Blue Box Beach Chairs has the following standards to make beach chairs: $\begin{array}{lcc} & \text { Standard Quantity } & \text { Standard Price } \\ \text { Direct materials } & 2.2 \text { pounds of polywood per chair }& \$ 3.50 \text { per pound } \\ \text { Direct labor } & 0.65 \text { hours per chair } & \$ 13.00 \text { per hour } \end{array}$ The static budget was based on the production of 6,200 beach chairs.The company used 13,000 pounds of polywood in order to make 6,000 chairs in April.The company purchased 7,000 pounds of polywood at a total cost of $24,150.How much is the direct materials quantity variance?

A) $700 favorable B) $2,240 favorable C) $350 favorable D) $1,050 favorable A) $700 favorable B) $2,240 favorable C) $350 favorable D) $1,050 favorable

Harris Manufacturing produces white sauce.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system for 2017: $\begin{array}{|l|l||l|l|} \hline {\text { Budgeted and Standard Data }} & &\text { Actual Data } \\ \hline \text { Material } & \begin{array}{l} 1 / 4 \mathrm{lb} . @ \$ 14 \text { per } \\ \text { pound } \end{array} & \text { Froduced } & 6,200 \text { units } \\\hline \text { Labor } & \begin{array}{l} 1.4 \mathrm{hrs} \text { hour } @ \$ 16 \text { per } \\ \text { hour } \end{array} & \begin{array}{l} \text { Materials } \\ \text { purchased } \end{array} & \begin{array}{l} 1,600 \mathrm{lbs} \text { for } \$ 13.70 / \\ \text { pound } \end{array} \\\hline \text { Total fixed overhead } & \$ 84,000 & \text { Materials used } & 1,520 \mathrm{lbs} . \\ \hline \text { Variable overhead } & \$ 6.50 \text { per unit } & \text { Labor worked } & 8,740 \mathrm{hrs} \text {. at } \$ 15.90 \text { /hour } \\ \hline \text { Production } & 6,000 \text { units } & \text { Total overhead } & \$ 122,000 \\ \hline \end{array}$ How much is the overhead controllable variance for 2017?

A) $2,300 favorable B) $2,800 favorable C) $500 favorable D) $5,100 favorable A) $2,300 favorable B) $2,800 favorable C) $500 favorable D) $5,100 favorable

Standard Gears produces lawn mower gears.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system: $\begin{array}{|l|l|l|l|} \hline{\text { Actual Data }} &&{\text { Budgeted and Stand ard Data }} \\ \hline \text { Produced } & 12,400 \text { units } & \text { Budgeted units } & 12,500 \text { units } \\\hline \text { Materials purchased } & \begin{array}{c} 4,650 \mathrm{lbs} . \text { for a total cost of } \\ \$ 32,550 \end{array} & \text { Budgeted materials } & 0.40 \mathrm{lb} . @ \$ 7.10 \text { per } \mathrm{lb} . \\\hline \text { Materials used } & 4,700 \mathrm{lbs} . &\text { Budgeted labor }& \begin{array}{c} 36 \text { minutes } @ \$ 11.00 \text { per } \\ \text { hour } \end{array} \\\hline \text { Labor worked } & 7,460 \text { hrs. costing } \$ 79,822 & \begin{array}{l} \text { Budgeted variable } \\ \text { overhead } \end{array} & \$ 35,625 \\\hline \text { Actual overhead } & \begin{array}{l} \text { Fixed: } \$ 84,800 \\ \text { Variable } \$ 36,100 \end{array} & \begin{array}{l} \text { Budgeted fixed } \\ \text { overhead } \end{array} & \$ 85,500 \\ \hline \end{array}$ How much is the direct material price variance?

A) $465 favorable B) $1,846 favorable C) $470 favorable D) $2,201 favorable A) $465 favorable B) $1,846 favorable C) $470 favorable D) $2,201 favorable

Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Actual production for March was 6,300 cup holders.Manufacturing overhead is applied based on units produced.Standards and actual costs follow for March: $\begin{array}{|l|c|c|}\hline & \text { Standards } & \text { Actual } \\ \hline \text { Materials } & 1.1 \text { pounds } @ \$ 2.40 \text { a pound }&6,400 \text { pounds purchased for } \$ 15,040 \text {; }\\&& 6,450 \text { pounds used }\\\hline \text { Labor } & 0.10 \text { hours } @ \$ 14.00 \text { per hour } & 620 \text { hours } @ \$ 14.30 \text { per hour } \\ \hline \text { Variable overhead } & \$ 16,800 & \$ 18,400 \\\hline \text { Eixed overhead } & \$ 9,600 & \$ 10,300 \\ \hline \end{array}$ How much is the overhead controllable variance?

A) $1,460 unfavorable B) $480 favorable C) $2,300 unfavorable D) $980 favorable A) $1,460 unfavorable B) $480 favorable C) $2,300 unfavorable D) $980 favorable

Mohammed Company employs a standard cost system.Mohammed has established the following standards for one unit of product: $\begin{array}{|l|c|c|c|} \hline & \text { Standard Quantity } & \begin{array}{c} \text { Standard } \\ \text { Price } \end{array} & \begin{array}{c} \text { Standard } \\ \text { Cost } \end{array} \\ \hline \text { Direct materials } & 12.0 \text { pounds } & \$ 7.00 / \text { pound } & \$ 84.00 \\ \text { Direct labor } & 2.6 \text { hours } & \$ 22.00 / \text { hour } & 57.20\\\hline \end{array}$ During June, Mohammed planned to produce 24,000 units of product.It purchased 330,000 pounds of direct material at a total cost of $2,343,000.The total factory wages for June were $1,440,000.Mohammed manufactured 25,000 units of product during June using 302,000 pounds of direct material and 64,000 direct labor hours.How much is the labor rate variance?

A) $32,000 unfavorable B) $22,000 favorable C) $10,000 favorable D) $35,200 unfavorable A) $32,000 unfavorable B) $22,000 favorable C) $10,000 favorable D) $35,200 unfavorable

Eminem, Inc.manufactures music CDs.At the start of 2017, Eminem planned to produce 108,000 CDs for which the standard cost for each CD is: $\begin{array}{lr} \text { Plastic ( } 0.25 \text { pounds at } \$ 6.00 \text { per pound) } & \$ 1.50 \\ \text { Labor }(0.10 \text { hour at } \$ 12.00 \text { per hour) } & 1.20 \\ \text { Overhead ( } \$ 0.80 \text { fixed and } \$ 0.60 & \\ \text { variable) } & \underline{1.40}\\ \text { Total } &\$4.10 \end{array}$ Overhead is allocated based on the number of units produced.Eminem isolates material purchase variances at the point of purchase.The following information summarizes Eminem's results for 2017: $\begin{array}{lr} \text { Actual production } & 110,000 \text { CDs } \\ \text { Actual variable overhead } & \$ 65,000 \\ \text { Actual fixed overhead } & \$ 83,000 \end{array}$ How much is the budgeted fixed overhead for 2017?

A) $86,400 B) $83,000 C) $88,000 D) $66,400 A) $86,400 B) $83,000 C) $88,000 D) $66,400

Scotto Designs has the following standards for the production of scarves: $\begin{array}{lrr} & {\text { Standard Quantity }} & \text { Standard Price } \\ \text { Direct materials }& 1.2 \text { yards per scarf } & \$ 4.70 \text { per yard } \\ \text { Direct labor } & 0.15 \text { hours per scarf } & \$ 11.00 \text { per hour } \end{array}$ The company used 985 yards of material in order to make 800 scarves in April.The company purchased 1,100 yards at $4.60 per yard.How much is the direct materials quantity variance?

A) $110 favorable B) $118 unfavorable C) $8 unfavorable D) $705 unfavorable A) $110 favorable B) $118 unfavorable C) $8 unfavorable D) $705 unfavorable

Exam 11: Standard Costs and Variance Analysis

Capital Leather Company produces leather footballs.The standard cost for each football is: Direct material $\quad 2$ feet of leather at $\$ 4.00$ per foot Direct labor $\quad$ 1.5 hours at $\$ 12.00$ per hour During February, 1,200 footballs were produced and 2,600 feet of leather were purchased at $4.25 per foot.Production usage was 2,300 feet.Direct labor cost incurred was $20,930 for 1,820 hours.How much is the direct labor efficiency variance?

(Multiple Choice)

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Question 81

Blue Box Beach Chairs has the following standards to make beach chairs: Standard Quantity Standard Price Direct materials 2.2 pounds of polywood per chair \ 3.50 per pound Direct labor 0.65 hours per chair \ 13.00 per hour The static budget was based on the production of 6,200 beach chairs.The company used 13,000 pounds of polywood in order to make 6,000 chairs in April.The company purchased 7,000 pounds of polywood at a total cost of $24,150.How much is the direct materials quantity variance?

(Multiple Choice)

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Question 82

Paradise Energy Company produces a product with a direct labor standard of 4.5 hours per unit at a rate of $13.50 per hour.During July 2,200 units were produced using 9,825 labor hours at an actual cost of $135,094.How much is the direct labor efficiency variance for July?

(Multiple Choice)

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Question 83

Harris Manufacturing produces white sauce.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system for 2017: Budgeted and Standard Data Actual Data Material 1/4.@\ 14 per pound Froduced 6,200 units Labor 1.4 hour @\ 16 per hour Materials purchased 1,600 for \ 13.70/ pound Total fixed overhead \ 84,000 Materials used 1,520. Variable overhead \ 6.50 per unit Labor worked 8,740 . at \ 15.90 /hour Production 6,000 units Total overhead \ 122,000 How much is the overhead controllable variance for 2017?

(Multiple Choice)

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Question 84

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis.The company estimated that 30,000 units would be produced in 2017 and uses this quantity to establish its standard overhead cost per unit.The cost formula for overhead costs used to develop the standard overhead cost per unit was: Overhead = $120,000 + $6 per unit During the year, actual overhead cost was $340,000.Actual units produced were 32,000.How much is the controllable overhead variance for 2017?

(Multiple Choice)

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Question 85

Unfavorable variances are red flags that a manager has performed poorly.

(True/False)

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Question 86

Variances that are large in absolute dollar value or as a percent of budgeted amounts are generally considered exceptional in a management by exception approach.

(True/False)

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Question 87

Lander Foods applied management by exception.Which of the following would have occurred?

(Multiple Choice)

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Question 88

Which of the following is a method of determining the standard quantity of direct labor?

(Multiple Choice)

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Question 89

The labor rate variance is also known as the labor efficiency variance.

(True/False)

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Question 90

Standard Gears produces lawn mower gears.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system: Actual Data Budgeted and Stand ard Data Produced 12,400 units Budgeted units 12,500 units Materials purchased 4,650. for a total cost of \ 32,550 Budgeted materials 0.40.@\ 7.10 per . Materials used 4,700. Budgeted labor 36 minutes @\ 11.00 per hour Labor worked 7,460 hrs. costing \ 79,822 Budgeted variable overhead \ 35,625 Actual overhead Fixed: \ 84,800 Variable \ 36,100 Budgeted fixed overhead \ 85,500 How much is the direct material price variance?

(Multiple Choice)

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Question 91

The controllable variable overhead variance is inappropriately named, because managers are not expected to be able to control it.

(True/False)

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Question 92

Which one of the following is a possible cause of an unfavorable labor rate variance?

(Multiple Choice)

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Question 93

What is a standard cost?

(Multiple Choice)

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Question 94

Steep, Inc.budgeted 6,000 cup holders for March.Each holder is sold for $12.Actual production for March was 6,300 cup holders.Manufacturing overhead is applied based on units produced.Standards and actual costs follow for March: Standards Actual Materials 1.1 pounds @\ 2.40 a pound 6,400 pounds purchased for \ 15,040 ; 6,450 pounds used Labor 0.10 hours @\ 14.00 per hour 620 hours @\ 14.30 per hour Variable overhead \ 16,800 \ 18,400 Eixed overhead \ 9,600 \ 10,300 How much is the overhead controllable variance?

(Multiple Choice)

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Question 95

Mohammed Company employs a standard cost system.Mohammed has established the following standards for one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 12.0 pounds \ 7.00/ pound \ 84.00 Direct labor 2.6 hours \ 22.00/ hour 57.20 During June, Mohammed planned to produce 24,000 units of product.It purchased 330,000 pounds of direct material at a total cost of $2,343,000.The total factory wages for June were $1,440,000.Mohammed manufactured 25,000 units of product during June using 302,000 pounds of direct material and 64,000 direct labor hours.How much is the labor rate variance?

(Multiple Choice)

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Question 96

Eminem, Inc.manufactures music CDs.At the start of 2017, Eminem planned to produce 108,000 CDs for which the standard cost for each CD is: Plastic ( 0.25 pounds at \ 6.00 per pound) \ 1.50 Labor (0.10 hour at \ 12.00 per hour) 1.20 Overhead ( \ 0.80 fixed and \ 0.60 variable) Total \4 .10 Overhead is allocated based on the number of units produced.Eminem isolates material purchase variances at the point of purchase.The following information summarizes Eminem's results for 2017: Actual production 110,000 CDs Actual variable overhead \ 65,000 Actual fixed overhead \ 83,000 How much is the budgeted fixed overhead for 2017?

(Multiple Choice)

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Question 97

What are the two most likely reasons an unfavorable total materials variance may exist?

(Multiple Choice)

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Question 98

Scotto Designs has the following standards for the production of scarves: Standard Quantity Standard Price Direct materials 1.2 yards per scarf \ 4.70 per yard Direct labor 0.15 hours per scarf \ 11.00 per hour The company used 985 yards of material in order to make 800 scarves in April.The company purchased 1,100 yards at $4.60 per yard.How much is the direct materials quantity variance?

(Multiple Choice)

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Question 99

If a management by exception approach is used to investigate variances, only variances that cause costs to be more than expected are investigated.

(True/False)

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Question 100

Paradise Energy Company produces a product with a direct labor standard of 4.5 hours per unit at a rate of $13.50 per hour.During July 2,200 units were produced using 9,825 labor hours at an actual cost of $135,094.How much is the direct labor efficiency variance for July?

Unfavorable variances are red flags that a manager has performed poorly.

Variances that are large in absolute dollar value or as a percent of budgeted amounts are generally considered exceptional in a management by exception approach.

Lander Foods applied management by exception.Which of the following would have occurred?

Which of the following is a method of determining the standard quantity of direct labor?

The labor rate variance is also known as the labor efficiency variance.

The controllable variable overhead variance is inappropriately named, because managers are not expected to be able to control it.

Which one of the following is a possible cause of an unfavorable labor rate variance?

What is a standard cost?

What are the two most likely reasons an unfavorable total materials variance may exist?

If a management by exception approach is used to investigate variances, only variances that cause costs to be more than expected are investigated.

Managerial Accounting in the Information Age

Job-Order Costing for Manufacturing and Service Companies

Process Costing

Cost-Volume-Profit Analysis

Variable Costing

Cost Allocation and Activity-Based Costing

The Use of Cost Information in Management Decision Making

Pricing Decisions

Capital Budgeting Decisions

Budgetary Planning and Control

Decentralization and Performance Evaluation

Statement of Cash Flows

Analyzing Financial Statements: a Managerial Perspective

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