Deck 9: Standard Costing and Variances

Question 1

The budget that is based on a single estimate of sales volume is called a static budget.This is the definition of a static budget.

Answer 1

True

Question 2

Easily attainable standards are the best for motivating individuals to work hard.Tight but attainable standards are the best for motivating individuals to work hard.

Answer 2

False

Question 3

A standard cost system initially records manufacturing costs at the standard rather than the actual amount.In a standard cost system,costs are initially recorded at standard amounts,and are adjusted to actual amounts through variances.

Answer 3

True

Question 4

A standard cost card shows what the company spent to produce each unit of product.The standard cost card shows what the company should spend to produce a single unit of product based on expected production and sales for the coming period.

Question 5

A price standard is the price that should be paid per output unit for the input.A price standard is the price that should be paid for a specific quantity of input,not per output unit.

Question 6

The production manager is typically responsible for the direct labor rate variance.It is difficult to hold an individual manager responsible for the direct labor rate variance because many factors can influence the wage rate.

Question 7

The flexible budget can be used as a benchmark for evaluating performance after the fact,as part of the control process.The flexible budget can be used as part of the planning process to predict how the budget will change under various scenarios.The flexible budget can also be used as a benchmark for evaluating performance after the fact as part of the control process.

Question 8

The variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate multiplied by the actual value of the cost driver.This is the formula for the variable overhead rate variance.

Question 9

The price variance for direct labor is called the direct labor rate variance.Because the price of direct labor is called the direct labor rate,the price variance for labor is called the direct labor rate variance.

Question 10

When preparing a flexible budget,fixed costs should remain the same as on the master budget.Fixed costs remain the same regardless of volume,which is the only change that occurs from master to flexible budget.

Question 11

A budget depends upon the level of output as well as the input standards.A budget depends on both input standards and output level.

Question 12

Fixed overhead does not have separate price and quantity variances.The model used to analyze variable costs does not apply to fixed overhead,so the fixed overhead spending variance cannot be broken down into price and quantity variances.

Question 13

The production manager is typically responsible for the direct material quantity variance.How direct materials are used is the responsibility of the production manager.

Question 14

A standard cost system records cost at their actual amounts.A standard cost system records cost at standard rather than actual amounts.

Question 15

The direct material quantity variance is the difference between the actual quantity and the standard quantity of materials multiplied by the actual price.The quantity variance is the difference between the actual quantity and the standard quantity of materials multiplied by the standard price.

Question 16

The fixed overhead volume variance is the difference between actual production volume and actual sales volume.The fixed overhead volume variance is the difference between applied fixed overhead and budgeted fixed overhead.

Question 17

A quantity standard is the amount of input that should go into a single unit of the product.This is the definition of a quantity standard.

Question 18

A spending variance is calculated by comparing actual costs with the static budget.A spending variance is calculated by comparing actual costs with the flexible budget.

Question 19

An ideal standard is one which can be achieved only under perfect conditions.This is the definition of an ideal standard.

Question 20

In a standard cost system,overhead is applied per unit by multiplying the standard overhead rate times the standard quantity of the cost driver.This is a key difference between the standard cost system and the normal cost system - overhead is applied based on the standard quantity of the cost driver rather than the actual quantity.

Question 21

The difference between the actual price and the standard price,multiplied by the actual quantity of materials purchased is the

A)direct materials spending variance.
B)direct materials volume variance.
C)direct materials price variance.
D)direct materials quantity variance.

Question 22

Exeter has a material standard of 1 pound per unit of output.Each pound has a standard price of $26 per pound.During July,Exeter paid $66,100 for 2,475 pounds,which they used to produce 2,350 units.What is the direct materials price variance?

A)$1,750 unfavorable
B)$1,300 favorable
C)$6,300 unfavorable
D)$5,000 unfavorable

Question 23

The difference between the actual quantity and the standard quantity,multiplied by the standard price is the

A)direct materials spending variance.
B)direct materials volume variance.
C)direct materials price variance.
D)direct materials quantity variance.

Question 24

A master budget is an example of a

A)static budget.
B)flexible budget.
C)standard cost card.
D)volume variance.

Question 25

Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.How much would direct materials cost be on a flexible budget for the period based on actual sales?

A)$19,870
B)$21,360
C)$22,962
D)$91,848

Question 26

The formula SP × (SQ - AQ)is the

A)direct materials spending variance.
B)direct materials volume variance.
C)direct materials price variance.
D)direct materials quantity variance.

Question 27

The standard costs are summarized on a:

A)static cost card.
B)flexible budget card.
C)standard cost card.
D)standard static carD.The standard cost card shows what the company should spend to make a single unit of product based on expected production and sales for the coming period.

Question 28

To foster continuous improvement,standards should ________________ in difficulty over time.

A)remain stable
B)increase
C)decrease
D)idealize

Question 29

The formula AQ × (SP - AP)is the

A)direct materials spending variance.
B)direct materials volume variance.
C)direct materials price variance.
D)direct materials quantity variance.

Question 30

Which of the following types of standards can be achieved only under perfect conditions?

A)Easily attainable standard
B)Ideal standard
C)Currently attainable standard
D)Tight but attainable standard

Question 31

A quantity standard is

A)the total dollar amount that a company expects to spend to achieve a given level of output.
B)a form that shows what the company should spend to make a single unit of product.
C)the price that should be paid for a specific quantity of input.
D)the amount of input that should be used in each unit of product or service.

Question 32

Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.How much would total costs be on a flexible budget for the period based on actual sales?

A)$111,070
B)$119,400
C)$124,872
D)$128,355

Question 33

Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.How much would fixed overhead cost be on a flexible budget for the period based on actual sales?

A)$43,200
B)$46,440
C)$49,923
D)$166,410

Question 34

Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.How much would variable overhead cost be on a flexible budget for the period based on actual sales?

A)$16,745
B)$18,000
C)$19,350
D)$46,440

Question 35

The standard labor rate is

A)the expected hourly cost of labor,excluding employee taxes and benefits.
B)the expected hourly cost of labor,including employee taxes and benefits.
C)the amount of time that workers should take to produce a single unit of product.
D)the amount of time that workers should take to produce a single unit of product times the expected hourly cost of labor.

Question 36

After selling 4,300 units during the period,Dole Corp.prepared a flexible budget that included $22,962 for direct materials,$36,120 for direct labor,$19,350 for variable overhead,and $46,440 for fixed overhead.Dole originally planned its master budget based on sales of 4,000 units.What would total costs have been on the master budget?

A)$111,070
B)$119,400
C)$124,872
D)$116,160

Question 37

Standard cost systems depend on which two types of standards?

A)quantity and price
B)quantity and efficiency
C)rate and price
D)rate and spending

Question 38

Comparing the master budget with the flexible budget creates a

A)quantity variance.
B)volume variance.
C)spending variance.
D)price variance.

Question 39

Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.How much would direct labor cost be on a flexible budget for the period based on actual sales?

A)$14,448
B)$31,256
C)$33,600
D)$36,120

Question 40

A spending variance is made up of

A)volume variance and quantity variance.
B)price variance and volume variance.
C)price variance and quantity variance.
D)price variance and rate variance.

Question 41

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the direct labor efficiency variance?

A)$1,150 favorable
B)$4,950 favorable
C)$6,100 favorable
D)$302 favorable

Question 42

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the direct labor rate variance?

A)$1,150 favorable
B)$4,950 favorable
C)$6,100 favorable
D)$302 favorable

Question 43

The difference between the actual variable overhead rate and the standard variable overhead rate,multiplied by the actual amount of the cost driver,is the

A)variable overhead rate variance.
B)variable overhead efficiency variance.
C)variable overhead volume variance.
D)over- or underapplied variance.

Question 44

Swan Company has a direct labor standard of 15 hours per unit of output.Each employee has a standard wage rate of $14 per hour.During March,employees worked 13,100 hours.The direct labor rate variance was $9,170 favorable,the direct labor efficiency variance was $15,400 unfavorable.What was the actual payroll?

A)$183,400
B)$168,000
C)$174,230
D)$192,570

Question 45

Oxford Co.has a material standard of 2.1 pounds per unit of output.Each pound has a standard price of $10 per pound.During February,Oxford Co.paid $57,220 for 4,840 pounds,which were used to produce 2,400 units.What is the direct materials price variance?

A)$6,820 unfavorable
B)$8,820 unfavorable
C)$8,820 favorable
D)$6,820 favorable

Question 46

Whitman has a direct labor standard of 2 hours per unit of output.Each employee has a standard wage rate of $22.50 per hour.During July,Whitman paid $94,750 to employees for 4,445 hours worked.2,350 units were produced during July.What is the direct labor rate variance?

A)$11,000.00 favorable
B)$5,737.50 favorable
C)$5,262.50 favorable
D)$10,525.00 unfavorable

Question 47

Whitman has a direct labor standard of 2 hours per unit of output.Each employee has a standard wage rate of $22.50 per hour.During July,Whitman paid $94,750 to employees for 4,445 hours worked.2,350 units were produced during July.What is the flexible budget amount for direct labor?

A)$105,750
B)$189,500
C)$200,025
D)$211,500

Question 48

Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon.During July,Scarlett Company purchased and used 7,500 gallons.The direct material quantity variance was $750 unfavorable and the direct material price variance was $3,000 favorable.What price per gallon was paid for the purchases?

A)$5.00
B)$5.40
C)$4.60
D)$2.50

Question 49

The difference between the actual labor hours and the standard labor hours,multiplied by the standard labor rate is the

A)direct labor spending variance.
B)direct labor volume variance.
C)direct labor rate variance.
D)direct labor efficiency variance.

Question 50

Oxford Co.has a material standard of 2.1 pounds per unit of output.Each pound has a standard price of $10 per pound.During February,Oxford Co.paid $57,220 for 4,840 pounds,which were used to produce 2,400 units.What is the direct materials quantity variance?

A)$2,000 unfavorable
B)$2,000 favorable
C)$6,820 favorable
D)$6,820 unfavorable

Question 51

The formula AH × (SR - AR)is the

A)direct labor spending variance.
B)direct labor volume variance.
C)direct labor rate variance.
D)direct labor efficiency variance.

Question 52

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the flexible budget amount for direct labor?

A)$26,400
B)$99,500
C)$100,650
D)$105,600

Question 53

Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon.During July,Cooper Company purchased and used 13,000 gallons,paying $93,200.The direct materials quantity variance was $1,500 unfavorable.How many units were produced?

A)13,000 units
B)6,600 units
C)6,214 units
D)6,400 units

Question 54

Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon.During July,Scarlett Company purchased and used 7,500 gallons.The direct materials quantity variance was $750 unfavorable and the direct materials price variance was $3,000 favorable.How many units were produced?

A)2,450 units
B)2,500 units
C)7,350 units
D)7,500 units

Question 55

Exeter has a material standard of 1 pound per unit of output.Each pound has a standard price of $26 per pound.During July,Exeter paid $66,100 for 2,475 pounds,which they used to produce 2,350 units.What is the direct materials quantity variance?

A)$1,750 unfavorable
B)$1,300 favorable
C)$3,250 unfavorable
D)$4,550 unfavorable

Question 56

The formula SR × (SH - AH)is the

A)direct labor spending variance.
B)direct labor volume variance.
C)direct labor rate variance.
D)direct labor efficiency variance.

Question 57

Swan Company has a direct labor standard of 15 hours per unit of output.Each employee has a standard wage rate of $14 per hour.During March,employees worked 13,100 hours.The direct labor rate variance was $9,170 favorable,the direct labor efficiency variance was $15,400 unfavorable.How many units were produced?

A)873 units
B)655 units
C)1,100 units
D)800 units

Question 58

The overall difference between the actual and applied manufacturing overhead is the

A)over- or underapplied overhead.
B)overhead rate variance.
C)overhead efficiency variance.
D)overhead volume variance.

Question 59

The difference between the actual labor rate and the standard labor rate,multiplied by the actual labor hours is the

A)direct labor spending variance.
B)direct labor volume variance.
C)direct labor rate variance.
D)direct labor efficiency variance.

Question 60

Whitman has a direct labor standard of 2 hours per unit of output.Each employee has a standard wage rate of $22.50 per hour.During July,Whitman paid $94,750 to employees for 4,445 hours worked.2,350 units were produced during July.What is the direct labor efficiency variance?

A)$11,000.00 favorable
B)$5,737.50 favorable
C)$5,262.50 favorable
D)$5,262.50 unfavorable

Question 61

Raven applies overhead based on direct labor hours.The variable overhead standard is 2 hours at $11 per hour.During July,Raven spent $116,700 for variable overhead.8,890 labor hours were used to produce 4,700 units.How much is variable overhead on the flexible budget?

A)$56,400
B)$97,790
C)$103,400
D)$116,700

Question 62

Avon Co.has a fixed overhead spending variance of $2,800 favorable.During February,2,500 units were budgeted to be produced,2,400 units were actually produced,and $75,000 was budgeted for fixed overhead.How much was actually spent on fixed overhead?

A)$72,000
B)$72,200
C)$75,000
D)$77,800

Question 63

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.How much is variable overhead on the flexible budget?

A)$28,800
B)$109,800
C)$113,400
D)$115,200

Question 64

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead efficiency variance?

A)$3,600 unfavorable
B)$3,600 favorable
C)$5,400 favorable
D)$1,800 favorable

Question 65

The fixed overhead volume variance is the difference between

A)Actual fixed overhead and budgeted fixed overhead.
B)Actual fixed overhead and applied fixed overhead.
C)Applied fixed overhead and budgeted fixed overhead.
D)Actual fixed overhead and the standard fixed overhead rate times actual cost driver.

Question 66

The difference between the actual fixed manufacturing overhead cost and the budgeted fixed manufacturing overhead cost is the

A)fixed overhead spending variance.
B)fixed overhead volume variance.
C)fixed overhead rate variance.
D)fixed overhead efficiency variance.

Question 67

Bonnie Company has a direct labor standard of 15 hours per unit of output.Each employee has a standard wage rate of $14 per hour.The standard variable overhead rate is $10 per hour.During March,employees worked 13,100 hours.The direct labor rate variance was $9,170 favorable,the variable overhead rate variance was $13,100 unfavorable,and the direct labor efficiency variance was $15,400 unfavorable.What is the actual variable overhead?

A)$117,900
B)$131,000
C)$144,100
D)$183,400

Question 68

Dill has a fixed overhead spending variance of $3,900 unfavorable.During July,4,500 units were budgeted to be produced,4,700 units were actually produced,and $71,400 was actually spent on fixed overhead.How much was budgeted fixed overhead?

A)$67,500
B)$68,362
C)$71,400
D)$75,300

Question 69

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead rate variance?

A)$3,600 unfavorable
B)$3,600 favorable
C)$5,400 favorable
D)$1,800 favorable

Question 70

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the over- or underapplied variable overhead?

A)$3,600 underapplied
B)$3,600 overapplied
C)$5,400 overapplied
D)$1,800 overapplied

Question 71

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead rate variance?

A)$8,440 favorable
B)$1,960 favorable
C)$10,400 favorable
D)$1,960 unfavorable

Question 72

Bonnie Company has a direct labor standard of 15 hours per unit of output.Each employee has a standard wage rate of $14 per hour.The standard variable overhead rate is $10 per hour.During March,employees worked 13,100 hours.The direct labor rate variance was $9,170 favorable,the variable overhead rate variance was $13,100 unfavorable,and the direct labor efficiency variance was $15,400 unfavorable.What is the variable overhead efficiency variance?

A)$13,100 unfavorable
B)$11,000 unfavorable
C)$24,100 unfavorable
D)$11,000 favorable

Question 73

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead efficiency variance?

A)$8,440 favorable
B)$1,960 favorable
C)$10,400 favorable
D)$1,960 unfavorable

Question 74

Warner Company has budgeted fixed overhead of $225,000 based on budgeted production of 7,500 units.During October,7,200 units were produced and $236,400 was spent on fixed overhead.What is the fixed overhead spending variance?

A)$11,400 unfavorable
B)$9,000 unfavorable
C)$20,400 unfavorable
D)$20,400 favorable

Question 75

Raven applies overhead based on direct labor hours.The variable overhead standard is 2 hours at $11 per hour.During July,Raven spent $116,700 for variable overhead.8,890 labor hours were used to produce 4,700 units.What is the variable overhead rate variance?

A)$13,300 unfavorable
B)$6,650 unfavorable
C)$18,910 unfavorable
D)$13,300 favorable

Question 76

Raven applies overhead based on direct labor hours.The variable overhead standard is 2 hours at $11 per hour.During July,Raven spent $116,700 for variable overhead.8,890 labor hours were used to produce 4,700 units.What is the variable overhead efficiency variance?

A)$5,610 favorable
B)$46,090 favorable
C)$18,910 favorable
D)$18,910 unfavorable

Question 77

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the over- or underapplied variable overhead?

A)$10,400 overapplied
B)$8,440 overapplied
C)$8,440 underapplied
D)$1,960 overapplied

Question 78

The difference between the actual cost driver amount and the standard cost driver amount,multiplied by the standard variable overhead rate is the

A)variable overhead rate variance.
B)variable overhead efficiency variance.
C)variable overhead volume variance.
D)over- or underapplied variance.

Question 79

Tucker Co.has budgeted fixed overhead of $225,000 based on budgeted production of 7,500 units.During February,7,200 units were produced and $233,400 was spent on fixed overhead.What is the fixed overhead spending variance?

A)$8,400 unfavorable
B)$9,000 unfavorable
C)$17,400 unfavorable
D)$600 favorable

Question 80

Fletcher has budgeted fixed overhead of $135,000 based on budgeted production of 9,000 units.During July,9,400 units were produced and $142,800 was spent on fixed overhead.What is the fixed overhead spending variance?

A)$7,800 unfavorable
B)$1,800 unfavorable
C)$1,800 favorable
D)$6,000 favorable