Q1. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period.
a. True
b. False

Q2. To ensure comparability, all of the balanced scorecards of companies within a single industry should have the same performance measures.
a. True
b. False

Q3. A manufacturing cycle efficiency (MCE) of 0.3 means that 70% of throughput time is spent on non-value-added activities.
a. True
b. False

Q4. When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable.
a. True
b. False

Q5. A favorable materials quantity variance would appear as a debit in a journal entry.
a. True
b. False

Q6. For an automobile manufacturer, the cost of a driver's side air bag purchased from a supplier and installed in every automobile would best be described as a:
a. fixed cost.
b.mixed cost.
c.step-variable cost.
d. variable cost.

Q7. Vicuna Wool Company manufactures and sells sweaters. Last year, Vicuna operated at 100% of capacity and had the following cost formula for total manufacturing costs:
Y = $50,000 + $400X
Assuming no change in cost structure, what would Vicuna's cost formula have been last year if they only operated at 90% of production capacity?
a. Y = $45,000 + $360X
b.Y = $45,000 + $400X
c. Y = $50,000 + $360X
d.Y = $50,000 + $400X

Q8.  The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below:

Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

a. $22.11 per machine-hour plus $98,497 per month

b. $7.37 per machine-hour plus $65,670 per month

c. $8.19 per machine-hour plus $62,015 per month

d. $7.55 per machine-hour plus $64,859 per month

Q9. During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers were being paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

a.Item A

b. Item B

c.Item C

d.Item D

Q10.  The journal entry below 

indicates that:

A. the total labor variance was $800, unfavorable.

B. employees received an unexpected rate increase during the period.

C. more labor time was required to complete the output of the period than was allowed at standard.

D. responses a and b are both correct.