Question

1. True or false: A debit balance means that a variance is favorable since it decreases income (just like a expense).

2. True or false: If the actual number of units produced is less than the number of units budgeted to produced, then the fixed overhead volume variance will always be unfavorable.

3. Raw Materials Inventory: 120,000 ; DM Price Variance: 5,000 ; Accounts Payable: 125,000. The debit to DM Price Variance in the journal entry above indicates a. that the variance is favorable since it is a debit balance. b. that standard price exceeds the actual price for direct materials. c. that the variance is unfavorable since it is a debit balance. d. that the actual quantity used was exactly what they budgeted to use.

4. How is the fixed overhead volume variance calculated? a. The difference between the actual fixed overhead costs incurred and the standard fixed overhead costs allocated b. The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs c. The difference between the standard fixed overhead rate and the actual fixed overhead rate multiplied by the actual hours used d. The difference between the standard fixed overhead costs allocated to production and the budgeted fixed overhead costs

5. True or false: The total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

6. A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted? a. Direct materials quantity variance b. Direct labor rate variance c. Direct materials price variance d. Direct labor efficiency variance

Answer 1

Q1. False.
A debit balance in variance means the Variance is unfavorable.
Q2. True.
Voume variance is difference in Std oh for Actual output and Budgeted output. If actual Output is less than budgeted.
Volume variance will always be unfavorable.
Q3.
Answer is C. that variance is unfavorable since it is debit balance.
Explanation:
When variannce is debited or having a debit balance it means it is unfavorabble.
Q4.
Answer is D. the difference in Sstd fixed OH cost allocated to production and the budgeted fixed OH cost.
Q5. Answer is True.
Total Direct labour cost variance= labour rate variance+ labour Efficiency variance
Q6.
Answer is C. Direct material price variance.
Explanation: Material price determines the difference between the std price fixed and actual price paid for material.