Question 1

The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.

Accepted Answer

A) True 
 B)False

Question 2

Aqua Company
Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows: $\begin{array}{ll}
\text { Direct materials (2 sheets of glass }(\$) \$ 2 \text { per sheet) } & \$ 4 \
\text { Direct labour (3 hours }(\$ 8 \text { per hour) } & 24
\end{array}$ The company purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
-Refer to Aqua Company. What is the total labour variance?

Accepted Answer

A)  $97,500 U 
B)  $97,500 F 
C)  $120,000 U 
D)  $217,000 F 
A)  $97,500 U 
B)  $97,500 F 
C)  $120,000 U 
D)  $217,000 F

Question 3

Fender Corporation
Fender Corporation produced 100 units of Product XX. The total standard and actual costs for materials and direct labour for the 100 units of Product XX are as follows: $\begin{array}{ll}
 &&\underline{\text { Standard}} &\underline{\text {  Actual }}\ 
 \underline{\text { Materials}}\
\text { Standard: } & 200 \mathrm{~kg} \text { at } \$ 3.00 \text { per kilogram }&\$600 \
\text { Actual: } & 220 \mathrm{~kg} \text { at } \$ 2.85 \text { per kilogram }&&\$627\
\
 \underline{\text { Direct labour}}\
\text { Standard: } & 400 \text { hours at } \$ 15.00 \text { per hour } & 6,000 \
\text { Actual: } & 368 \text { hours at } \$ 16.50 \text { per hour } &&6,072 
\end{array}$ 
-Refer to Perfect Builders. What was the labour efficiency variance?

Accepted Answer

A)  $400,000 U 
B)  $400,000 F 
C)  $440,000 U 
D)  $440,000 F 
A)  $400,000 U 
B)  $400,000 F 
C)  $440,000 U 
D)  $440,000 F

Question 4

Serenity Equestrian Corporation
Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour: $$\begin{array} { l l } 
\text { Leather } ( 20 \text { strips } ( Q , \$ 15 \text { per strip) } & \$ 300 \
\text { Direct labour } ( 15 \text { hours } ( a ) \$ 15 \text { per hour } ) & \$ 225 \
\text { Total prime cost } & \$ 525
\end{array}$$ During the year, the company produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather.Actual direct labour was 2,500 hours at $16 per hour.
-Refer to Serenity Equestrian Corporation. What is the labour efficiency variance?

Accepted Answer

A)  $3,750 U 
B)  $3,750 F 
C)  $4,000 U 
D)  $4,000 F 
A)  $3,750 U 
B)  $3,750 F 
C)  $4,000 U 
D)  $4,000 F

Question 5

Refer to Royal Company. What is the material usage variance?

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 6

Green Lawn Corporation
Green Lawn Corporation wants to produce a new lawnmower. The financial data is as follows: Target price: $\quad \$ 450$
Target profit: $\quad \$ 75$ Estimated cost given current product and process designs: $400
-Refer to The Fantastic Tool Company. 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 7

Fender Corporation
Fender Corporation produced 100 units of Product XX. The total standard and actual costs for materials and direct labour for the 100 units of Product XX are as follows: $\begin{array}{ll}
 &&\underline{\text { Standard}} &\underline{\text {  Actual }}\ 
 \underline{\text { Materials}}\
\text { Standard: } & 200 \mathrm{~kg} \text { at } \$ 3.00 \text { per kilogram }&\$600 \
\text { Actual: } & 220 \mathrm{~kg} \text { at } \$ 2.85 \text { per kilogram }&&\$627\
\
 \underline{\text { Direct labour}}\
\text { Standard: } & 400 \text { hours at } \$ 15.00 \text { per hour } & 6,000 \
\text { Actual: } & 368 \text { hours at } \$ 16.50 \text { per hour } &&6,072 
\end{array}$ 
-Refer to Fender Corporation. What is the labour efficiency variance?

Accepted Answer

A)  $480 U 
B)  $480 F 
C)  $552 U 
D)  $552 F 
A)  $480 U 
B)  $480 F 
C)  $552 U 
D)  $552 F

Question 8

Kaizen means continuous improvement.

Accepted Answer

A) True 
 B)False

Question 9

Which formula is used to calculate the materials price variance?

Accepted Answer

A)  (actual price × actual quantity) - (standard price × actual quantity) 
B)  (standard price × actual quantity) - (actual price × actual quantity) 
C)  (actual price × actual quantity) - (standard price × standard quantity) 
D)  (standard price × standard quantity) - (actual price × actual quantity) 
A)  (actual price × actual quantity) - (standard price × actual quantity) 
B)  (standard price × actual quantity) - (actual price × actual quantity) 
C)  (actual price × actual quantity) - (standard price × standard quantity) 
D)  (standard price × standard quantity) - (actual price × actual quantity)

Question 10

Min Company
Min Company has developed the following standards for one of its products. $$\begin{array} { l l } 
\text { Direct materials: } & 15 \mathrm {~kg} \times \$ 17.50 \text { per kilogram } \
\text { Direct labour: } & 4 \text { hours } \times \$ 24 \text { per hour } \
\text { Variable manufacturing overhead: } & 4 \text { hours } \times \$ 14 \text { per hour }
\end{array}$$ The following activity occurred during the month of November: $\begin{array}{ll}
\text { Materials purchased: } & 20,000 \mathrm{~kg} \text { costing } \$ 340,000 \
\text { Materials used: } & 7,200 \mathrm{~kg} \
\text { Units produced: } & 500 \text { units } \
\text { Direct labour: } & 2,300 \text { hours at } \$ 23.60 \text { per hour }
\end{array}$ The company records materials price variances at the time of purchase.
-What is the direct materials price variance?

Accepted Answer

A)  $10,000 U 
B)  $10,000 F 
C)  $50,000 U 
D)  $50,000 F 
A)  $10,000 U 
B)  $10,000 F 
C)  $50,000 U 
D)  $50,000 F

Question 11

Jersey Company produced 1,000 trash cans during April using 450 direct labour hours and 3,100 kg of rubber. Its materials and labour standards are as follows: $\begin{array}{lr}
\text { Direct materials ( } 3 \mathrm{~kg} \text { of rubber }(\$ 0.50 \text { per kilogram) } & \$ 1.50 \
\text { Direct labour }(0.5 \text { hours }(0) \$ 16.00 \text { per hour) } & 3.00
\end{array}$ Its materials price variance was a favourable $620 and its labour rate variance was an unfavourable $900.
Required:
A. Calculate the actual materials price per unit.
B. Calculate the actual labour rate.
C. Determine the materials usage variance and whether it is favourable or unfavourable.
D. Determine the labour efficiency variance and whether it is favourable or unfavourable.

Accepted Answer

The answer of Jersey Company produced 1,000 trash cans during...

Question 12

The actual quantity of input at the standard price less the standard quantity of input at the actual price equals the usage variance.

Accepted Answer

A) True 
 B)False

Question 13

Allan Company
Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: $\begin{array}{lll}
\text {Direct materials ( $ 5 \mathrm{~m} $ of denim $ @ \$ 2 $ per metre) }&\$10\
\text {Direct labour (3 hours $ @ \$ 6 $ per  }&18\
\end{array}$
 The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories.
-Refer to Allan Company. What is the materials usage variance?

Accepted Answer

A)  $48,750 U 
B)  $48,750 F 
C)  $50,000 U 
D)  $50,000 F 
A)  $48,750 U 
B)  $48,750 F 
C)  $50,000 U 
D)  $50,000 F

Question 14

Which variance is the difference between the actual cost of the input and its planned cost?

Accepted Answer

A)  the price variance 
B)  the usage variance 
C)  the efficiency variance 
D)  the total budget variance 
A)  the price variance 
B)  the usage variance 
C)  the efficiency variance 
D)  the total budget variance

Question 15

During September, a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle, $5 less than the standard price. The company's standard quantity of this type of shingle is 550 bundles. What is the journal entry to record the purchase of materials?

Accepted Answer

A)  Materials 20,000
Materials price variance 2,500
Accounts payable 17,500 
B)  Materials 20,000
Materials price variance 2,500
Accounts payable 22,500 
C)  Materials 17,500
Materials price variance 2,500
Accounts payable 20,000 
D)  Materials 20,000
Materials price variance 2,750
Accounts payable 17,250 
A)  Materials 20,000
Materials price variance 2,500
Accounts payable 17,500 
B)  Materials 20,000
Materials price variance 2,500
Accounts payable 22,500 
C)  Materials 17,500
Materials price variance 2,500
Accounts payable 20,000 
D)  Materials 20,000
Materials price variance 2,750
Accounts payable 17,250

Question 16

Serenity Equestrian Corporation
Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour: $$\begin{array} { l l } 
\text { Leather } ( 20 \text { strips } ( Q , \$ 15 \text { per strip) } & \$ 300 \
\text { Direct labour } ( 15 \text { hours } ( a ) \$ 15 \text { per hour } ) & \$ 225 \
\text { Total prime cost } & \$ 525
\end{array}$$ During the year, the company produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather.Actual direct labour was 2,500 hours at $16 per hour.
-Refer to Serenity Equestrian Corporation. What is the standard cost of direct labour for the production of 150 saddles?

Accepted Answer

A)  $33,750 
B)  $36,000 
C)  $37,500 
D)  $40,000 
A)  $33,750 
B)  $36,000 
C)  $37,500 
D)  $40,000

Question 17

Refer to Risco Company. Suppose the actual cost was $87 per kilogram and the company purchased 27,500 kg of steel. All materials purchased were used. What is the materials usage variance?

Accepted Answer

A)  $13,500 U 
B)  $13,500 F 
C)  $10,500 U 
D)  $10,500 F 
A)  $13,500 U 
B)  $13,500 F 
C)  $10,500 U 
D)  $10,500 F

Question 18

Match each of the following calculations with their corresponding variance.
-Total materials 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 19

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Actual price of inputs is less than the standard price.

Accepted Answer

A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards 
A) Quantity standards 
B) Ideal standards 
C) Price standards 
D) Standard cost sheet 
E) Upper control limit
F)Currently attainable standards
G)Kaizen standards

Question 20

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.
Required:
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 on a per unit basis.

Accepted Answer

A. Maintenance:
Physical standard: 20 mi

The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.

Refer to Royal Company. What is the material usage variance?

Kaizen means continuous improvement.

Which formula is used to calculate the materials price variance?

The actual quantity of input at the standard price less the standard quantity of input at the actual price equals the usage variance.

Which variance is the difference between the actual cost of the input and its planned cost?

During September, a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle, $5 less than the standard price. The company's standard quantity of this type of shingle is 550 bundles. What is the journal entry to record the purchase of materials?

Refer to Risco Company. Suppose the actual cost was $87 per kilogram and the company purchased 27,500 kg of steel. All materials purchased were used. What is the materials usage variance?

Match each of the following calculations with their corresponding variance. -Total materials variance

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual price of inputs is less than the standard price.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit 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

The actual quantity of input at the actual price less the actual quantity of input at the standard price is the price variance.

Refer to Royal Company. What is the material usage variance?

Kaizen means continuous improvement.

Which formula is used to calculate the materials price variance?

The actual quantity of input at the standard price less the standard quantity of input at the actual price equals the usage variance.

Which variance is the difference between the actual cost of the input and its planned cost?

During September, a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle, $5 less than the standard price. The company's standard quantity of this type of shingle is 550 bundles. What is the journal entry to record the purchase of materials?

Refer to Risco Company. Suppose the actual cost was $87 per kilogram and the company purchased 27,500 kg of steel. All materials purchased were used. What is the materials usage variance?

Match each of the following calculations with their corresponding variance. -Total materials variance

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Actual price of inputs is less than the standard price.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost Behaviour

Cost-Volume-Profit 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