# Variance Analysis - Finance (MCQ) Questions and answers

1)   The sum of actual cost and the standard cost is known as variance analysis.

a. True
b. False

 Answer  Explanation ANSWER: False Explanation: No explanation is available for this question!

2)   Given budgeted output, number of working days, fixed overheads and variable overheads are 15,000 units, 25, Rs 30,000 and Rs 45,000 respectively. The actual output, number of working days, fixed overheads and variable overheads are 16,000 units, 27, Rs 30,500 and Rs 47,000, respectively. The increase in capacity is 5%. Determine variable overhead expenditure variance and fixed overhead variance, respectively.

a. Rs 1,500 and Rs 1,000 favorable
b. Rs 1,500 and Rs 1,000 unfavorable
c. Rs 1,000 and Rs 1,500 unfavorable
d. Rs 1,000 and Rs 1,500 favorable
 Answer  Explanation ANSWER: Rs 1,000 and Rs 1,500 favorable Explanation: No explanation is available for this question!

3)   The formula to estimate Labour Mix variance is

a. Total standard labour cost of actual output - Total actual cost of actual output
b. (Standard rate per hour - Actual rate per hour) * Actual Hours
c. (Revised standard time - Actual time) * Standard rate
d. Abnormal idle hours * Standard hourly rate
 Answer  Explanation ANSWER: (Revised standard time - Actual time) * Standard rate Explanation: No explanation is available for this question!

4)   In case only actual data and standard data are given without any indication of output

a. Standard quantity has to be calculated
b. Standard quantity has not to be calculated
d. None of the above
 Answer  Explanation ANSWER: Standard quantity has not to be calculated Explanation: No explanation is available for this question!

5)   Given standard cost specifications time 5 hours per unit and cost Rs 5 per labour. Actual performance in cost period is production hours 10,400 and idle time 400 hours. Payment done is average per hour Rs 5.20 for 10,800 hours. Determine labour rate variance and labour efficiency variance, respectively.

a. Rs 2,160 and Rs 2,000 both unfavorable
b. Rs 2,160 and Rs 2,000 both favorable
c. Rs 2,000 and Rs 2,160 both unfavorable
d. d) Rs 2,000 and Rs 2,160 both favorable
 Answer  Explanation ANSWER: Rs 2,160 and Rs 2,000 both unfavorable Explanation: No explanation is available for this question!

6)   ABC Ltd is operating a system of standard costing with closing of books done every quarter. The budgeted overheads are Rs 2,55,000. Also, the overhead rate was pre-decided @ Rs 5.1 per labour hours and during a quarter actually used 52,000 labour hours, instead of 51,000 hours. The actual overheads resulted in a rate of Rs 4.9 per labour hours. What is volume variance?

a. Rs 5,100 favorable
b. Rs 5,200 favorable
c. Rs 5,100 unfavorable
d. Rs 5,200 unfavorable
 Answer  Explanation ANSWER: Rs 5,100 favorable Explanation: No explanation is available for this question!

7)   Analysis of overhead variances can be done by

a. Two variance method
b. Three variance method
c. Four variance method
d. All of the above
 Answer  Explanation ANSWER: All of the above Explanation: No explanation is available for this question!

8)   Which of the following statements are true about labour idle time?

a. Labour idle time variance is not caused by non-availability of raw material
b. Labour idle time variance is measured as : Abnormal idle hours * Actual hourly rate
c. Labour idle time variance is always unfavorable or adverse
d. All of the above
 Answer  Explanation ANSWER: Labour idle time variance is always unfavorable or adverse Explanation: No explanation is available for this question!

9)   The sub-variance of material usage variance, known as Material mix variance is measured as

a. Total standard cost - Total actual cost
b. Standard cost of revised standard mix - Standard cost of actual mix
c. (Standard unit price - Actual unit price) * Actual quantity used
d. (Standard quantity - Actual quantity) * Unit standard price
 Answer  Explanation ANSWER: Standard cost of revised standard mix - Standard cost of actual mix Explanation: No explanation is available for this question!

10)   Volume variance arises when

a. There is rise in overhead rate per hour
b. There is decline in overhead rate per hour
c. There is decrease or increase in actual output compared to the budgeted output
d. None of the above
 Answer  Explanation ANSWER: There is decrease or increase in actual output compared to the budgeted output Explanation: No explanation is available for this question!

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