1. Identify the situation below that will result in a favorablevariance.

Multiple Choice

• Actual revenue is higher than budgeted revenue.

• Actual revenue is lower than budgeted revenue.

• Actual income is lower than expected income.

• Actual costs are higher than budgeted costs.

• Actual expenses are higher than budgeted expenses.

2 Hassock Corp. produces woven wall hangings. It takes 2 hoursof direct labor to produce a single wall hanging. Hassock’sstandard labor cost is $12 per hour. During August, Hassockproduced 10,000 units and used 21,040 hours of direct labor at atotal cost of $250,376. What is Hassock’s labor rate variance forAugust?

Multiple Choice

• $2,000 favorable.

• $2,104 unfavorable.

• $2,104 favorable.

• $4,160 favorable.

• $2,000 unfavorable.

A flexible budget may be prepared:

Multiple Choice

• Before the operating period only.

• After the operating period only.

• During the operating period only.

• At any time in the planning period.

• Only when the company encounters excessive costs.

Which department is often responsible for the direct materialsprice variance?

Multiple Choice

• The accounting department.

• The production department.

• The purchasing department.

• The finance department.

• The budgeting department.

Grant Co. uses the following standard to produce a single unitof its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actualdata for the month show total variable overhead costs of $190,000,and 23,000 units produced. The total variable overhead varianceis:

Multiple Choice

• $6,000F.

• $6,000U.

• $78,000U.

• $78,000F.

• $0.

Using the information below, compute the manufacturing cycletime:

Process time	6.0		hours
Inspections time	.5		hours
Move time	.6		hours
Wait time	.9		hours
Warehouse storage time	72.0		hours

Multiple Choice

• 7.5 hours.

• 6.5 hours.

• 8.0 hours.

• 80.0 hours.

• 7.1 hours.