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Question 1 - CMA 1291 3-17 - Variance Analysis Concepts

Folsom Fashions sells a line of women's dresses. Folsom's performance report for November follows.

Actual Budget
Dresses sold 5,000 6,000
Sales $ 235,000 $ 300,000
Variable costs (145,000) (180,000)
Contribution margin 90,000 120,000
Fixed costs (84,000) (80,000)
Operating income $ 6,000 $ 40,000

The company uses a flexible budget to analyze its performance and to measure the effect on operating income of the
various factors affecting the difference between budgeted and actual operating income.

The fixed cost variance for November is

A. $4,000 unfavorable.
B. $5,000 unfavorable.
C. $5,000 favorable.
D. $4,000 favorable.

Question 2 - CMA 1293 3-22 - Manufacturing Input Variances - Materials and Labor

ChemKing uses a standard costing system in the manufacture of its single product. The 35,000 units of raw material in
inventory were purchased for $105,000, and two units of raw material are required to produce one unit of final product.
In November, the company produced 12,000 units of product. The standard allowed for material was $60,000, and there
was an unfavorable quantity variance of $2,500.

ChemKing's standard price for one unit of material is

A. $2.00.
B. $2.50.
C. $3.00.
D. $5.00.

Question 3 - CMA 692 3-21 - Manufacturing Input Variances - Materials and Labor

Jackson Industries employs a standard cost system in which direct materials inventory is carried at standard cost.
Jackson has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 5 pounds $3.60/pound $18.00
Direct labor 1.25 hours $12.00/hour 15.00
$33.00

During May, Jackson purchased 125,000 pounds of direct materials at a total cost of $475,000. The total factory wages

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for May were $364,000, 90% of which were for direct labor. Jackson manufactured 22,000 units of product during May
using 108,000 pounds of direct materials and 28,000 direct labor hours.

The direct labor usage (efficiency) variance for May is

A. $6,000 unfavorable.
B. $6,000 favorable.
C. $5,850 unfavorable.
D. $5,850 favorable.

Question 4 - CMA 692 3-20 - Manufacturing Input Variances - Materials and Labor

Jackson Industries employs a standard cost system in which direct materials inventory is carried at standard cost.
Jackson has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 5 pounds $3.60/pound $18.00
Direct labor 1.25 hours $12.00/hour 15.00
$33.00

During May, Jackson purchased 125,000 pounds of direct materials at a total cost of $475,000. The total factory wages
for May were $364,000, 90% of which were for direct labor. Jackson manufactured 22,000 units of product during May
using 108,000 pounds of direct materials and 28,000 direct labor hours.The direct labor price (rate) variance for May is

A. $7,200 unfavorable.
B. $8,400 unfavorable.
C. $6,000 unfavorable.
D. $8,400 favorable.

Question 5 - CMA Sample Q3-11 - Manufacturing Input Variances - Materials and Labor

Garland Company uses a standard cost system. The standard for each finished unit of product allows for 3 pounds of
plastic at $0.72 per pound. During December, Garland bought 4,500 pounds of plastic at $0.75 per pound and used
4,100 pounds in the production of 1,300 finished units of product. What is the materials purchase price variance for the
month of December?

A. $135 unfavorable.
B. $150 unfavorable.
C. $123 unfavorable.
D. $117 unfavorable.

Question 6 - CMA 695 3-24 - Manufacturing Input Variances - Materials and Labor

Blaster Inc., a manufacturer of portable radios, purchases the components from subcontractors to use to assemble into

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a complete radio. Each radio requires three units each of Part XBEZ52, which has a standard cost of $1.45 per unit.
During May, Blaster experienced the following with respect to Part XBEZ52.

Units
Purchases ($18,000) 12,000
Consumed in manufacturing 10,000
Radios manufactured 3,000

During May, Blaster Inc. incurred a materials efficiency variance of

A. $1,450 favorable.
B. $1,450 unfavorable.
C. $4,350 unfavorable.
D. $4,350 favorable.

Question 7 - CIA 597 3-18 - Manufacturing Input Variances - Materials and Labor

A company reported a significant material efficiency variance for the month of January. All of the following are possible
explanations for this variance except:

A. An inadequately trained and supervised labor force.

B. Producing more units than planned for in the master budget.
C. Processing a large number of rush orders.
D. Cutbacks in preventive maintenance.

Question 8 - CMA 695 3-25 - Manufacturing Input Variances - Materials and Labor

Price variances and efficiency variances can be key to the performance measurement within a company. In evaluating
the performance within a company, a materials efficiency variance can be caused by all of the following except the

A. Actions of the purchasing department.

B. Performance of the workers using the material.
C. Design of the product.
D. Sales volume of the product.

Question 9 - CMA 1295 3-25 - Manufacturing Input Variances - Materials and Labor

Which one of the following variances is most controllable by the production control supervisor?

A. Material price variance.

B. Fixed overhead budget variance.
C. Variable overhead spending variance.
D. Material usage variance.

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Question 10 - CMA 1290 3-5 - Manufacturing Input Variances - Materials and Labor

Franklin Glass Works' production budget for the year ended November 30 was based on 200,000 units. Each unit
requires two standard hours of labor for completion. Total overhead was budgeted at $900,000 for the year, and the
fixed overhead rate was estimated to be $3.00 per unit. Both fixed and variable overhead are assigned to the product on
the basis of direct labor hours. The actual data for the year ended November 30 are presented as follows.

Actual production in units 198,000

Actual direct labor hours 440,000
Actual variable overhead $352,000
Actual fixed overhead $575,000

The standard hours allowed for actual production for the year ended November 30 total

A. 495,000.
B. 247,500.
C. 400,000.
D. 396,000.

Question 11 - CMA 694 3-22 - Manufacturing Input Variances - Materials and Labor

Under a standard cost system, labor price variances are usually not attributable to

A. The assignment of different skill levels of workers than planned.

B. The use of a single average standard rate.
C. Labor rate predictions.
D. Union contracts approved before the budgeting cycle.

Question 12 - CMA 1291 3-1 - Manufacturing Input Variances - Materials and Labor

Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow
has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 8 pounds $1.80 per pound $14.40
Direct labor .25 hours $8.00 per hour 2.00
$16.40

During November, Arrow purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory
wages for November were $42,000, 90% of which were for direct labor. Arrow manufactured 19,000 units of product
during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

The direct materials purchase price variance for November is

A. $16,000 favorable.
B. $14,250 favorable.
C. $14,250 unfavorable.
D. $16,000 unfavorable.

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Question 13 - CMA 1287 4-30 - Manufacturing Input Variances - Materials and Labor

Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for
one unit of Teragram include six pounds of materials at $.30 per pound. Actual production in November was 3,100 units
of Teragram. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable
materials quantity variance of $120. Based on these variances, one could conclude that

A. More materials were purchased than were used.

B. The actual usage of materials was less than the standard allowed.
C. The actual cost of materials was less than the standard cost.
D. More materials were used than were purchased.

Question 14 - CMA 695 3-23 - Manufacturing Input Variances - Materials and Labor

Blaster Inc., a manufacturer of portable radios, purchases the components from subcontractors to use to assemble into
a complete radio. Each radio requires three units each of Part XBEZ52, which has a standard cost of $1.45 per unit.
During May, Blaster experienced the following with respect to Part XBEZ52.

Units
Purchases ($18,000) 12,000
Consumed in manufacturing 10,000
Radios manufactured 3,000

During May, Blaster Inc. incurred a purchase price variance of

A. $500 favorable.
B. $450 favorable.
C. $450 unfavorable.
D. $600 unfavorable.

Question 15 - IMA 08-P2-233 - Manufacturing Input Variances - Materials and Labor

MinnOil performs oil changes and other minor maintenance seervices (e.g., tire pressure checks) for cars. The company
advertises that all services are completed within 15 minutes for each service. On a recent Saturday, 160 cars were
serviced resulting in the following labor variances: rate, $19 unfavorable; efficiency, $14 favorable. If MinnOil's standard
labor rate is $7 per hour, determine the actual wage rate per hour and the actual hours worked.

A. Wage Rate $6.55/hour; Hours Worked 42.00

B. Wage Rate $6.67/hour, Hours Worked 42.71
C. Wage Rate $7.45/hour, Hours Worked 42.00
D. Wage Rate $7.50/hour; Hours Worked 38.00

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Question 16 - CMA 1294 3-25 - Manufacturing Input Variances - Materials and Labor

An unfavorable direct labor efficiency variance could be caused by a(n)

A. Unfavorable materials usage variance.

B. Favorable variable overhead spending variance.
C. Unfavorable variable overhead spending variance.
D. Unfavorable fixed overhead volume variance.

Question 17 - IMA 08-P2-228 - Variance Analysis Concepts

The following performance report was prepared for Dale Manufacturing for the month of April.
Actual Static
Results Budget Variance
Sales units 100,000 80,000 20,000 F

Sales dollars $190,000 $160,000 $30,000 F

Variable costs 125,000 96,000 29,000 U
Fixed costs 45,000 40,000 5,000 U
-------------- ------------- ------------
Operating income $20,000 $24,000 $4,000 U

Using a flexible budget, Dale's total sales-volume variance is

A. $6,000 favorable.
B. $16,000 favorable.
C. $4,000 unfavorable.
D. $20,000 unfavorable.

Question 18 - CMA 1279 4-11 - Introduction to Variance Analysis and Standard Costs

The best basis upon which cost standards should be set to measure controllable production inefficiencies is

A. Recent average historical performance.

B. Engineering standards based on ideal performance.
C. Normal capacity.
D. Engineering standards based on attainable performance.

Question 19 - CMA 692 3-18 - Manufacturing Input Variances - Materials and Labor

Jackson Industries employs a standard cost system in which direct materials inventory is carried at standard cost.
Jackson has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 5 pounds $3.60/pound $18.00

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Direct labor 1.25 hours 12.00/hour 15.00

$33.00

During May, Jackson purchased 125,000 pounds of direct materials at a total cost of $475,000. The total factory wages
for May were $364,000, 90% of which were for direct labor. Jackson manufactured 22,000 units of product during May
using 108,000 pounds of direct materials and 28,000 direct labor hours.

The purchase price variance for the direct materials acquired by Jackson Industries during May is

A. $21,600 unfavorable.
B. $21,600 favorable.
C. $25,000 unfavorable.
D. $28,000 favorable.

Question 20 - CMA 1291 3-4 - Manufacturing Input Variances - Materials and Labor

Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow
has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 8 pounds $1.80 per pound $14.40
Direct labor .25 hours $8.00 per hour 2.00
$16.40

During November, Arrow purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory
wages for November were $42,000, 90% of which were for direct labor. Arrow manufactured 19,000 units of product
during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

The direct labor usage (efficiency) variance for November is

A. $2,200 favorable.
B. $1,800 unfavorable.
C. $2,000 favorable.
D. $2,000 unfavorable.

Question 21 - CMA 696 3-22 - Manufacturing Input Variances - Materials and Labor

Ardmore Enterprises uses a standard cost system in its small appliance division. The standard cost of manufacturing
one unit of Zeb is as follows:

Materials - 60 pounds at $1.50 per pound $ 90

Labor - 3 hours at $12 per hour 36
Factory overhead - 3 hours at $8 per hour 24
Total standard cost per unit $150

The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000
per month. During May, Ardmore produced 1,650 units of Zeb compared with a normal capacity of 1,800 units. The

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actual cost per unit was as follows:

Materials (purchased and used) - 58 pounds at $1.65 per pound $ 95.70

Labor - 3.1 hours at $12 per hour 37.20
Factory overhead - $39,930 per 1,650 units 24.20
Total actual cost per unit $157.10

The total materials quantity variance for May is

A. $4,950 favorable.
B. $14,355 unfavorable.
C. $14,355 favorable.
D. $4,950 unfavorable.

Question 22 - CMA 1291 3-3 - Manufacturing Input Variances - Materials and Labor

Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow
has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 8 pounds $1.80 per pound $14.40
Direct labor .25 hours $8.00 per hour 2.00
$16.40

During November, Arrow purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory
wages for November were $42,000, 90% of which were for direct labor. Arrow manufactured 19,000 units of product
during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

The direct labor price (rate) variance for November is

A. $2,090 favorable.
B. $2,000 unfavorable.
C. $2,200 favorable.
D. $1,900 unfavorable.

Question 23 - CIA 594 III-74 - Manufacturing Input Variances - Materials and Labor

A company manufactures one product and has a standard cost system. In April the company had the following
experience:

Direct Materials Direct Labor

Actual $/unit of input (lbs. & hrs.) $28 $18
Standard price/unit of input $24 $20
Standard inputs allowed per unit of output 10 4
Actual units of input 190,000 78,000
Actual units of output 20,000 20,000

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The direct labor rate variance for April is

A. $156,000 unfavorable.
B. $240,000 favorable.
C. $40,000 unfavorable.
D. $156,000 favorable.

Question 24 - CIA 592 IV-18 - Manufacturing Input Variances - Materials and Labor

The following is a standard cost variance analysis report on direct labor cost for a division of a manufacturing company.

Actual Hours at Actual Hours at Standard Hours at

Job Actual Wages Standard Wages Standard Wages
213 $3,243 $3,700 $3,100
215 15,345 15,675 15,000
217 6,754 7,000 6,600
219 19,788 18,755 19,250
221 3,370 3,470 2,650
Totals $48,500 $48,600 $46,600

What is the total flexible budget direct labor variance for the division?

A. $1,900 favorable.
B. $2,000 unfavorable.
C. $100 favorable.
D. $1,900 unfavorable.

Question 25 - CMA 1295 H5 - Variance Analysis Concepts

The difference between the actual amounts and the flexible budget amounts for the actual output achieved is the

A. Standard cost variance.

B. Sales volume variance.
C. Production volume variance.
D. Flexible budget variance.

Question 26 - CMA 1291 3-2 - Manufacturing Input Variances - Materials and Labor

Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow
has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 8 pounds $1.80 per pound $14.40
Direct labor .25 hours $8.00 per hour 2.00

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$16.40

During November, Arrow purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory
wages for November were $42,000, 90% of which were for direct labor. Arrow manufactured 19,000 units of product
during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

The direct materials usage (quantity) variance for November is

A. $17,100 unfavorable.
B. $17,100 favorable.
C. $1,100 favorable.
D. $14,400 unfavorable.

Question 27 - CIA 1192 IV-20 - Manufacturing Input Variances - Materials and Labor

A manufacturer has the following direct materials standard for one of its products.

Direct materials: 3 pounds @ $1.60/pound = $4.80

The company records all inventory at standard cost. Data for the current period regarding the manufacturer's budgeted
and actual production for the product as well as direct materials purchases and issues to production for manufacture of
the product are presented as follows.

Budgeted production for the period: 8,000 units

Actual production for the period: 7,500 units

Direct materials purchases:

Pounds purchased: 25,000 pounds
Total cost: $38,750

Direct materials issued in production: 23,000 pounds

The direct materials purchase price variance for the current period is

A. $1,125 favorable.
B. $1,200 favorable.
C. $1,250 favorable.
D. $1,150 favorable.

Question 28 - CMA 687 4-18 - Manufacturing Input Variances - Materials and Labor

Baxter Corporation's master budget calls for the production of 5,000 units of product monthly. The master budget
includes indirect labor of $144,000 annually; Baxter considers indirect labor to be a variable cost. During the month of
April, 4,500 units of product were produced, and indirect labor costs of $10,100 were incurred. A performance report
utilizing flexible budgeting would report a budget variance for indirect labor of

A. $1,900 unfavorable.
B. $700 favorable.
C. $700 unfavorable.
D. $1,900 favorable.

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Question 29 - CIA 590 IV-15 - Manufacturing Input Variances - Materials and Labor

A manager prepared the following table by which to analyze labor costs for the month:

Actual Hours at Actual Hours at Standard Hours at

Actual Rate Standard Rate Standard Rate
$10,000 $9,800 $8,820

What variance was $980?

A. Labor efficiency variance.

B. Labor rate variance.
C. Volume variance.
D. Labor spending variance.

Question 30 - CMA 692 3-17 - Manufacturing Input Variances - Materials and Labor

An organization that specializes in reviewing and editing technical magazine articles sets the following standards for
evaluating the performance of the professional staff:
Annual budgeted fixed costs for normal capacity level of 10,000 articles reviewed and edited: $600,000
Standard professional hours per 10 articles: 200 hours
Flexible budget of standard labor costs to process 10,000 articles: $10,000,000

The following data apply to the 9,500 articles that were actually reviewed and edited during the current year:
Total hours used by professional staff: 192,000 hours
Flexible costs: $9,120,000
Total cost: 9,738,000

The labor efficiency variance for the year is

A. $500,000 favorable.
B. $238,000 unfavorable.
C. $380,000 favorable.
D. $100,000 unfavorable.

Question 31 - CMA 696 3-23 - Manufacturing Input Variances - Materials and Labor

Ardmore Enterprises uses a standard cost system in its small appliance division. The standard cost of manufacturing
one unit of Zeb is as follows:

Materials - 60 pounds at $1.50 per pound $ 90

Labor - 3 hours at $12 per hour 36
Factory overhead - 3 hours at $8 per hour 24
Total standard cost per unit $150

The budgeted variable factory overhead rate is $3 per labor hour, and the budgeted fixed factory overhead is $27,000

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per month. During May, Ardmore produced 1,650 units of Zeb compared with a normal capacity of 1,800 units. The
actual cost per unit was as follows:

Materials (purchased and used) - 58 pounds at $1.65 per pound $ 95.70

Labor - 3.1 hours at $12 per hour 37.20
Factory overhead - $39,930 per 1,650 units 24.20
Total actual cost per unit $157.10

The materials price variance for May is

A. $14,850 favorable.
B. $14,850 unfavorable.
C. $14,355 favorable.
D. $14,355 unfavorable.

Question 32 - CMA 695 3-10 - Introduction to Variance Analysis and Standard Costs

A standard costing system is most often used by a firm in conjunction with

A. Participative management programs.

B. Management by objectives.
C. Flexible budgets.
D. Target (hurdle) rates of return.

Question 33 - CIA 595 III-24 - Introduction to Variance Analysis and Standard Costs

Which of the following management practices involves concentrating on areas that deserve attention and placing less
attention on areas operating as expected?

A. Responsibility accounting.
B. Management by objectives.
C. Management by exception.
D. Benchmarking.

Question 34 - CMA 693 3-16 - Variance Analysis Concepts

In analyzing company operations, the controller of the Jason Corporation found a $250,000 favorable flexible-budget
revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance
can be wholly explained by

A. The total static budget variance.

B. Changes in unit selling prices.
C. The total flexible budget variance.
D. The total sales volume variance.

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Question 35 - CMA 692 3-19 - Manufacturing Input Variances - Materials and Labor

Jackson Industries employs a standard cost system in which direct materials inventory is carried at standard cost.
Jackson has established the following standards for the prime costs of one unit of product.

Standard Standard Standard

Quantity Price Cost
Direct materials 5 pounds $3.60/pound $18.00
Direct labor 1.25 hours $12.00/hour 15.00
$33.00

During May, Jackson purchased 125,000 pounds of direct materials at a total cost of $475,000. The total factory wages
for May were $364,000, 90% of which were for direct labor. Jackson manufactured 22,000 units of product during May
using 108,000 pounds of direct materials and 28,000 direct labor hours.

The direct materials usage (quantity) variance for May is

A. $7,200 favorable.
B. $7,600 favorable.
C. $7,200 unfavorable.
D. $5,850 unfavorable.

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