Question 1

The materials price variance is normally caused by the production department.

Accepted Answer

A) True 
 B)False

Question 2

When is a variance considered to be 'material'?

Accepted Answer

A)  When it is large compared to the actual cost 
B)  When it is infrequent 
C)  When it is unfavorable 
D)  When it could have been controlled more effectively 
A)  When it is large compared to the actual cost 
B)  When it is infrequent 
C)  When it is unfavorable 
D)  When it could have been controlled more effectively

Question 3

Lumberman Manufacturing provided the following information about its standard costing system for 2016:
Standard Data Actual Data
Materials 10 lbs. @ $4 per lbs. Produced 4,000 units
Labor 3 hrs. @ $21 per hr. Materials purchased 50,000 lbs. for $215,000
Budgeted production 3,500 units Materials used 41,000 lbs.
Labor worked 11,000 hrs. costing $220,000
Instructions
Determine the amount of the materials price variance. By how much will the materials price variances differ if the price variance is determined at the time of production?

Accepted Answer

Identification of price variances at the

Question 4

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

Accepted Answer

A)  $560 F 
B)  $588 F 
C)  $112 U 
D)  $672 U 
A)  $560 F 
B)  $588 F 
C)  $112 U 
D)  $672 U

Question 5

In using variance reports, top management normally looks for _________________ variances.

Accepted Answer

The answer of In using variance reports, top management normally...

Question 6

Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will Instructions
Compute the estimates for (a) a standard cost and (b) a budgeted cost.

Accepted Answer

(a) Standards are stated as a per unit a

Question 7

The predetermined overhead rate for Zane Company is $5, comprised of a variable overhead rate of $3 and a fixed rate of $2. The amount of budgeted overhead costs at normal capacity of $150,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the predetermined overhead rate of $5. Actual overhead for June was $8,900 variable and $5,400 fixed, and 1,500 units were produced. The direct labor standard is 2 hours per unit produced. The total overhead variance is

Accepted Answer

A)  $1,800 F. 
B)  $700 F. 
C)  $700 U. 
D)  $1,800 U. 
A)  $1,800 F. 
B)  $700 F. 
C)  $700 U. 
D)  $1,800 U.

Question 8

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

Accepted Answer

A)  $1,260 U. 
B)  $4,860 U. 
C)  $4,860 F. 
D)  $3,600 U. 
A)  $1,260 U. 
B)  $4,860 U. 
C)  $4,860 F. 
D)  $3,600 U.

Question 9

Edgar, Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds.
Edgar, Inc.'s materials quantity variance is

Accepted Answer

A)  $1,200 U. 
B)  $1,200 F. 
C)  $1,320 F. 
D)  $1,320 U. 
A)  $1,200 U. 
B)  $1,200 F. 
C)  $1,320 F. 
D)  $1,320 U.

Question 10

It is possible that a company's financial statements may report inventories at

Accepted Answer

A)  budgeted costs. 
B)  standard costs. 
C)  both budgeted and standard costs. 
D)  None of these answers are correct. 
A)  budgeted costs. 
B)  standard costs. 
C)  both budgeted and standard costs. 
D)  None of these answers are correct.

Question 11

A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00 
B)  $0.20 
C)  $5.00 
D)  Cannot be determined from the data provided. 
A)  $1.00 
B)  $0.20 
C)  $5.00 
D)  Cannot be determined from the data provided.

Question 12

Standards may be useful in setting selling prices for finished goods.

Accepted Answer

A) True 
 B)False

Question 13

Standard cost + price variance + quantity variance = Budgeted cost.

Accepted Answer

A) True 
 B)False

Question 14

In reviewing the activities of the Mixing Department for the month of June, the manager of the department notices that there was an unfavorable materials price variance for the month and there was an unfavorable materials quantity variance. Under what circumstances, if any, can the responsibility for each variance be placed on (a) the purchasing department and (b) the production department?

Accepted Answer

(a) Purchasing department. The investiga

Question 15

The matrix approach to variance analysis

Accepted Answer

A)  will yield slightly different variances than the formula approach. 
B)  is more accurate than the formula approach. 
C)  does not separate the price and quantity variance calculations. 
D)  provides a convenient structure for determining each variance. 
A)  will yield slightly different variances than the formula approach. 
B)  is more accurate than the formula approach. 
C)  does not separate the price and quantity variance calculations. 
D)  provides a convenient structure for determining each variance.

Question 16

The investigation of a materials quantity variance usually begins in the

Accepted Answer

A)  production department. 
B)  purchasing department. 
C)  sales department. 
D)  controller's department. 
A)  production department. 
B)  purchasing department. 
C)  sales department. 
D)  controller's department.

Question 17

Shipp, Inc. manufactures a product requiring two pounds of direct material. During 2016, Shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4. During 2016, Shipp uses 22,000 pounds to make 12,000 products. The standard direct material cost per unit of finished product is

Accepted Answer

A)  $8.27. 
B)  $9.01. 
C)  $8.00. 
D)  $8.53. 
A)  $8.27. 
B)  $9.01. 
C)  $8.00. 
D)  $8.53.

Question 18

The standard cost of Product 245 manufactured by Albert Industries includes 2 pounds of direct materials at $4.00 per pound. During September, 40,000 pounds of direct materials are purchased at a cost of $3.85 per pound, and all of the direct materials are used to produce 19,000 units of Product 245.
Instructions
(a) Compute the materials price and quantity variances.
(b) Journalize the purchase of the materials and the issuance of the materials, assuming a standard cost system is used.

Accepted Answer

The answer of The standard cost of Product 245 manufactured...

Question 19

If standard costs are incorporated into the accounting system,

Accepted Answer

A)  it may simplify the costing of inventories and reduce clerical costs. 
B)  it can eliminate the need for the budgeting process. 
C)  the accounting system will produce information which is less relevant than the historical cost accounting system. 
D)  approval of the shareholders is required. 
A)  it may simplify the costing of inventories and reduce clerical costs. 
B)  it can eliminate the need for the budgeting process. 
C)  the accounting system will produce information which is less relevant than the historical cost accounting system. 
D)  approval of the shareholders is required.

Question 20

If the actual direct labor hours worked is greater than the standard hours, the labor quantity variance will be ___________________, and the labor rate variance will be ____________________ if the standard rate of pay is greater than the actual rate of pay.

Accepted Answer

unfavorabl

Exam 24: Standard Costs and Balanced Scorecard

The materials price variance is normally caused by the production department.

When is a variance considered to be 'material'?

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products. What was the materials price variance for December?

In using variance reports, top management normally looks for _________________ variances.

Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will Instructions Compute the estimates for (a) a standard cost and (b) a budgeted cost.

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor price variance was

It is possible that a company's financial statements may report inventories at

A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

Standards may be useful in setting selling prices for finished goods.

Standard cost + price variance + quantity variance = Budgeted cost.

The matrix approach to variance analysis

The investigation of a materials quantity variance usually begins in the

If standard costs are incorporated into the accounting system,

If the actual direct labor hours worked is greater than the standard hours, the labor quantity variance will be ___________________, and the labor rate variance will be ____________________ if the standard rate of pay is greater than the actual rate of pay.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations Perpetual Approach

Inventories Periodic Approach

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Liabilities

Corporations: Organization, Stock Transactions, and Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Budgetary Control and Responsibility Accounting

Planning for Capital Investments

Time Value of Money

Investments

Payroll Accounting

Subsidiary Ledgers and Special Journals

Other Significant Liabilities

Filters

If the actual direct labor hours worked is greater than the standard hours, the labor quantity variance will be _, and the labor rate variance will be __ if the standard rate of pay is greater than the actual rate of pay.