Roll Number:___________________________________ Total 7 points 10 minutes

MANAGERIAL ACCOUNTING AND CONTROL SYSTEMS

EXECUTIVE MBA 2020 QUIZ 6 26 May 2019

1. Which of the following is the most probable reason a company would experience an unfavorable
labor rate variance and a favorable labor efficiency variance?
A. Company used more of higher paid, experienced individuals than planned.
B. Company used more of low paid, unskilled workers than planned.
C. Because of the production schedule, workers from other production areas were assigned to assist this
particular process.
D. Defective materials caused more labor to be used in order to produce a standard unit.

2. Which department should usually be held responsible for an unfavorable materials price variance?
A. Production.
B. Materials Handling.
C. Engineering.
D. Purchasing.

Comparing actual results to a budget based on actual activity for the period is possible
with the use of a:
A) monthly budget.
B) master budget.
C) flexible budget.
D) rolling budget.

Delaware Corp. prepared a master budget that included $21,360 for direct materials, $33,600 for direct labor,
$18,000 for variable overhead, and $46,440 for fixed overhead. Delaware Corp. planned to sell 4,000 units during
the period, but actually sold 4,300 units. How much would total costs be on a flexible budget for the period based on
actual sales? 
 

A.  $111,070
B.  $119,400
C.  $124,872
D.  $128,355
{[($21,360 + $33,600 + $18,000)/4,000] × 4,300} + $46,440 = $124,872.

Which of the following statements is a good description of the variances that should
be investigated under the management by exception concept?
A) all variances should be investigated.
B) only unfavorable variances should be investigated.
C) a small random sample of all variances should be investigated.
D) unusually large favorable and unfavorable variances should be investigated.
Answer: D
Oxford Co. has a material standard of 2.1 pounds per unit of output. Each pound has a standard price of $10 per
pound. During February, Oxford Co. paid $57,220 for 4,840 pounds, which were used to produce 2,400 units. What
is the direct materials price variance? 
 

A.  $6,820 unfavorable

B.  $8,820 unfavorable
C.  $8,820 favorable
D.  $6,820 favorable
($10 × 4,840) - $57,220 = $8,820 unfavorable

The following information pertains to Bates Company's direct labor for March:
Standard direct labor-hours ....................... 21,000
Actual direct labor-hours ........................... 20,000
Favorable direct labor rate variance .......... $8,400
Standard direct labor rate per hour ............ $6.30
What was Bates' total actual direct labor cost for March?
A) $117,600
B) $118,000
C) $134,000
D) $134,400
Answer: A

From a cost control perspective, which of the following variances are least relevant:
A. Raw material quantity variance
B. Labour Efficiency variance
C. Fixed Overhead volume variance
D. Variable Overhead Spending Variance

A flexible budget contains:

A. Cost targets based on actual output (e.g., sales volume) for the period.

B. Cost targets based on planned output (e.g., sales volume) for the period.

C. Actual costs incurred for the actual output of the period.

D. Costs and revenues for the difference between planned and actual output.

E. Costs based on actual output of the period, and revenue based on master budgeted output.