Variance Accounting

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Variance Accounting Questions and Answers

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What do negative numbers represent when comparing the budget amount to the forecast amount?
Explain when should variances be allocated to work in process finished goods and cost of goods sold rather than just charge to the cost of goods sold at the end of the period.
If the entire overhead variance is closed to cost of goods sold, what is the effect on gross profit and net operating income?
What is variance and why are we concerned with it in manufacturing?
What does negative headcount on your budget mean in accounting?
Give an example of when an unfavorable variance outcome isn't necessarily a bad thing (or a controllable thing).
What does an unfavorable overhead volume variance indicate?
The variance of any two-asset portfolio depends on which factors?
Fosnight Enterprises prepared the following sales budget: March Budgeted Sales: $6,000 April Budgeted Sales: $13,000 May Budgeted Sales: $12,000 June Budgeted Sales: $14,000 The expected gross...
A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year. Each pair of boots require 2kg of a k...
A corporation manufactures a product called X. The standard cost per unit of this product is shown below. Direct materials-2 pounds plastic at $6.00 per pound $12.00 Direct labor-2 hours at $13.00...
Mickey Co. produces wooden tool boxes. The company's standards per box require 6 boards, each costing $10 per board and half an hour of direct labor. The standard labor rate is $15 per hour. In Aug...
A company manufactures two types of snowshoes. The regular snowshoe is for individuals who snowshoe two or three times a year. The sport snowshoe is for those who snowshoe on a regular basis, more...
A home-decorating company is determining the amount of fabric required for a customer's window treatments. A single window requires 13 4/5 yards and a double window requires 19 7/15 yards of fabric...
Leshan Company planned to produce 12,000 units. This level of production required 20 setups at a cost of $18,000 plus $500 per setup. Actual production was 10,000 units, requiring 15 setups. The ac...
Wayne Company has the following data: Month Budgeted Sales January $108,000 February 132,000 March 144,000 April 120,000 The gross profit margin is 40 percent. Desired inventory levels are 30-perc...
The amount of labor hours available to Asaro Pte Ltd. in the production of products X and Y amount to 35,000 in total. The table below gives details about these two products. Product X Product Y L...
You are a new accounting intern at Thomas Bikes. Your boss gives you the following information and asks you to compute the cost of direct materials used (assume that the company's raw materials inv...
Fran Powers created the following a budget and reported actual spending listed. Calculate the variance for each category and indicate whether it is Deficit or Surplus: Item Budgeted Actual Varianc...
Some car tires can develop what is known as "heel and toe" wear if not rotated after a certain mileage. To assess this issue, a consumer group investigated the tire wear on two brands of tire, A an...
Consider the following: Defects in batch Probability 0 0.05 1 0.18 2 0.29 3 0.24 4 0.13 5 0.11 Find the variance of this variable. a. 1.35. b. 1.83. c. 2.55. d. 2.58.
Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 3,200 tenant-days, but its ac...
Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 4,100 client-visits, but its actual level of activity was 4,020 client-visits. The clinic has pr...
The direct labor budget is based on: a. the desired ending inventory of finished goods. b. the beginning inventory of finished goods. c. the required production for the period. d. the required...
What are three labor cost savings activities that would be most effective for an employer? What are some rationals for the labor cost savings activities?
Draw random two numbers from a box, the box contains the number [0,1,2...,9]. Let X is the larger number and Y is the smaller one. a) Find a distribution of X, Y and their joint distribution, b) Di...
Warner Co. has budgeted fixed overhead of $150,000. Practical capacity is 6,000 units, and budgeted production is 5,000 units. During February, 4,800 units were produced and $155,600 was spent on f...
Ajay Inc. produces metal axels. The sales budget for the next four months is: January 6,500 units, February 7,000, March 7,500, April 8,000. Ajay Inc.'s ending finished goods inventory policy is...
What are usually the determinants of a difference?
How to calculate co-variance from two variances ?
When completing a variance analysis, we describe variances as: A) good or bad B) positive or negative C) favorable or unfavorable D) ideal or less-than-ideal
You have been given a report that contains the probability distribution listed below for a projected HPR (Holding Period Return) for RU stock that trades over-the-counter in the United States. STA...
Consider a fair 6-sided die. A) What is the expected number of rolls before you see all 6 sides? B) Suppose you roll it 8 times. What is the expected sum of the 8 rolls? C) What is the variance of...
The Walter Group provides the following data for June 2019 when 15,000 units were manufactured. Standard Material cost (per Unit) 8.50kg @ $7.50 per Kg. Actual Material cost (Per Unit) 6.75Kg @ $1...
Fiona Company Ltd has set the following standards to produce one unit of product. Normal production each month is 500 units. Direct Material 8 Kg@ 6.5 per kg $52 Direct Labor 4 hours @ 7.00 per ho...
The random variable x has the following probability distribution: x & 1 & 2 & 3 & 4 & 5 \\ \hline P(x) & 2/10 & 1/10 & 1/10 & 1/10 & 5/10 \\ \hline \end{array} What is the expected value of E(x)? W...
Which one of the following best defines the variance of an investment's annual returns over a number of years? a. The average squared difference between the arithmetic and the geometric average ann...
A manufactured product has the following information for June. Standard Actual Direct materials (6 lbs. @ $9 per lb.) 51,600 lbs. @ $9.10 per lb. Direct labor (3 hrs. @ 517 per hr.) 25,200 hrs. @...
Solitaire Company's fixed budget performance report for June follows. The $303,750 budgeted expenses include $267,300 variable expenses and $36,450 fixed expenses. Actual expenses include $42,750 f...
Samson Company has a standard costing system in the production of its only product. 84,000 units of raw materials inventory were purchased for $126,000 and 4 units of raw materials are required to...
Sedona Company set the following standard costs for one unit of its product for 2015. Direct material (15 lbs. @ $4.20 per lb.) $ 63.00 Direct labor (10 hrs. @ $6.40 per hr.) 64.00 Factory variabl...
World Company expects to operate at 80% of its productive capacity of 55,000 units per month. At this planned level, the company expects to use 27,500 standard hours of direct labor. Overhead is al...
Discuss the importance of standard costing and understanding variances. If a supplier were to offer you cheaper goods (price and quality), what additional information would you need before making a...
Mankato Control Company, which manufactures electrical switches, uses a standard-costing system. The standard production overhead costs per switch are based on direct-labor hours and are as follows...
Harley Davidson makes motorcycle engines in its Milwaukee plant. For the most recent month, budgeted production was 3,300 engines. The standard power cost is $9.20 per machine-hour. The company's s...
The standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows: Variances Standard Cost Unfavorable Favorable Direct materials $90,0...
If the standard quantity of materials is 84,000 units @ $0.15 per unit, and the actual quantity is 94,500 units @ $0.12 per unit, then the materials price variance is what?
Loggin Midwifery's cost formula for its wages and salaries is $2,380 per month plus $231 per birth. For the month of April, the company planned for activity of 100 births, but the actual level of a...
Oerstman, Inc., uses a standard costing system and develops its overhead rates from the current annual budget. The budget is based on an expected annual output of 124,000 units requiring 496,000 di...
Geller Cellars produce bourbon in two almost identical production facilities - the Monica and Ross plants. The managers of both plants each budgeted $80,000 of factory overhead cost to manufacture...
Vitex, Inc. manufactures a popular consumer product and it has provided the following data excerpts from its standard cost system: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate...
Share how variance analysis has been, is and/or could be used relative to personal and/or professional decision making (e.g., who gets a raise or promotion or "released" from the organization).
When a financial manager studies current reports and compares them with reports from earlier periods to see if established plans are being followed, these reports are called: A. subsidiary reports...
Blue Dingo uses a standard costing system. The company's standard costs and variances for direct materials, direct labor, and factory overhead for the month of May are as follows. Variances Stand...
Fit Fran recently launched her own set of healthy nutritious drinks. She's hired you as a consultant to help assess recent performance. Budgeted Data Actual results Drink Qty ASP variable Cost...
Sunland Company's accounting records reflect the following inventories: Dec. 31, 2016 Dec. 31, 2017 Raw materials inventory $88,000 $74,000 Work in process inventory 114,000 126,000 Finished goods...
During FY 2016, Alpha Company recorded total of factory overhead costs of $250,000. Additionally, Alpha applied a total of $235,000 of factory overhead to various job orders during FY 2016. Use thi...
Discuss the use of budgets and standard costs to control business activities.
Interpret what budget variances represent. Should all variances be investigated?
1. Compare the flexible budget to the actual expenses. What does this inform? 2. Discuss the following variances: i. Static budget variance, including sales volume and flexible budget variances...
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