Management Accounting, 1st edition, by Catherine Gowthorpe, Chapter 9
Quiz
Which one of the following statements is correct?
Responsibility accounting ensures that:
there is strict control over responsibility for resource allocation.
management accountants accept responsibility for their monthly management reports.
problems identified by analysing variances are tracked to their source.
standard costing systems are implemented in accordance with accounting standards.
Which one of the following statements is correct?
Standard costing is a system that can be usefully applied in business environments where:
products are custom-built to comply with customer requirements.
costs are expected to fluctuate within wide parameters.
the relevant accounting standard on product costing is followed.
a repetitive and predictable series of standardised operations are carried out.
Picken Warbury has the following budget for January 2011:
€
Sales: 500 units at €70 per unit
35 000
Costs
Direct materials: 500 x (6kg x €1.50)
(4 500)
Direct labour: 500 x (1 hour x €8.75)
(4 375)
Production overhead
(15 000)
TOTAL
11 125
Selling and administrative overhead
(5 000)
Net profit
6 125
The company 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 560 units, what will be the revised net profit figure?
€6737.50
€7237.50
€3750
€9260.00
Sloop Warrenby has the following budget for March 2010:
€
Sales: 1250 units at €14.50
18 125
Costs
Direct materials: 1250 x (2 metres x €2.00)
(5000)
Direct labour: 1250 x (0.25 hours x €10.00)
(3125)
Production overhead
(4500)
TOTAL
5500
Selling and administrative overhead
(2700)
Net profit
2800
The company 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 1200 units, what will be the revised net profit figure?
€2580.00
€2688.00
€2400.00
€3216.67
Billingsgate Western has the following budget for December 2010:
€
Sales: 250 units at €256 per unit
64 000
Costs
Direct materials: 250 x (8 kg x €8.50)
(17 000)
Direct labour: 250 x (1.5 hours x €10.60)
(3975)
Direct expense: 250 x €2
(500)
Production overhead
(21 000)
TOTAL
21 525
Selling and administrative overhead
(8 350)
Net profit
13 175
The direct expense is a royalty payable to the product’s patent holder for each unit produced. The company 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 260 units, what will be the revised net profit figure?
€14 036
€14 876
€13 702
€14 896
Which one of the following statements is correct?
The variance between the original budgeted profit and the flexed budget profit is known as:
the profit variance.
the sales volume variance.
the sales profit volume variance.
the profit price variance.
Palesworth Productions budgeted a figure of €25 000 in net profit for the month of May 2011, based on a target sales figure of 600 units. The actual outturn was that 700 units were sold. The flexed budget net profit figure was €26 700 and the actual net profit for the month was €27 200.
What was the sales profit volume variance for May 2011?
€500
€1200
€2200
€1700
Mulhouse and Snell budgeted a figure of €53 220 in net profit for the month of August 2010, based on a target sales figure of 2000 units. The actual outturn was that 2020 units were sold. The flexed budget net profit figure was €54 470 and the actual net profit for the month was €54 400.
What was the sales profit volume variance for August 2010?
€1250 (A)
€1180 (F)
€1250 (F)
€1180 (A)
Petty Simpson budgeted a figure of €32 460 in net profit for the month of June 2010, based on a target sales figure of 1000 units. The actual outturn was that 990 units were sold. The flexed budget net profit figure was €32 320, and the actual net profit for the month was €33 060.
What was the sales profit volume variance for June 2010?
€460
€140
€740
€600
Precinct and Weston’s sales budget for June 2010 was 500 units at a standard selling price of €75. The actual price at which units were sold in the month was €78, and in total 510 units were actually sold.
What was the sales price variance for June 2010?
€780 (F)
€780 (A)
€1530 (F)
€1530 (A)
Snelling and Penwortham’s sales budget for November 2010 was 3000 units at a standard selling price of €26.50. Actual sales volumes exceeded expectations at 3150 units. The actual sales price was €26.20.
What was the sales price variance for November 2010?
€3030 (F)
€945 (F)
€3030 (A)
€945 (A)
Hatton and Hussein’s sales budget for July 2010 was 680 units at a standard selling price of €32.50. At the end of the month the management accountant flexed the budget; the flexed sales figure was €22 620. The actual selling price achieved in the month was €33.75.
What was the sales price variance for July 2010?
€870.00 (A)
€333.20 (F)
€870.00 (F)
€333.20 (A)
Britton Aarhus’s sales budget for November 2010 was 550 units at a standard selling price of €68.50. The flexed sales figure was €37 264. The actual selling price achieved in the month was €68.95.
What was the sales price variance for November 2010?
€244.80 (F)
€244.80 (A)
€413.70 (A)
€413.70 (F)
Britney Walsh budgeted a total spend of €12 600 on raw materials for June 2010: 6 kg @ €3.50 x 600 units.
The budget outturn was that 620 units were sold. These were each produced using 6.5 kg of raw materials at a price of €3.30 per kg.
What was the flexed budget figure for raw materials for June 2010?
€12 870
€11 880
€13 020
€14 105
Hoode and Lowe’s materials budget for August 2010 comprised 6 metres of raw material at a standard cost of €2.30 per metre for each unit produced and sold. Actual sales and production for the month was 680 units. The outturn was that 6.20 metres of raw material were used for each unit at a cost of €2.40 per metre.
What was the materials price variance for August 2010?
€734.40 (A)
€421.60 (F)
€734.40 (F)
€421.60 (A)
Wengeli and Hudson’s materials budget for February 2010 comprised 2.5 kg of raw material at a standard cost of €10.50 per kg for each unit produced and sold. The sales and production budget was for 880 units. Actual sales and production for the month was 890 units. The actual price paid for raw materials was €10.40 and 2.4 kg were used in the manufacture of each unit.
What was the materials price variance for February 2010?
€885.60 (F)
€213.60 (F)
€1148.10 (F)
€222.50 (F)
Styles Warnleigh’s materials budget for February 2010 comprised 4.5 kg. of raw material at a standard cost of €3.50 per kg. for each unit produced and sold. Actual sales and production for the month was 286 units. €3.62 was actually paid for each kg of raw material used in the month, and the actual input to each product unit was 4.3 kg.
What was the materials price variance for February 2010?
€147.58 (F)
€147.58 (A)
€52.62 (F)
€52.62 (A)
Snodgrass and Payne’s materials budget for April 2010 comprised 6 metres of raw material at a standard cost of €2.30 per metre for each unit produced and sold. Actual sales and production for the month was 680 units. The outturn was that 6.20 metres of raw material were used for each unit at a cost of €2.40 per metre.
What was the materials quantity variance for April 2010?
€734.40 (F)
€312.80 (A)
€312.80 (F)
€734.40 (A)
Sloop Pennyfeather budgeted a total spend of €12 600 on raw materials for December 2009: 6 kg at a standard price of €3.50 x 600 units.
The budget outturn was that 610 units were sold. These were each produced using 6.5 kg of raw materials at a price of €3.30 per kg.
What was the materials quantity variance for December 2009?
€274.50 (A)
€484.50 (A)
€1067.50 (A)
€1277.50 (A)
Brandenburg and Fontaine produced and sold 1350 units of their BF322 product in October 2009. Each unit was budgeted to use 1.5 hours of labour at a standard cost of €11.60 per hour. When the company’s management accountant reviewed the records for the month he found that 1.6 labour hours had been used in actual production, at an actual cost of €11.55 per hour.
What was the labour rate variance for October 2009?
€108 (F)
€108 (A)
€1458 (F)
€1458 (A)
Vilneuve and Prewitt’s direct labour budget for May 2009 comprised 2.3 labour hours at a rate of €9.75 per unit. The actual sales and production level for the month was 1850 units. The actual labour rate paid was €9.95 and each unit actually required, on average, an input of 2.6 labour hours.
What was the labour rate variance for May 2009?
€962 (A)
€851 (A)
€851 (F)
€962 (F)
Durkheim Goldfinger budgeted a sales and production level of 2600 units for the month of December 2009. The actual sales and production outturn was 2520 units. The labour budget for the month comprised an input of 3.2 hours per unit at a standard rate of €8.65. Actual figures per unit were 3.3 hours at an actual rate of €8.60.
What was the labour rate variance for December 2009?
€2167.20 (A)
€450.40 (F)
€415.80 (F)
€1764.00 (A)
Ancona and Flight’s direct labour budget for September 2010 comprised 2.3 labour hours at a rate of €9.75 per unit. The actual sales and production level for the month was 1850 units. The actual labour rate paid was €9.95 and each unit actually required, on average, an input of 2.6 labour hours.
What was the labour efficiency variance for September 2010?
€5522.25 (A)
€5522.25 (F)
€5411.25 (A)
€5411.25 (F)
Parnassus Products’ labour budget for January 2009 comprised 1.75 hours of direct labour input at a standard rate of €7.60 per hour, for each unit of production. The actual labour rate paid in the month was €7.70 and the figure for actual hours input per unit of product was 1.72. The actual sales and production level for the month was 1227 units.
What was the total labour variance (i.e. the total of the labour rate and the labour efficiency variances) for January 2009?
€211.05
€279.76
€68.71
€490.81
Olette Staines produced and sold 1350 units of their OS211 product in September 2009. Each unit was budgeted to use 1.5 hours of labour at a standard cost of €11.60 per hour. When the company’s management accountant reviewed the records for the month he found that 1.6 labour hours had been used in actual production, at an actual cost of €11.55 per hour.
What was the labour efficiency variance for September 2009?
€1458 (F)
€1566 (A)
€1566 (F)
€1458 (A)
Munster and Moss budgeted sales and production of 1650 units in the month of July 2010. In the event, the company produced and sold 1665 units. The budgeted labour rate per unit was €12.50, whereas the actual rate was €12.40.
Budget labour hours per unit of product was 4.3 hours, whereas actual the actual labour hours figure was 4.6 per unit.
What was the labour efficiency variance for July 2010?
€6187.50
€5477.85
€6139.80 (A)
€6243.75 (A)
Coromandel and Wellington incurs variable production overheads. The company’s budget for August 2010 included 960 units of sales and production. Variable overheads were recovered at a rate of €3 per unit.
The actual sales and production in units for the month was 975, and the actual figure for variable overheads incurred was €3250.
What was the variable production overhead variance for August 2010?
€325 (A)
€370 (A)
€370 (F)
€325 (F)
Sopworth and Barking incurs variable production overheads. The company’s budget for December 2009 included 1760 units of sales and production. Variable overheads were recovered at a rate of €2.25 per unit.
The actual sales and production in units for the month was 1721, and the actual figure for variable overheads incurred was €4275.
What was the variable production overhead variance for December 2009?
€402.75 (F)
€315.00 (F)
€315.00 (A)
€402.75 (A)
Millworth Moorhead incurs variable production overheads. The company’s budget for February 2010 included 2360 units of sales and production. Variable overheads were recovered at a rate of €5.60 per unit.
The actual sales and production in units for the month was 2333, and the actual figure for variable overheads incurred was €12 257.
What was the variable production overhead variance for February 2010?
€959 (F)
€959 (A)
€807.80 (F)
€807.80 (A)
Brookworth Ghent incurs variable production overheads. The company’s budget for March 2010 included 966 units of sales and production. Variable overheads were recovered at a rate of €16.50 per unit.
The actual sales and production in units for the month was 934, and the actual figure for variable overheads incurred was €14 996.
What was the variable production overhead variance for March 2010?