectations of what costs and revenues will be.

Heading reference: What is standard costing?, Variance analysis

d. Variance analysis helps control operations.

Heading reference: What is standard costing?, Variance analysis

Type: multiple choice question

Title: Chapter 13 Question 03

3) Which one of the following is not a recognized standard under standard costing?

a. Ideal

Heading reference: Different standards

b. Normal

Heading reference: Different standards

c. Attainable

Heading reference: Different standards

d. Actual

Heading reference: Different standards

Type: true-false

Title: Chapter 13 Question 04

4) A standard cost card includes just details of product costs.

a. True

Heading reference: What is standard costing?, Setting the standard

b. False

Heading reference: What is standard costing?, Setting the standard

Type: true-false

Title: Chapter 13 Question 05

5) A standard cost is just a best estimate of the costs and revenues associated with a product or service.

a. True

Heading reference: What is standard costing?

b. False

Heading reference: What is standard costing?

Type: true-false

Title: Chapter 13 Question 06

6) A standard cost card just presents details of standard selling price, direct materials, direct labour, direct expenses and variable overheads.

a. True

Heading reference: What is standard costing?, Setting the standard

b. False

Heading reference: What is standard costing?, Setting the standard

Type: multiple choice question

Title: Chapter 13 Question 07

7) What is the correct formula for the direct material total variance?

a. (Actual usage of direct material for actual production – expected usage of direct material for actual production) x the standard cost of direct material for one unit of production.

Heading reference: Setting the standard, Direct material price and usage variances

b. Actual expenditure on direct material for actual production – expected expenditure on direct material for actual production.

Heading reference: Setting the standard, Direct material price and usage variances

c. What the direct material for actual production should have cost – what the direct material for actual production actually cost.

Heading reference: Setting the standard, Direct material price and usage variances

d. Expected expenditure on material – actual production units x standard material cost per unit of production.

Heading reference: Setting the standard, Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 08

8) What is the correct formula for the direct material price variance?

a. Actual expenditure on direct material for actual production – expected expenditure on direct material for actual production.

Heading reference: Direct material price and usage variances

b. (Actual usage of direct material for actual production – expected usage of direct material for actual production) x the standard cost of direct material for one unit of production.

Heading reference: Direct material price and usage variances

c. What the direct material for actual production should have cost – what the direct material for actual production actually cost.

Heading reference: Direct material price and usage variances

d. What the direct material for expected production should have cost – what the direct material for actual production actually cost.

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 09

9) What is the correct formula for the direct material usage variance?

a. (The direct material that should have been used in actual production – the actual direct material used in actual production) x the actual cost of direct material for one unit of production.

Heading reference: Direct material price and usage variances

b. Actual expenditure on direct material used in actual production – expected expenditure on direct material used in actual production.

Heading reference: Direct material price and usage variances

c. What the direct material used in actual production should have cost – what the direct material used in actual production actually cost.

Heading reference: Direct material price and usage variances

d. (The direct material that should have been used in actual production – the actual direct material used in actual production) x the standard cost of direct material for one unit of production.

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 10

10) Maria bakes and sells cakes for special occasions. Each cake requires 0.5 kilograms of flour. Flour costs £1.20 per kilogram. During May, Maria expected to bake 500 cakes. However, due to additional demand, she baked 600 cakes and her total flour cost for the month was £420 for 360 kilograms. What was Maria’s direct material total variance for the month of May?

a. £12 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

b. £60 Unfavourable

Heading reference: Setting the standard, Direct material price and usage variances

c. £72 Unfavourable

Heading reference: Setting the standard, Direct material price and usage variances

d. £72 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 11

11) ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 3 metres of material at a standard cost of £5.50 per metre. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2022, ABC produced 5,500 shirts. The cost of each metre of material was £5.30 and 2.8 metres of material were used in each shirt produced. Based on the above information, what is the direct material total variance for the year ended 30 April 2022?

a. £3,080 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

b. £5,830 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

c. £6,050 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

d. £9,130 Favourable

Heading reference: Setting the standard, Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 12

12) MSC Limited uses a standard costing system for all its products. MSC Limited produces hoodies. Each hoodie uses a standard 5 metres of material at a standard cost of £3 per metre. Budgeted production is 2,000 hoodies per annum. During the financial year ended 30 April 2022, MSC produced 2,200 hoodies. The cost of each metre of material was £3.25 and 4.8 metres of material were used in each hoodie produced. Based on the above information, what is the direct material price variance for the year ended 30 April 2022?

a. £1,320 Favourable

Heading reference: Direct material price and usage variances

b. £1,320 Unfavourable

Heading reference: Direct material price and usage variances

c. £2,400 Unfavourable

Heading reference: Direct material price and usage variances

d. £2,640 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 13

13) ZTC Limited uses a standard costing system for its products. ZTC Limited produces soft drinks. Each litre of soft drink uses 0.5 litres of fruit juice at a standard cost of £0.40 per litre. Budgeted production for June is 50,000 litres of soft drinks. Actual production for June was 55,000 litres. Total fruit juice used in June was 28,000 litres which cost £11,500. Based on the above information, what is the direct material price variance for June?

a. £200 Unfavourable

Heading reference: Direct material price and usage variances

b. £300 Unfavourable

Heading reference: Direct material price and usage variances

c. £500 Unfavourable

Heading reference: Direct material price and usage variances

d. £1,500 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 14

14) Zany Cushion Covers Limited uses a standard costing system. Each cushion cover uses a standard 2 metres of material at a standard cost of £1.50 per metre. Budgeted production is 2,000 cushion covers per month. During November, Zany Cushion Covers Limited produced 2,200 cushion covers, using 4,950 metres of material at a cost of £6,930. Based on the above information, what is the direct material price variance for November?

a. £300 Unfavourable

Heading reference: Direct material price and usage variances

b. £330 Unfavourable

Heading reference: Direct material price and usage variances

c. £495 Favourable

Heading reference: Direct material price and usage variances

d. £825 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 15

15) BFM Limited uses a standard costing system for all its products. BFM Limited produces Product C. The standard material usage for Product C is 3 kilograms of material at a cost of £5 per kilogram. Budgeted production for Product C is 4,000 units per annum. During the financial year ended 28 February 2022, BFM produced 4,500 Product Cs using a total of 12,600 kilograms of material at a cost of £5.50 per kilogram. Based on the above information, what is the direct material usage variance for the year ended 28 February 2022?

a. £1,800 Unfavourable

Heading reference: Direct material price and usage variances

b. £4,000 Favourable

Heading reference: Direct material price and usage variances

c. £4,500 Favourable

Heading reference: Direct material price and usage variances

d. £6,300 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 16

16) BTG Limited uses a standard costing system for all its products. BTG Limited produces Product D. The standard material usage for Product D is 5 kilograms of material at a cost of £10 per kilogram. Budgeted production for Product D is 10,000 units per annum. During the financial year ended 31 March 2022, BTG produced 11,000 product Ds using a total of 57,500 kilograms of material at a cost of £9.75 per kilogram. Based on the above information, what is the direct material usage variance for the year ended 31 March 2022?

a. £10,625 Unfavourable

Heading reference: Direct material price and usage variances

b. £13,750 Favourable

Heading reference: Direct material price and usage variances

c. £14,375 Favourable

Heading reference: Direct material price and usage variances

d. £25,000 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 17

17) Podcaster University Press uses a standard costing system for all its book production. The standard paper usage for the Accounting Standards book is 600 sheets at a cost of £1.20 for 500 sheets. Budgeted production of the Accounting Standards book is 5,000 copies per annum. During the financial year ended 31 December 2021, Podcaster University Press printed 5,500 copies of the Accounting Standards book, using a total of 3,600,000 sheets of paper at a cost of £1.25 per 500 sheets. Based on the above information, what is the direct material usage variance for the Accounting Standards book in the year ended 31 December 2021?

a. £360 Unfavourable

Heading reference: Direct material price and usage variances

b. £720 Unfavourable

Heading reference: Direct material price and usage variances

c. £750 Unfavourable

Heading reference: Direct material price and usage variances

d. £1,080 Unfavourable

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 18

18) (The labour hours that should have been used for actual production – the labour hours that were actually used for actual production) x standard rate per hour. Which variance is calculated using this formula?

a. Direct Labour Efficiency Variance

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. Direct Labour Total Variance

Heading reference: Direct labour total variance, Direct labour variances: information and control

c. Direct Labour Rate Variance

Heading reference: Direct material variances: information and control, Direct labour rate and efficiency variances

d. Variable Overhead Efficiency Variance

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 19

19) What is the correct formula for the direct labour rate variance?

a. Actual expenditure on direct labour for actual production – expected expenditure on direct labour for actual production.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. (Expected direct labour hours for actual production – actual direct labour hours for actual production) x the standard cost for one hour of direct labour.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. What the actual direct labour hours for actual production should have cost – what the actual direct labour hours for actual production actually cost.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. What the direct labour for expected production should have cost – what the direct labour for actual production actually cost.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 20

20) What is the correct formula for the direct labour total variance?

a. (Expected hours of direct labour for actual production – actual hours of direct labour for actual production) x the standard cost for one hour of direct labour.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. Expected expenditure on direct labour – actual production units x standard labour hour cost per unit of production.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. Actual direct labour hours for actual production x standard cost – what the actual direct labour hours for actual production actually cost.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. Actual expenditure on direct labour for actual production – expected expenditure on direct labour for actual production.

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 21

21) Maria runs a bakery, baking and selling cakes for special occasions. Each cake requires 2 hours of direct labour for baking and decorating. Direct labour is paid at the rate of £8 per hour. During May, Maria expected to bake 400 cakes. However, due to additional demand, she baked 500 cakes and her total labour cost for the month was £7,938 for 980 hours of direct labour. What was Maria’s direct labour total variance for the month of May?

a. £62 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £98 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £160 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £1,600 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 22

22) ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 8 hours of direct labour at a standard rate of pay of £10 per direct labour hour. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2022, ABC produced 5,500 shirts. The cost of each direct labour hour was £9.60 and a total of 45,000 direct labour hours were paid. Based on the above information, what is the direct labour total variance for the year ended 30 April 2022?

a. £8,000 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £10,000 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £18,000 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £32,000 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 23

23) QRS Limited uses a standard costing system for all its products. QRS Limited produces Product E. The standard direct labour hours for one unit of Product E are 3 hours at £11 per direct labour hour. Budgeted production of Product E is 4,000 units per annum. In the financial year ended 31 October 2021, QRS Limited produced 3,950 units of Product E. Total direct labour cost for the year was £132,000 with direct labour hours paid at a rate of £12.00 per hour. What is the direct labour efficiency variance for Product E for the financial year ended 31 October 2021?

a. £Nil

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £1,650 unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £9,350 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £11,000 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 24

24) XDT Limited uses a standard costing system for all its services. XDT Limited services photocopiers. The standard direct labour time to service one photocopier is 2½ hours and the standard cost of labour is £18 per direct labour hour. The company budgets 750 photocopier services per month with budgeted monthly labour hours of 1,875. In September, XDT Limited serviced 800 photocopiers and paid their service engineers for a total of 1,950 labour hours. Direct labour cost for the month was £36,075. What is the direct labour efficiency variance for September?

a. £75 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £900 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £975 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £1,350 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 25

25) Potters Limited uses a standard costing system for all its products. Potters Limited produces hand painted teapots. The standard direct labour time to paint one teapot is 1½ hours and the standard cost of labour is £20 per direct labour hour. Budgeted production is 1,500 teapots per month with budgeted monthly labour hours of 2,250. In October, Potters Limited produced 1,480 teapots and incurred total labour costs for painting the teapots of £43,659, paying £19.80 per hour for labour. What is the direct labour efficiency variance for October?

a. £300 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £441 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £600 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £741 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 26

26) QRS Limited uses a standard costing system for all its products. QRS Limited produces Product D. The standard direct labour hours for Product D are 2½ hours at £8 per direct labour hour. Budgeted production of Product D is 3,000 units per annum. In the financial year ended 31 October 2021, QRS Limited produced 3,500 units of Product D. Total direct labour cost for the year was £79,800 at a rate of £7.60 per hour. What is the direct labour rate variance for Product D for the financial year ended 31 October 2021?

a. £3,600 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £4,200 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £9,800 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £14,000 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 27

27) ZDT Limited uses a standard costing system for all its products. ZDT Limited produces box files. The standard direct labour time to produce one box file is 5 minutes and the standard cost of labour is £10 per direct labour hour. Budgeted production is 21,000 box files per month with budgeted labour hours of 1,750 per month. In October, ZDT Limited produced 24,000 box files and total labour hours paid were 1,950. Direct labour cost for the month was £20,280. What is the direct labour rate variance for October?

a. £280 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £500 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £780 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £2,000 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 28

28) The Pottery Limited uses a standard costing system for all its products. The Pottery Limited produces decorative vases. The standard direct labour time to paint one decorative vase is 2 hours and the standard cost of labour is £16 per direct labour hour. Budgeted production is 1,000 decorative vases per month with budgeted labour hours of 2,000 per month. In April, The Pottery Limited produced 1,050 decorative vases and incurred total labour costs for painting the vases of £33,075, paying £17.50 per hour for labour. What is the direct labour rate variance for April?

a. £525 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

b. £2,835 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

c. £3,150 Unfavourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

d. £3,360 Favourable

Heading reference:

Direct material variances: information and control

Direct labour rate and efficiency variances

Direct labour total variance

Type: multiple choice question

Title: Chapter 13 Question 29

29) Which one of the following presents the correct formula for the sales volume variance calculation?

a. (Actual sales in units – budgeted sales in units) x (actual selling price per unit – actual variable costs per unit).

Heading reference: Sales variances

b. (Actual sales in units – budgeted sales in units) x (actual selling price per unit – standard variable costs per unit).

Heading reference: Sales variances

c. (Actual sales in units – budgeted sales in units) x (standard selling price per unit – actual variable costs per unit).

Heading reference: Sales variances

d. (Actual sales in units – budgeted sales in units) x (standard selling price per unit – standard variable costs per unit).

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 30

30) Which one of the following presents the correct formula for the sales price variance calculation?

a. (Actual sales in units – budgeted sales in units) x (standard selling price per unit – standard variable costs per unit).

Heading reference: Sales variances

b. (Actual unit selling price – standard unit selling price) x budgeted sales in units.

Heading reference: Sales variances

c. (Actual unit selling price – standard unit selling price) x actual units sold.

Heading reference: Sales variances

d. (Actual unit selling price – standard unit selling price) x (actual units sold – budgeted sales units).

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 31

31) TST Limited uses a standard costing system for all its products. Product F has a standard selling price of £30 and budgeted total sales for the year ended 31 May 2021 of 10,000 units. The actual selling price for Product F throughout the year to 31 May 2021 was £35 and the actual units sold were 10,500. The actual variable costs of Product F amounted to £22 per unit in the year to 31 May 2021 while the standard variable cost of Product F is £20. Based on the above information, what is the sales volume variance for Product F for the year ended 31 May 2021?

a. £5,000 Favourable

Heading reference: Sales variances

b. £6,500 Favourable

Heading reference: Sales variances

c. £52,500 Favourable

Heading reference: Sales variances

d. £84,000 Favourable

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 32

32) Which one of the following scenarios would not result in a favourable sales volume variance?

a. A higher level of actual sales units compared to budget and a lower actual selling price than budget.

Heading reference: Sales variances

b. A higher level of actual sales units compared to budget and a lower actual contribution per sale than budget.

Heading reference: Sales variances

c. A lower level of actual sales units compared to budget and a higher actual contribution per sale than budget.

Heading reference: Sales variances

d. A higher level of actual sales units compared to budget and a higher actual selling price per unit than budget.

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 33

33) Potters Limited uses a standard costing system for all its products. Mugs have a standard selling price of £10 and budgeted total sales for December are 4,000 mugs. The actual selling price for mugs throughout December was £10.50 and the actual number of mugs sold was 3,800. The actual variable cost of producing mugs during December was £4.75 per while the standard variable cost of each mug is £5.00. Based on the above information, what is the sales volume variance for mugs in December?

a. £1,000 Unfavourable

Heading reference: Sales variances

b. £1,050 Unfavourable

Heading reference: Sales variances

c. £1,100 Unfavourable

Heading reference: Sales variances

d. £1,150 Unfavourable

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 34

34) JMJ Limited operates a standard costing system for all its products. The standard selling price of product A is £50 and the budgeted sales for the year ended 31 March 2022 are 5,000 units. During the year ended 31 March 2022, 6,000 Product As were sold and the average selling price during the year was £52. What is the sales price variance for the year ended 31 March 2022?

a. £2,000 Unfavourable

Heading reference: Setting the standard, Sales variances

b. £2,000 Favourable

Heading reference: Setting the standard, Sales variances

c. £12,000 Unfavourable

Heading reference: Setting the standard, Sales variances

d. £12,000 Favourable

Heading reference: Setting the standard, Sales variances

Type: multiple choice question

Title: Chapter 13 Question 35

35) ADB Limited uses a standard costing system for all its products. ADB produces and sells dinner plates. Each dinner plate has a standard selling price of £15 and budgeted total sales for June of 4,000 plates. The actual selling price for dinner plates throughout June was £14.50 and the actual number of dinner plates sold was 3,900. The actual variable costs are £7 per dinner plate while the standard variable cost of each plate is £6.75. Based on the above information, what is the sales price variance for dinner plates for June?

a. £975 Favourable

Heading reference: Sales variances

b. £1,000 Favourable

Heading reference: Sales variances

c. £1,950 Unfavourable

Heading reference: Sales variances

d. £2,000 Unfavourable

Heading reference: Sales variances

Type: multiple choice question

Title: Chapter 13 Question 36

36) BCD Limited uses a standard costing system for all its products. BCD produces and sells footballs which it sells to local league football teams. Each football has a standard variable cost of £10. The standard selling price of each football is £35 and budgeted total sales for October were 800 footballs. The actual selling price for footballs throughout October was £37.50 and the actual number of footballs sold in the month was 850. The actual variable costs in October were £11.50 per football. Based on the above information, what is the sales price variance for footballs for October?

a. £1,250 Favourable

Heading reference: Sales variances

b. £1,275 Favourable

Heading reference: Sales variances

c. £2,000 Favourable

Heading reference: Sales variances

d. £2,125 Favourable

Heading reference: Sales variances

Type: true-false

Title: Chapter 13 Question 37

37) The fixed overhead expenditure variance is calculated by deducting the budgeted fixed overhead expenditure from the actual fixed overhead expenditure.

a. True

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

b. False

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

Type: multiple choice question

Title: Chapter 13 Question 38

38) BCD allocates £6 of fixed overhead to each product it produces. Fixed overhead is allocated to products on the basis that monthly production at the company will be 2,500 units of product. Actual production for August was 2,000 units. Actual fixed overhead costs in August totalled up to £14,800. What is the fixed overhead expenditure variance for August?

a. £200 Favourable

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

b. £2,800 Unfavourable

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

c. £3,000 Unfavourable

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

d. £3,000 Favourable

Heading reference: Fixed overhead expenditure variance, Fixed overhead expenditure variance: information and control

Type: multiple choice question

Title: Chapter 13 Question 39

39) What is the correct formula for the variable overhead expenditure variance?

a. The total cost of variable overheads for actual production compared to the standard cost of variable overheads for actual production.

Heading reference: Variable overhead variances, Appendix: variable overhead variances

b. (Expected direct labour or machine hours for actual production – actual direct labour or machine hours for actual production) x the standard cost for one hour of variable overhead.

Heading reference: Appendix: variable overhead variances

c. What the actual direct labour or machine hours for actual production should have cost – what the actual direct labour or machine hours for actual production actually cost.

Heading reference: Appendix: variable overhead variances

d. What the direct labour or machine hours for expected production should have cost – what the direct labour or machine hours for actual production actually cost.

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 40

40) Which one of the following is the correct formula used in calculating the variable overhead total variance?

a. What the actual direct labour or machine hours for actual production should have cost – what the actual direct labour or machine hours for actual production actually cost.

Heading reference: Appendix: variable overhead variances

b. The total cost of variable overheads for actual production – the standard cost of variable overheads for actual production.

Heading reference: Appendix: variable overhead variances

c. (Expected direct labour or machine hours for actual production – actual direct labour or machine hours for actual production) x the standard cost for one hour of variable overhead.

Heading reference: Appendix: variable overhead variances

d. Standard expenditure on variable overhead incurred in actual production – actual production units x standard variable overhead cost per unit of production.

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 41

41) What is the correct formula for the variable overhead efficiency variance?

a. (The labour or machine hours that should have been used in actual production – the actual labour or machine hours used in actual production) x the actual cost for one hour of variable overhead.

Heading reference: Appendix: variable overhead variances

b. Actual expenditure on variable overheads used in actual production – expected expenditure on variable overheads used in actual production.

Heading reference: Appendix: variable overhead variances

c. What the variable overheads incurred in actual production should have cost – what the variable overheads incurred in actual production actually cost.

Heading reference: Appendix: variable overhead variances

d. (Expected direct labour or machine hours for actual production – actual direct labour or machine hours for actual production) x the standard cost for one hour of variable overhead.

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 42

42) Maria’s bakery bakes and sells cakes for special occasions. Each cake requires 2 hours of direct labour time for baking and decorating. Variable overhead is incurred at the rate of £2.50 per labour hour. During the month of May, Maria’s bakery produced 500 cakes compared to a budgeted output figure of 460 cakes. Maria’s employees worked for 980 hours during May. The total variable overhead cost for May was £2,620. What was Maria’s variable overhead total variance for the month of May?

a. £50 Favourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

b. £120 Unfavourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

c. £170 Unfavourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

d. £320 Unfavourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 43

43) ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 8 hours of direct labour. Variable overhead is incurred at the rate of £0.75 per labour hour. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2022, ABC produced 5,500 shirts. A total of 45,000 direct labour hours were worked and the total variable overhead expenditure was £31,500. Based on the above information, what is the variable overhead total variance for the year ended 30 April 2022?

a. £750 Unfavourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

b. £1,500 Unfavourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

c. £1,500 Favourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

d. £2,250 Favourable

Heading reference: Variable overhead variances, Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 44

44) XTA Limited uses a standard costing system for all its products. Product E’s standard specifies 4 machine hours of production time and incurs variable overheads at the standard rate of £2 per machine hour. Budgeted production of Product E is 10,000 units per annum. For the financial year ended 31 January 2022, it was calculated that the machine hours actually used for each Product E were 3.9 hours while the actual cost of variable overhead was £2.10 per machine hour. Actual production was 9,800 units of Product E. What is the variable overhead efficiency variance based on these figures?

a. £1,862 Unfavourable

Heading reference: Appendix: variable overhead variances

b. £1,960 Favourable

Heading reference: Appendix: variable overhead variances

c. £2,000 Favourable

Heading reference: Appendix: variable overhead variances

d. £3,822 Unfavourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 45

45) XDT Limited uses a standard costing system for all its services. XDT Limited services photocopiers. The standard direct labour time to service one photocopier is 2½ hours. Variable overhead is incurred at the rate of £5.00 per labour hour. The company budgets 750 photocopier services per month with budgeted monthly labour hours of 1,875. In September, XDT Limited serviced 800 photocopiers and paid their service engineers for a total of 1,950 labour hours. Actual variable overhead expenditure for the month was £9,550. What is the variable overhead efficiency variance for September?

a. £200 Favourable

Heading reference: Appendix: variable overhead variances

b. £250 Favourable

Heading reference: Appendix: variable overhead variances

c. £375 Unfavourable

Heading reference: Appendix: variable overhead variances

d. £450 Favourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 46

46) Potters Limited uses a standard costing system for all its products. Potters Limited produces hand painted teapots. The standard direct labour time to paint one teapot is 1½ hours. Variable overhead is incurred by each teapot at the rate of £6 per labour hour. Budgeted production is 1,500 teapots per month with budgeted monthly labour hours of 2,250. In October, Potters Limited produced 1,480 teapots and incurred total variable overhead expenditure of £13,000. 2,205 labour hours were paid in October. What is the variable overhead efficiency variance for October?

a. £90 Favourable

Heading reference: Appendix: variable overhead variances

b. £180 Favourable

Heading reference: Appendix: variable overhead variances

c. £230 Favourable

Heading reference: Appendix: variable overhead variances

d. £320 Favourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 47

47) QRS Limited uses a standard costing system for all its products. QRS Limited produces Product E. The standard machine hours for each unit of Product E are 3½ hours. Variable overhead is incurred by each Product E at the rate of £8 per machine hour. Budgeted production of Product E is 3,000 units per annum. In the financial year ended 31 October 2021, QRS Limited produced 3,300 units of Product E. Total machine hours for the year were 11,800 and the variable overhead paid in the year was £95,000. What is the variable overhead expenditure variance for Product E for the financial year ended 31 October 2021?

a. £600 Unfavourable

Heading reference: Appendix: variable overhead variances

b. £2,000 Unfavourable

Heading reference: Appendix: variable overhead variances

c. £2,600 Unfavourable

Heading reference: Appendix: variable overhead variances

d. £8,400 Unfavourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 48

48) ZDT Limited uses a standard costing system for all its products. ZDT Limited produces picture frames. The standard direct labour time to produce one picture frame is 20 minutes. Variable overhead is incurred by picture frames at the rate of £6 per direct labour hour. Budgeted production is 15,000 picture frames per month. In October, ZDT Limited produced 15,300 picture frames, incurring variable overhead costs of £32,000 and total labour hours paid were 4,800. What is the variable overhead expenditure variance for October?

a. £600 Favourable

Heading reference: Appendix: variable overhead variances

b. £1,400 Unfavourable

Heading reference: Appendix: variable overhead variances

c. £1,800 Favourable

Heading reference: Appendix: variable overhead variances

d. £3,200 Unfavourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 49

49) The Pottery Limited uses a standard costing system for all its products. The Pottery Limited produces decorative vases. The standard direct labour time to paint one decorative vase is 2 hours and the standard cost of labour is £16 per direct labour hour. Variable overheads are incurred by each vase at the rate of £4 per labour hour. Budgeted production is 1,000 decorative vases per month with budgeted labour hours of 2,000 per month. In April, The Pottery Limited produced 1,050 decorative vases and incurred total variable overheads of £8,300. The direct labour hours paid for April were 2,025. What is the variable overhead expenditure variance for April?

a. £100 Favourable

Heading reference: Appendix: variable overhead variances

b. £200 Unfavourable

Heading reference: Appendix: variable overhead variances

c. £300 Favourable

Heading reference: Appendix: variable overhead variances

d. £1,200 Favourable

Heading reference: Appendix: variable overhead variances

Type: multiple choice question

Title: Chapter 13 Question 50

50) Which one of the following would result in an unfavourable sales volume variance?

a. A selling price higher than budgeted.

Heading reference: Sales variances

b. A selling price lower than budgeted.

Heading reference: Sales variances

c. Selling more products or services than budgeted.

Heading reference: Sales variances

d. Selling fewer products or services than budgeted.

Heading reference: Sales variances

Type: true-false

Title: Chapter 13 Question 51

51) Variances calculate the difference between actual and budgeted revenues and costs.

a. True

Heading reference: What is standard costing?, Variance analysis

b. False

Heading reference: What is standard costing?, Variance analysis

Type: multiple choice question

Title: Chapter 13 Question 52

52) Product G uses materials with a standard cost of £20 per unit of production. The results for May show an unfavourable direct material price variance of £2,400 and a favourable direct material usage variance of £1,800. Actual production during May was 3,000 units of Product G. What was the actual direct material cost of Product G for May?

a. £55,800

Heading reference: Direct material price and usage variances

b. £59,400

Heading reference: Direct material price and usage variances

c. £60,600

Heading reference: Direct material price and usage variances

d. £64,200

Heading reference: Direct material price and usage variances

Type: multiple choice question

Title: Chapter 13 Question 53

53) The standard cost of labour for Product Y is £15 per unit of production. The results for February show an unfavourable direct labour rate variance of £500 and a favourable direct labour efficiency variance of £700. Actual production for February was 2,500 units of Product Y. What was the actual direct labour cost of Product Y for February?

a. £37,300

Heading reference: Direct labour rate and efficiency variances

b. £37,500

Heading reference: Direct labour rate and efficiency variances

c. £37,700

Heading reference: Direct labour rate and efficiency variances

d. £38,700

Heading reference: Direct labour rate and efficiency variances

Type: multiple choice question

Title: Chapter 13 Question 54

54) XYZ Limited produces Product W. Product W has a standard selling price of £240 and a standard variable cost of £160. During the month of June, sales of Product W produced a favourable sales volume variance of £7,200. Budgeted contribution from sales of Product W for June was £48,000. How many units of Product W were actually sold during June?

a. 510

Heading reference: Setting the standard, Sales variances

b. 630

Heading reference: Setting the standard, Sales variances

c. 645

Heading reference: Setting the standard, Sales variances

d. 690

Heading reference: Setting the standard, Sales variances

Type: multiple choice question

Title: Chapter 13 Question 55

55) TJC Limited allocates a standard £5.00 fixed overhead cost to Product J on the basis that 5,000 units of Product J are produced each month. 5,500 units of Product J were produced in July resulting in an unfavourable fixed overhead expenditure variance of £1,000. What was the actual fixed overhead expenditure during July?

a. £24,000

Heading reference: Fixed overhead expenditure variance

b. £26,000

Heading reference: Fixed overhead expenditure variance

c. £26,500

Heading reference: Fixed overhead expenditure variance

d. £28,500

Heading reference: Fixed overhead expenditure variance

Type: true-false

Title: Chapter 13 Question 56

56) Variances calculate the differences between actual and standard revenues and costs.

a. True

Heading reference: What is standard costing?, Variance analysis

b. False

Heading reference: What is standard costing?, Variance analysis