1. Volume Variance =

(A) Standard rate (Actual output-budgeted output)
(B) Actual output x standard rate-budgeted fixed overheads
(C) Standard rate per hour(standard hours produced-actual hours)
(D) All of the above



2. A favourable variance will arise when capital revenues are………..than expected.

(A) Less
(B) More 
(C) Lesser
(D) None of the above



3. An unfavourable material price variance occurs because of:

(A) Price increase in raw materials
(B) Price decrease in raw materials
(C) Less than anticipated normal wastage in the manufacturing process
(D) More than anticipated normal wastage in the manufacturing process



4. The type of standard best suitable for cost control purpose is

(A) Basic standard
(B) Ideal standard
(C) Normal standard
(D) Expected standard



5. An unfavourable material usage arises because of:

(A) Price increase in raw materials
(B) Price decrease in raw mateials
(C) Less than anticipated normal wastage in the manufacturing process
(D) More than anticipated normal wastage in the manufacturing process



6. Volume variance arises because of :

(A) Increase in overhead rate per hour
(B) Decrease in overhead rate per hour
(C) Increase or decrease in actual output as compared to the budgeted output.
(D) Difference in budgeted overheads and actual overheads.



7. Labour rate variance is computed by multiplying the

(A) Standard labour rate with the difference between standard labour hours and actual labour hours
(B) Actual labour hours with the difference between standard labour hours and actual labour hours
(C) Actual labour rate with the difference between standard labour rate and actual labour hours.
(D) None of the above



8. ……………..is an example of long-term budget

(A) Cash budget
(B) Capital expenditure budget
(C) Research and development budget
(D) Both b & c



9. ……………..is an example of short-term budget

(A) Cash budget
(B) Capital expenditure budget
(C) Material budget
(D) Both a & c



10. The control ratios used by the management to know whether the deviations of the actual performance from the budgeted performance are favourable or unfavourable are………………

(A) Capacity ratio, activity ratio
(B) Efficiency ratio, calendar ratio
(C) Both a & b
(D) None of the above




More MCQs on Cost Accounting