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Unit 2 : Business 2 - Quiz

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Question 1.1. (TCO E) (CPA-04172) For a company that produces more than one product, the sales
volume variance can be divided into which two of the following additional variances? (Points : 10)
Sales price variance and flexible budget variance.
Sales efficiency variance and sales price variance.
Sales quantity variance and sales mix variance.
Sales mix variance and production volume variance.


Question 2.2. (TCO E) (CPA-04843) Which of the following forecasting methods relies mostly on
judgment? (Points : 10)
Time series models.
Econometric models.
Delphi.
Regression.


Question 3.3. (TCO E) (C)A-06978) Which of the following types of variances would a purchasing
manager most likely influence? (Points : 10)
Direct materials price.
Direct materials quantity.
Direct labor rate.
Direct labor efficiency.


Question 4.4. (TCO E) (CPA-03914) In managerial accounting, the term "relevant range" is often used
to describe: (Points : 10)
The theoretical maximums and minimum ranges the company could operate in.
The range over which costs fluctuate.
The range over which relevant costs are incurred.
The range over which cost relationships are valid.


Question 5.5. (TCO E) (CPA-03721) Clay Co. has considerable excess manufacturing capacity. A
special job order's cost sheet includes the following applied manufacturing overhead costs:

Fixed costs $21,000
Variable costs 33,000

The fixed costs include a normal $3,700 allocation for in-house design costs, although no in-house
design will be done. Instead the job will require the use of external designers costing $7,750. What is
the total amount to be included in the calculation to determine the minimum acceptable price for the
job? (Points : 10)
$36,700
$40,750
$54,000
$58,050


Question 6.6. (TCO E) (CPA- 05874) A company uses a standard costing system. At the end of the
current year, the company provides the following overhead information:

Actual overhead incurred:
Variable $ 90,000
Fixed $ 62,000
Budgeted fixed overhead $ 65,000
Variable overhead rate (per direct labor hour) $ 8
Standard hours allowed for actual production 12,000
Actual labor hours used 11,000


What amount is the variable overhead efficiency variance? (Points : 10)
$8,000 favorable.
$8,000 unfavorable.
$6,000 favorable.
$2,000 unfavorable.


Question 7.7. (TCO E) (CPA-06165) Anderson Corporation budgeted sales of 6,250 at $12 per unit but
achieved sales of 5,000 at $15 per unit. Anderson would compute a selling price variance of: (Points :
10)
$0
$3,750
$15,000
$18,750


Question 8.8. (TCO E) (CPA-04186) The controller for Durham Skates is reviewing the production cost
report for July. An analysis of direct material costs reflects an unfavorable flexible budget variance of
$25. The plant manager believes this is excellent performance on a flexible budget for 5,000 units of
direct material. However, the production supervisor is not pleased with this result as he claims to have
saved $1,200 in material cost on actual production using 4,900 units of direct material. The standard
material cost is $12 per unit. Actual material used for the month amounted to $60,025.
If the direct material variance was investigated further, it would reflect a price variance of: (Points : 10)
$850 unfavorable.
$1,200 favorable.
$1,225 unfavorable.
$2,500 favorable.


Question 9.9. (TCO E) (CPA-04262) Bruell Electronics Co. is developing a new product, surge
protectors for high-voltage electrical flows. The following cost information relates to the product.

Unit Costs
Direct materials $3.25
Direct labor 4.00
Distribution .75

The company will also be absorbing $120,000 of additional fixed-costs associated with this new
product. A corporate fixed charge of $20,000 currently absorbed by other products will be allocated to
this new product.
How many surge protectors (rounded to the nearest hundred) must Bruell Electronics sell at a selling
price of $14 per unit to gain $30,000 additional income before taxes? (Points : 10)
12,100 units.
20,000 units.
25,000 units.
28,300 units.


Question 10.10. (TCO E) (CPA-03852) Folsom Fashions sells a line of women's dresses. Folsom's
performance report for November Year 1 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 variable cost flexible budget variance for November is: (Points : 10)
$5,000 favorable.
$5,000 unfavorable.
$4,000 favorable.
$4,000 unfavorable.

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