Deck 12: Standard Costs: Direct Labor and Materials

Question 1

Ultimate U-bolts (UU)paid $161,175 for direct labor this month,paying $1.50 cents less per hour than planned.Fifty-four thousand pounds of bolts were produced and direct labor was paid for 9,210 hours.Producing one pound takes ten minutes.Which is true?

A)The workers were efficient because Ultimate U-bolts saved $825 overall
B)The workers were inefficient because they used 210 more hours than allowed
C)The direct labor efficiency variance is $3,780 unfavorable
D)The direct labor efficiency variance cannot be calculated from the information provided
E)None of the choices are correct

Answer 1

B

Question 2

Fegox Firinghi (FF)produces flip flops.Each flip-flop requires 2 pounds of Flub and 1 pound of Fleeb,which are planned to cost $8 and $3 per pound,respectively.During the month of May,FF purchased 22,000 pounds of Flub for $179,900 and 13,000 pounds of Fleeb for $42,000.All materials were consumed in producing 10,500 good flip flops. Which is true?

A)Direct materials price variances total $21,000 unfavorable
B)Direct materials price variances total $6,950 unfavorable
C)The standard price of Flub should be revised
D)The standard price of Flub should not be revised
E)a)and c)only

Answer 2

B

Question 3

A review of skilled engineering labor rates and variances at Kumisomo Industries revealed the following: Actual wage per hour was $15,as opposed to $13 standard.Actual labor hours per unit produced were 1.2 compared with 1.4 hours standard.If during a period 1,000 units were produced,which of the following is false?

A)The DL wage variance is unfavorable.
B)The DL wage variance is $2,400 favorable
C)The DL efficiency variance is $2,600 favorable
D)The DL efficiency variance may be random
E)None of the above is false

Answer 3

B

Question 4

PopALock manufactures locks for home and industrial use.PopALock developed the following standard costs for its most popular industrial deadbolt lock: $\begin{array}{c}\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Standard Cost}\quad \quad \quad \quad \quad \quad \quad \text { Unit Standard Cost} \\\begin{array}{lll} \text { Direct materials}\\ \text { Direct labor} \end{array}\begin{array}{lll}\text {1.20 pounds @ \$ 2 per pound}\\\text {0.25 hour @\$12 per hour} \end{array}\begin{array}{lll}\quad \quad \quad \$ 2.40 \\\quad \quad \quad 3.00 \end{array}\end{array}$

For the current year,PopALock planned to work 2,180 direct labor hours and planned to produce 8,720 units of this industrial deadbolt lock.Actual results for the current year were 8,800 deadbolt locks produced,11,000 pounds of direct materials were purchased and used,price paid for the direct materials was $23,100,and actual direct labor costs were $26,656 for 2,240 direct labor hours.Which of the following correctly represents the direct labor wage variance and the direct labor efficiency variance,respectively?

A)$224 F and $480 U
B)$256 F and $480 U
C)$480 U and $256 F
D)$224 U and $256 U
E)$224 U and $480 F

Question 5

Barb Bubbletop (BB)produces bangles.Each bangle requires 0.25 pounds of bronze which should cost $16 per pound.In August,BB purchased 12,000 pounds of bronze at $15 per pound.In the month,41,000 bangles were made,and 11,000 pounds of bronze were used.Which is false of BB's materials variances?

A)The company should have spent $164,000 on materials
B)Bronze inventory increased by $15,000
C)Materials quantity variance is $18,000 unfavorable
D)Materials price variance is $12,000 unfavorable
E)All of the above are false

Question 6

PopALock manufactures locks for home and industrial use.PopALock developed the following standard costs for its most popular industrial deadbolt lock: $\begin{array}{c}\quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \text { Standard Cost}\quad \quad \quad \quad \quad \quad \quad \text { Unit Standard Cost} \\\begin{array}{lll} \text { Direct materials}\\ \text { Direct labor} \end{array}\begin{array}{lll}\text {1.20 pounds @ \$ 2 per pound}\\\text {0.25 hour @\$12 per hour} \end{array}\begin{array}{lll}\quad \quad \quad \$ 2.40 \\\quad \quad \quad 3.00 \end{array}\end{array}$
For the current year,PopALock planned to work 2,180 direct labor hours and planned to produce 8,720 units of this industrial deadbolt lock.Actual results for the current year were 8,800 deadbolt locks produced,11,000 pounds of direct materials were purchased and used,price paid for the direct materials was $23,100,and actual direct labor costs were $26,656 for 2,240 direct labor hours.Which of the following correctly represents the direct materials price variance and the direct materials quantity variance,respectively?

A)$1,100 F and $880 F
B)$1,100 F and $1,056 U
C)$3,300 U and $1,056 U
D)$1,100 U and $880 U
E)$3,300 U and $880 U

Question 7

When variances are used as an input to the performance evaluation system,which of the following scenarios may be encountered?

A)Purchasing managers may buy too much inventory to get a bulk purchase discount
B)Purchasing managers may buy lower quality materials to generate a favorable price variance
C)If standards are set at easily achievable levels,some people will only do enough to meet the target,but no more
D)When labor efficiency is measured on a team or production cell basis,the free rider may take advantage
E)All of the choices are correct

Question 8

Ultimate U-bolts (UU)paid $161,175 for direct labor this month,paying $1.50 cents less per hour than planned.Fifty-four thousand pounds of bolts were produced and direct labor was paid for 9,210 hours.Producing one pound takes ten minutes.Which is true?

A)The direct labor wage variance is $4,605 unfavorable
B)The direct labor wage variance is $4,605 favorable
C)The direct labor wage variance is $4,500 favorable
D)The total labor variance is $17,805 favorable
E)None of the choices are correct

Question 9

Standard costs embody targets.The targets should:

A)be very easy to achieve so everyone gets rewarded
B)reflect ideal performance so the company can measure efficiency losses
C)be used to evaluate performance and assign blame
D)reflect a particular management team's goals
E)None of the choices are correct

Question 10

What is the typical treatment of large year-end balances in the variance accounts?

A)Recalculate all standard costs,and adjust to the actual basis for external financial reporting purposes
B)Close to cost of goods of sold
C)Prorate the direct material and labor variances across cost of goods sold,work in process and finished goods inventories
D)Prorate the variances across the raw materials,work in process,and finished goods inventories
E)b and c above

Question 11

Fantastic Diapers made 3,000 batches this month.According to the plan,each batch needs 45 minutes of direct labor,which is paid $12.50 per hour,including benefits.Payroll records showed that 2,100 labor hours were worked and that 50 cents more per hour was paid.Which is true?

A)The direct labor wage variance is $1,050 favorable
B)The direct labor wage variance is $1,125 unfavorable
C)The direct labor efficiency variance is $1,950 favorable
D)The direct labor efficiency variance is $1,875 unfavorable
E)None of the choices are correct

Question 12

Standard costs:

A)represent the actual amount spent
B)are standard prices
C)are often set based on inputs by engineers
D)are never changed
E)None of the choices are correct

Question 13

Fegox Firinghi (FF)produces flip flops.Each flip-flop requires 2 pounds of Flub and 1 pound of Fleeb,which are planned to cost $8 and $3 per pound respectively.During the month of May,FF purchased 22,000 pounds of Flub for $179,900 and 13,000 pounds of Fleeb for $42,000.All materials were consumed in producing 10,500 good flip flops. Which is true?

A)The direct materials quantity variances total $21,000 favorable
B)FF was very efficient in using raw materials to produce their output
C)Direct materials quantity variances total $15,500 favorable
D)Direct materials quantity variances total $15,500 unfavorable
E)All of the above are false