Select the choice which best completes the statement, or answers the question, by clicking on the corresponding letter.
1. The process of responsibility accounting ensures that:
problems identified by variances are tracked to their source
there is a strict management hierarchy of responsibility
standard costing systems are implemented properly
management accountants are responsible for calculating variances
2. Standard costing is a system of costing that can be used in business environments where:
a repetitive series of standardised operations are carried out
each product is customised to purchaser requirements
there are likely to be large fluctuations in costs
goods are supplied in standard sizes only
3. Prideaux Fabrications Limited has the following budget for November 20X7:
Sales: 600 units x £75..................................£45 000 Costs Direct materials: 600 x (4kg x £7)..................(£16 800) Direct labour: 600 x (1 hour x £8)..................(£4 800) Production overhead....................................(£12 000) ..................................................................£11 400 Selling and administrative overhead...............(£6 000) Net profit.....................................................£5 400
Prideaux Fabrications Limited does not absorb production overhead using an overhead absorption rate and it may be assumed that all of its overheads are fixed in nature. If the company flexes its budget for 700 units what will be the revised net profit figure?
£12 900
£7 300
£6 300
£9 300
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the sales profit volume variance for the month?
£1470 (A)
£1470 (F)
£8950 (A)
£8950 (F)
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the sales price variance for the month?
£2250 (A)
£14 750 (A)
£14 750 (F)
£2250 (F)
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the direct materials price variance for the month?
£10 620 (A)
£5 900 (A)
£5 900 (F)
£10 620 (F)
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the direct materials quantity variance for the month?
£16 520 (A)
£16 520 (F)
£17 700 (A)
£17 700 (F)
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the direct labour rate variance for the month?
£720 (F)
£0
£1770 (F)
£2520 (F)
Quayle Farrar Limited produces a standard size metal railing unit. Its budget for April 20X6 is as follows:
Sales: 3000 units x £250.......................£750 000
Direct materials: 3000 x (8kg x £7).........(£168 000) Direct labour: 3000 x (2.5 hours x £6).....(£45 000) Production overhead.............................(£155 000) ............................................................£382 000 Other overheads...................................(£125 000) Net profit...............................................£257 000
Quayle Farrar Limited does not absorb production overheads using an overhead absorption rate. It may be assumed that all of its overheads are fixed in nature. The company’s actual results for the month are as follows:
Sales: 2950 x £255....................................£752 250
Direct materials: 2950 x (7.2kg x £7.50) .....(£159 300) Direct labour: 2950 x (2.4hours x £6).........(£42 480) Production overhead.................................(£162 000) ...............................................................£388 470 Other overheads.......................................(£130 000) Net profit..................................................£258 470
What is the direct labour efficiency variance for the month?
£1050 (A)
£1770 (F)
£1050 (F)
£1770 (A)
Which of the following is not a valid possible cause of direct materials quantity variances?
obtaining quantity discounts for large orders of materials
increased/decreased level of quality checks on the production process
poor functioning of machinery giving rise to excessive wastage