The estimates of the variable and fixed components

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Reference no: EM139596

Q1. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period.
a. True
b. False

Q2. To ensure comparability, all of the balanced scorecards of companies within a single industry should have the same performance measures.
a. True
b. False

Q3. A manufacturing cycle efficiency (MCE) of 0.3 means that 70% of throughput time is spent on non-value-added activities.
a. True
b. False

Q4. When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable.
a. True
b. False

Q5. A favorable materials quantity variance would appear as a debit in a journal entry.
a. True
b. False

Q6. For an automobile manufacturer, the cost of a driver's side air bag purchased from a supplier and installed in every automobile would best be described as a:
a. fixed cost.
b.mixed cost.
c.step-variable cost.
d. variable cost.

Q7. Vicuna Wool Company manufactures and sells sweaters. Last year, Vicuna operated at 100% of capacity and had the following cost formula for total manufacturing costs:
Y = $50,000 + $400X
Assuming no change in cost structure, what would Vicuna's cost formula have been last year if they only operated at 90% of production capacity?
a. Y = $45,000 + $360X
b.Y = $45,000 + $400X
c. Y = $50,000 + $360X
d.Y = $50,000 + $400X

Q8.  The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below:

 

Machine-Hours

Repair-Hours

April

4,459

$98,523

May

4,426

$98,296

June

4,493

$98,781

July

4,417

$98,207

August

4,432

$98,349

September

4,446

$98,420

October

4,489

$98,749

November

4,475

$98,654

Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

a. $22.11 per machine-hour plus $98,497 per month

b. $7.37 per machine-hour plus $65,670 per month

c. $8.19 per machine-hour plus $62,015 per month

d. $7.55 per machine-hour plus $64,859 per month

Q9. During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers were being paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

 

Labor Rate Variance

Labor Efficiency Variance

A)

Unfavorable

No effect

B)

No effect

Unfavorable

C)

Unfavorable

Favorable

D)

Favorable

Unfavorable

a.Item A

b. Item B

c.Item C

d.Item D

Q10.  The journal entry below 

Work in Process

25,000

Direct Labor Efficiency Variance

1,200

Direct Labor Rate Variance

2,000

Accrued Wages Payable

24,200

indicates that:

A. the total labor variance was $800, unfavorable.

B. employees received an unexpected rate increase during the period.

C. more labor time was required to complete the output of the period than was allowed at standard.

D. responses a and b are both correct.

Reference no: EM139596

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