Chapter 10

10. An unfavorable labor efficiency variance is created when:

A. actual labor hours worked exceed standard hours allowed.
B. actual hours worked are less than standard hours allowed.
C. actual wages paid are less than amounts that should have been paid.
D. actual units produced exceed budgeted production levels.
E. actual units produced exceed standard hours allowed.
11. A favorable labor rate variance is created when:
A. actual labor hours worked exceed standard hours allowed.
B. actual hours worked are less than standard hours allowed.
C. actual wages paid are less than amounts that should have been paid for the number of hours worked.
D. actual units produced exceed budgeted production levels.
E. actual units produced exceed standard hours allowed.
14. Dover Enterprises recently used 14,000 labor hours to produce 7,500 completed units. According to
manufacturing specifications, each unit is anticipated to take two hours to complete. The company's actual
payroll cost amounted to $158,200. If the standard labor cost per hour is $11, Dover's labor rate variance is:
A. $4,200U.
B. $4,000F.
C. $4,300U.
D. $4,300F.
E. none of the other answers are correct.
15. Alexis Company recently completed 10,600 units of its single product, consuming 32,000 labor hours that
cost the firm $480,000. According to manufacturing specifications, each unit should have required 3 hours of
labor time at $15.40 per hour.
On the basis of this information, determine Alexis's total labor variance.
A. $15,880U
B. $9,720F
C. $15,720F
D. $9,720U
E. $15,880F

Chapter 11

6.

Young Corporation has a high probability of operating at 40,000 activity hours during
the upcoming period, and lower probabilities of operating at 30,000 hours and 50,000 hours.
The company's flexible budget revealed the following:

If Young operated at 35,000 hours, its total budgeted cost would be:
A. $877,500.
B. $945,000.
C. $787,500.
D. $997,500.
E. $810,000.
7. Gourmet Restaurants has the following flexible-budget formula:
Y = $13PH + $450,000 where PH is defined as process hours.
What is Gourmet's budgeted total cost if its process hours equal 25,000?
A. $325,000.
B. $450,000.
C. $775,000.
D. $1,225,000.
E. Answer cannot be determined from the information provided.
13. Which of the following statements is/are correct concerning the application of overhead in
a standard costing system driven by process hours?
A. A predetermined overhead rate is allowed only for fixed overhead.
B. Overhead application is based on standard process hours allowed.
C. Overhead application is based on actual process hours incurred.
D. Only prime costs are considered to be product costs in a standard costing system.
E. Only variable overhead costs are applied to production.

Chapter 12
2. The concepts and tools used to measure the performance of people and departments are
known as:
A. goal congruence.
B. planning and control.
C. responsibility accounting.
D. delegation of decision making.
E. strategic control.
9. An investment center manager:
A. does not have the ability to produce revenue.
B. may be involved with the sale of new marketing programs to clients.
C. would normally be held accountable for producing an adequate return on invested capital.
D. often oversees divisional operations.
E. may be the manager who oversees the operations of a retail store.