Question 1

Which of the following is NOT characteristic of the use of labour variance information?

Accepted Answer

A)  The actual wage rate is almost always different from the standard rate. 
B)  Unexpected overtime can cause variation in the labour rate. 
C)  An average wage rate is chosen as the labour rate standard. 
D)  The production manager controls the use of labour. 
A)  The actual wage rate is almost always different from the standard rate. 
B)  Unexpected overtime can cause variation in the labour rate. 
C)  An average wage rate is chosen as the labour rate standard. 
D)  The production manager controls the use of labour.

Question 2

Appliance Company inspects every steam iron it manufactures for safety issues.The standard labour cost is $12 per hour.The maintenance standard at the beginning of the first quarter is 20 minutes per iron.Appliance is implementing a new production process that will aid in reducing any potential electrical defects in the irons.This will decrease the inspection time to 15 minutes per iron.After the end of the first quarter,the new process had reduced the inspection time per iron from 20 minutes to 14 minutes. A. Identify the kaizen and maintenance labour standards in place at the beginning of the first quarter. Express the standards in both physical and financial terms.
B. Calculate the expected cost reduction and actual cost reduction.

Accepted Answer

The answer of Appliance Company inspects every steam iron it...

Question 3

Direct materials ( 2 sheets of glass $ (\$ 2 $ per sheet)$\quad$$ \$ 4 $
Direct labour (3 hours $ @ \$ 8 $ per hour)$\quad$$\quad$$\quad$$\quad$$\quad$24
-Refer to the Figure.What is the journal entry to record both labour variances?

Accepted Answer

A)  Work in Process 1,055,000
Labour Rate Variance 100,000
Labour Efficiency Variance 55,000
Accrued Payroll 1,100,000 
B)  Work in Process 1,055,000
Labour Rate Variance 105,500
Labour Efficiency Variance 55,000
Accrued Payroll 1,105,500 
C)  Work in Process 1,055,000
Labour Rate Variance 96,875
Labour Efficiency Variance 55,000
Accrued Payroll 1,096,875 
D)  Work in Process 1,055,000
Labour Rate Variance 95,000
Labour Efficiency Variance 55,000
Accrued Payroll 1,095,000 
A)  Work in Process 1,055,000
Labour Rate Variance 100,000
Labour Efficiency Variance 55,000
Accrued Payroll 1,100,000 
B)  Work in Process 1,055,000
Labour Rate Variance 105,500
Labour Efficiency Variance 55,000
Accrued Payroll 1,105,500 
C)  Work in Process 1,055,000
Labour Rate Variance 96,875
Labour Efficiency Variance 55,000
Accrued Payroll 1,096,875 
D)  Work in Process 1,055,000
Labour Rate Variance 95,000
Labour Efficiency Variance 55,000
Accrued Payroll 1,095,000

Question 4

-Refer to the Figure.What was AirSoar's actual cost per labour hour?

Accepted Answer

A)  $11.25 
B)  $11.50 
C)  $12.50 
D)  $12.75 
A)  $11.25 
B)  $11.50 
C)  $12.50 
D)  $12.75

Question 5

The total budget variance is the difference between the actual cost of the input and its actual cost.

Accepted Answer

A) True 
 B)False

Question 6

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre)$\quad$$\$ 10$
Direct labour (3 hours $@ \$ 6$ per hour)$\quad$$\quad$$\quad$$\quad$$\quad$18
-Refer to the Figure.What is the entry to close the variances of labour and materials?

Accepted Answer

A)  Materials Price Variance 30,000
Materials Usage Variance 50,000
Labour Efficiency Variance 75,000
Cost of Goods Sold 155,000
Cost of Goods Sold 90,625
Labour Rate Variance 90,625 
B)  Materials Price Variance 31,250
Materials Usage Variance 48,750
Labour Efficiency Variance 78,125
Cost of Goods Sold 158,125
Cost of Goods Sold 93,750
Labour Rate Variance 93,750 
C)  Cost of Goods Sold 155,000
Materials Price Variance 30,000
Materials Usage Variance 50,000
Labour Efficiency Variance 75,000
Labour Rate Variance 90,625
Cost of Goods Sold 90,625 
D)  Cost of Goods Sold 158,125
Materials Price Variance 31,250
Materials Usage Variance 48,750
Labour Efficiency Variance 78,125
Labour Rate Variance 93,750
Cost of Goods Sold 93,750 
A)  Materials Price Variance 30,000
Materials Usage Variance 50,000
Labour Efficiency Variance 75,000
Cost of Goods Sold 155,000
Cost of Goods Sold 90,625
Labour Rate Variance 90,625 
B)  Materials Price Variance 31,250
Materials Usage Variance 48,750
Labour Efficiency Variance 78,125
Cost of Goods Sold 158,125
Cost of Goods Sold 93,750
Labour Rate Variance 93,750 
C)  Cost of Goods Sold 155,000
Materials Price Variance 30,000
Materials Usage Variance 50,000
Labour Efficiency Variance 75,000
Labour Rate Variance 90,625
Cost of Goods Sold 90,625 
D)  Cost of Goods Sold 158,125
Materials Price Variance 31,250
Materials Usage Variance 48,750
Labour Efficiency Variance 78,125
Labour Rate Variance 93,750
Cost of Goods Sold 93,750

Question 7

Royal Company uses a standard costing system.The following information pertains to direct materials for the month of September: $$\begin{array} { l r } 
\text { Standard price per kilogram } & \$ 17.00 \
\text { Actual purchase price per kilogram } & \$ 16.50 \
\text { Quantity purchased } & 3,100 \mathrm {~kg} \
\text { Quantity used } & 3,950 \mathrm {~kg} \
\text { Standard quantity allowed for actual output } & 4,000 \mathrm {~kg} \
\text { Actual output } & 1,000 \text { units }
\end{array}$$ Royal Company reports its material price variances at the time of purchase.What is the material usage variance for Royal Company?

Accepted Answer

A)  $850 (U) 
B)  $850 (F) 
C)  $1,950 (F) 
D)  $2,850 (F) 
A)  $850 (U) 
B)  $850 (F) 
C)  $1,950 (F) 
D)  $2,850 (F)

Question 8

$$\begin{array} { l l } 
\text { Standard direct labour rate per hour } & \$ 15.00 \
\text { Actual direct labour rate per hour } & \$ 13.50 \
\text { Labour rate vari ance } & \$ 18,000 \text { favourable } \
\text { Actual output } & 1,000 \text { units } \
\text { Standard hours allowed for actual production } & 10,000 \text { hours }
\end{array}$$
-Refer to the Figure.What is the total labour budget variance for Bear Company?

Accepted Answer

A)  $12,000 (U) 
B)  $12,000 (F) 
C)  $18,000 (U) 
D)  $18,000 (F) 
A)  $12,000 (U) 
B)  $12,000 (F) 
C)  $18,000 (U) 
D)  $18,000 (F)

Question 9

MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour: $\begin{array}{lr}
\text { Direct materials }(100 \mathrm{~kg} @ \$ 1.00 \text { per kilogram) } & \$ 100.00 \
\text { Direct labour }(0.5 \text { hours at } \$ 24 \text { per hour) } & 12.00 \
\text { Total standard direct cost per } 100 \mathrm{~kg} \mathrm{bag} & \$ 112.00
\end{array}$ The following activities were recorded for October: - 1,000 bags were manufactured.
- $ 95,000 \mathrm{~kg} $ of materials costing $ \$ 76,000 $ were purchased.
- $102,500 \mathrm{~kg} $ of materials were used.
- $ \$ 12,000 $ was paid for 475 hours of direct labour. There were no beginning or ending work-in-process inventories.
Required: A. Compute the direct materials variances.
B. Compute the direct labour variances.
C. Give possible reasons for the occurrence of each of the preceding variances.

Accepted Answer

The answer of MacDowell Company manufactures 100 kg bags of...

Question 10

Which of the following statements is characteristic of variances?

Accepted Answer

A)  Unfavourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
B)  Favourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
C)  Unfavourable variances are always credits. 
D)  Favourable variances are always debits. 
A)  Unfavourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
B)  Favourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage. 
C)  Unfavourable variances are always credits. 
D)  Favourable variances are always debits.

Question 11

Which formula is used to compute standard hours allowed?

Accepted Answer

A)  unit labour standard × actual output 
B)  unit labour standard × standard output 
C)  unit labour standard × actual input 
D)  unit labour standard × standard input 
A)  unit labour standard × actual output 
B)  unit labour standard × standard output 
C)  unit labour standard × actual input 
D)  unit labour standard × standard input

Question 12

Warwick Company has the following information concerning its direct labour: $$\begin{array}{l}
&\text { Direct Labour: }\
\text { Standard Hours } & 7,500 \
\text { Actual Hours } & 7,350 \
\text { Standard Rate } & \$ 16 \
\text { Actual Rate } & \$ 19
\end{array}$$ A. Determine the labour rate variance and whether it is favourable or unfavourable.
B. Determine the labour efficiency variance and whether it is favourable or unfavourable.
C. Provide the journal entry for the labour variances.

Accepted Answer

The answer of Warwick Company has the following information concerning...

Question 13

Match the variance with its correct calculation.
-Labour efficiency variance

Accepted Answer

A) Actual quantity × actual price 
B) (Actual hours × actual rate)− (standard hours × standard rate) 
C) (Actual quantity × actual price)− (standard quantity × standard price) 
D) (Actual hours − standard hours)× standard rate 
E) (Actual price − standard price)× actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate)× actual hours
H)(Actual quantity − standard quantity)× standard price 
A) Actual quantity × actual price 
B) (Actual hours × actual rate)− (standard hours × standard rate) 
C) (Actual quantity × actual price)− (standard quantity × standard price) 
D) (Actual hours − standard hours)× standard rate 
E) (Actual price − standard price)× actual quantity
F)Standard quantity × standard price
G)(Actual rate − standard rate)× actual hours
H)(Actual quantity − standard quantity)× standard price

Question 14

Determine if the variance is favourable or unfavourable.
-Actual price of inputs is greater than the standard price.

Accepted Answer

A) Favourable variance 
B) Unfavourable variance 
A) Favourable variance 
B) Unfavourable variance

Question 15

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre)$\quad$$\$ 10$
Direct labour (3 hours $@ \$ 6$ per hour)$\quad$$\quad$$\quad$$\quad$$\quad$18
-Refer to the Figure.What is the entry to record the issuance and usage of materials?

Accepted Answer

A)  Work in Process 1,170,000
Materials Usage Variance 48,750
Materials 1,218,750 
B)  Work in Process 1,200,000
Materials Usage Variance 50,000
Materials 1,250,000 
C)  Work in Process 1,218,750
Materials Usage Variance 48,750
Materials 1,170,000 
D)  Work in Process 1,250,000
Materials Usage Variance 50,000
Materials 1,200,000 
A)  Work in Process 1,170,000
Materials Usage Variance 48,750
Materials 1,218,750 
B)  Work in Process 1,200,000
Materials Usage Variance 50,000
Materials 1,250,000 
C)  Work in Process 1,218,750
Materials Usage Variance 48,750
Materials 1,170,000 
D)  Work in Process 1,250,000
Materials Usage Variance 50,000
Materials 1,200,000

Question 16

Sterling Manufacturing has developed the following standards for one of its products. Materials: $ 5 \mathrm{~m} \times \$ 6 $ per metre$\quad$$\quad$$ \$ 30 $
Direct labour: 2 hours $ \times \$ 8 $ per hour$\quad$16 The company records materials price variances at the time of purchase.
The following activity occurred during the month of December: $$\begin{array} { l l } 
\text { Materials purchased: } & 5,200 \mathrm {~m} \text { costing } \$ 29,900 \
\text { Materials used: } & 4,750 \mathrm {~m} \
\text { Units produced: } & 1,000 \text { units } \
\text { Direct labour: } & 2,100 \text { hours costing } \$ 17,850
\end{array}$$ Required: A. Calculate the direct materials price variance.
B. Calculate the direct materials usage variance.
C. Calculate the direct labour rate variance.
D. Calculate the direct labour efficiency variance.

Accepted Answer

The answer of Sterling Manufacturing has developed the following standards...

Question 17

-Refer to the Figure.What are the labour rate variance and the labour efficiency variance,respectively?

Accepted Answer

A)  $2,250 U and $4,000 U 
B)  $2,250 F and $4,000 F 
C)  $2,500 U and $3,750 U 
D)  $2,500 F and $3,750 F 
A)  $2,250 U and $4,000 U 
B)  $2,250 F and $4,000 F 
C)  $2,500 U and $3,750 U 
D)  $2,500 F and $3,750 F

Question 18

RJB Builders makes mouldings.Its standard quantity of material allowed is 1 m of wood per 1 m of moulding at a standard price of $2.00 per metre.During September,RJB Builders purchased 500,000 m of wood at a cost of $1.90 per metre,which produced only 499,000 m of moulding.What was the materials price variance and the materials usage variance,respectively?

Accepted Answer

A)  $49,900 U and $2,000 F 
B)  $49,900 F and $1,900 U 
C)  $50,000 F and $1,900 U 
D)  $50,000 F and $2,000 U 
A)  $49,900 U and $2,000 F 
B)  $49,900 F and $1,900 U 
C)  $50,000 F and $1,900 U 
D)  $50,000 F and $2,000 U

Question 19

Niven Company has developed the following standards for one of its products: $\begin{array}{ll}
\text { Direct materials: } & 8 \mathrm{~kg} \times \$ 8.5 \text { per kilogram } \
\text { Direct labour: } & 3 \text { hours } \times \$ 13 \text { per hour }
\end{array}$ The following activity occurred during the month of April: $$\begin{array} { l l } 
\text { Materials purchased: } & 5,000 \mathrm {~kg} \text { costing } \$ 42,500 \
\text { Materials used: } & 3,600 \mathrm {~kg} \
\text { Units produced: } & 500 \text { units } \
\text { Direct labour: } & 1,150 \text { hours at } \$ 11.80 \text { per hour }
\end{array}$$ The company records materials price variances at the time of purchase.What is the variable standard cost per unit for materials and labour?

Accepted Answer

A)  $38 
B)  $74 
C)  $84 
D)  $98 
A)  $38 
B)  $74 
C)  $84 
D)  $98

Question 20

Suppose the actual labour rate exceeds the standard labour rate,and the actual labour hours exceed the number of hours allowed.What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency
Variance Variance

Accepted Answer

A)  favourable favourable 
B)  favourable unfavourable 
C)  unfavourable favourable 
D)  unfavourable unfavourable 
A)  favourable favourable 
B)  favourable unfavourable 
C)  unfavourable favourable 
D)  unfavourable unfavourable

Which of the following is NOT characteristic of the use of labour variance information?

Direct materials ( 2 sheets of glass $(\$ 2$ per sheet) $\quad$ $\$ 4$ Direct labour (3 hours $@ \$ 8$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 24 -Refer to the Figure.What is the journal entry to record both labour variances?

-Refer to the Figure.What was AirSoar's actual cost per labour hour?

The total budget variance is the difference between the actual cost of the input and its actual cost.

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre) $\quad$ $\$ 10$ Direct labour (3 hours $@ \$ 6$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 18 -Refer to the Figure.What is the entry to close the variances of labour and materials?

Standard direct labour rate per hour \ 15.00 Actual direct labour rate per hour \ 13.50 Labour rate vari ance \ 18,000 favourable Actual output 1,000 units Standard hours allowed for actual production 10,000 hours -Refer to the Figure.What is the total labour budget variance for Bear Company?

Which of the following statements is characteristic of variances?

Which formula is used to compute standard hours allowed?

Match the variance with its correct calculation. -Labour efficiency variance

Determine if the variance is favourable or unfavourable. -Actual price of inputs is greater than the standard price.

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre) $\quad$ $\$ 10$ Direct labour (3 hours $@ \$ 6$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 18 -Refer to the Figure.What is the entry to record the issuance and usage of materials?

-Refer to the Figure.What are the labour rate variance and the labour efficiency variance,respectively?

Suppose the actual labour rate exceeds the standard labour rate,and the actual labour hours exceed the number of hours allowed.What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency Variance Variance

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 10: Standard Costing: a Managerial Control Tool

Which of the following is NOT characteristic of the use of labour variance information?

Direct materials ( 2 sheets of glass ($2 (\$ 2 ($2 per sheet) \quad$4 \$ 4 $4 Direct labour (3 hours @$8 @ \$ 8 @$8 per hour) \quad\quad\quad\quad\quad 24 -Refer to the Figure.What is the journal entry to record both labour variances?

-Refer to the Figure.What was AirSoar's actual cost per labour hour?

The total budget variance is the difference between the actual cost of the input and its actual cost.

Direct materials ( 5 m5 \mathrm {~m}5 m of denim @$2@ \$ 2@$2 per metre) \quad$10\$ 10$10 Direct labour (3 hours @$6@ \$ 6@$6 per hour) \quad\quad\quad\quad\quad 18 -Refer to the Figure.What is the entry to close the variances of labour and materials?

Standard direct labour rate per hour \ 15.00 Actual direct labour rate per hour \ 13.50 Labour rate vari ance \ 18,000 favourable Actual output 1,000 units Standard hours allowed for actual production 10,000 hours -Refer to the Figure.What is the total labour budget variance for Bear Company?

Which of the following statements is characteristic of variances?

Which formula is used to compute standard hours allowed?

Match the variance with its correct calculation. -Labour efficiency variance

Determine if the variance is favourable or unfavourable. -Actual price of inputs is greater than the standard price.

Direct materials ( 5 m5 \mathrm {~m}5 m of denim @$2@ \$ 2@$2 per metre) \quad$10\$ 10$10 Direct labour (3 hours @$6@ \$ 6@$6 per hour) \quad\quad\quad\quad\quad 18 -Refer to the Figure.What is the entry to record the issuance and usage of materials?

-Refer to the Figure.What are the labour rate variance and the labour efficiency variance,respectively?

Suppose the actual labour rate exceeds the standard labour rate,and the actual labour hours exceed the number of hours allowed.What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency Variance Variance

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Costvolumeprofit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing,and Inventory Management

Budgeting, production, cash, and Master Budget

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Direct materials ( 2 sheets of glass $(\$ 2$ per sheet) $\quad$ $\$ 4$ Direct labour (3 hours $@ \$ 8$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 24 -Refer to the Figure.What is the journal entry to record both labour variances?

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre) $\quad$ $\$ 10$ Direct labour (3 hours $@ \$ 6$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 18 -Refer to the Figure.What is the entry to close the variances of labour and materials?

Direct materials ( $5 \mathrm {~m}$ of denim $@ \$ 2$ per metre) $\quad$ $\$ 10$ Direct labour (3 hours $@ \$ 6$ per hour) $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 18 -Refer to the Figure.What is the entry to record the issuance and usage of materials?