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Chapters 1-4 The Accounting Cycle
Chapters 5-8 Current Assets
Chapters 9-11 Long-Term Assets
Chapters 12-14 Liabilities/Equities
Chapters 15-16 Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20 Managerial/Cost
Chapters 21-24 Budgeting/Decisions

Chapter 22 - Multiple Choice

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Chapter 22 – Multiple Choice

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Question 1 of 8

1. Question
A business unit is known as a profit center:
- if its management is held accountable for both revenues and expenses, and has the authority to make decisions regarding its products, markets, and sources of supply.
- if its management is compensated based on the level of profitability.
- if its management is evaluated not only on revenues and expenses but also on asset investment.
- if its operations or departments are not directly involved in revenue generating activities, but instead focus on elements of cost control (including choosing the source of supply).
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Question 2 of 8

2. Question
The basic difference between a static budget and a flexible budget is that:
- A flexible budget considers only variable costs, but a static budget considers all costs.
- Flexible budgets allow management latitude in meeting goals, whereas a static budget is based on a fixed standard.
- A static budget is for an entire production facility, but a flexible budget is applicable only to a single department.
- A static budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.
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Question 3 of 8

3. Question
Linwood Industries prepared a flexible budget which revealed total production costs of $79,000 at an anticipated 10,000 unit activity level. Variable production costs were (per unit) $1.50 for direct materials, $3.50 for direct labor, and $0.75 for variable factory overhead. How much are total anticipated production costs in Linwood’s flexible budget for an activity level of 10,800 units?
- $21,500
- $62,100
- $79,000
- $83,600
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Question 4 of 8

4. Question
Which of the following is not one of the objectives in utilizing standard costs?
- To simplify costing procedures and expedite cost reports.
- To allow management to readily determine, and focus attention on, special problem areas.
- To allow a measure of cost assuming ideal or perfect operating conditions.
- To provide a measure of budgeted cost for a single unit of activity.
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Question 5 of 8

5. Question
Actual direct labor at Subramaniam Tire during the month of June amounted to 14,000 hours. This compares to the standard direct labor hours for the actual output of 15,000 hours. During June, total actual variable overhead was $32,000. The standard total variable overhead application rate per standard direct labor hour was $2.25. How much was the variable overhead spending variance for June?
- $500 favorable
- $500 unfavorable
- $2,000 favorable
- $2,000 unfavorable
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Question 6 of 8

6. Question
If a unit manager made a decision to purchase raw materials that were of superior quality to that which was anticipated, and this decision resulted in less spoilage than normal, the effect on the quantity and price variances, respectively, would be:
- Unfavorable, unfavorable
- Favorable, unfavorable
- Favorable, favorable
- Unfavorable, favorable
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Question 7 of 8

7. Question
Quillen uses a single raw material in its production process. The standard price for a unit of material is $7.00. During October the company purchased and used 10,000 units of this material. The actual purchase price was $8.00 per unit. The standard quantity required per finished product is 3 units. Quillen produced 3,000 finished units of the final product in October. How much was the material price variance for October?
- $3,000 favorable
- $3,000 unfavorable
- $9,000 unfavorable
- $10,000 unfavorable
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Question 8 of 8

8. Question
Finch produced 3,000 units of output. The production process normally requires 3 hours of labor per unit of output. The standard labor rate is $7.00 per hour, but Finch paid $6.00 per hour. Actual hours needed to complete the production process were 8,500. How much was the labor efficiency variance?
- $3,000 favorable
- $3,000 unfavorable
- $3,500 favorable
- $3,500 unfavorable
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Chapters 1-4
Chapters 5-8
Chapters 9-11
Chapters 12-14
Chapters 15-16
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20
Chapters 21-24
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