Deck 10: Standard Costs and Variances

Question 1

The standard price per unit for direct materials should reflect the final, delivered cost of the materials.

Answer 1

True

Question 2

When more hours of labor time are necessary to complete a job than the standard allows, the labor efficiency variance is unfavorable.2017-09-13

Answer 2

True

Question 3

If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period.

Answer 3

False

Question 4

The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the fixed part of the predetermined overhead rate.

Question 5

If demand is insufficient to keep everyone busy and workers are not laid off, an unfavorable (U) variable overhead efficiency variance often will be a result unless managers build excessive inventories.

Question 6

Waste on the production line will result in an unfavorable materials price variance.

Question 7

Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.

Question 8

The materials price variance is computed based on the amount of materials purchased during the period.

Question 9

If demand is insufficient to keep everyone busy and workers are not laid off, a favorable (F) labor efficiency variance often will be a result.

Question 10

The standard labor rate per hour should not include any employment taxes.

Question 11

If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance.

Question 12

A quantity standard indicates how much of an input should be used to make a unit of product or provide a unit of service.

Question 13

If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable (U).

Question 14

In general, the production manager is responsible for the materials price variance.

Question 15

The labor rate variance measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the standard hours allowed for the actual output.

Question 16

An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

Question 17

The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used.

Question 18

When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at standard cost.

Question 19

The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate.

Question 20

The labor efficiency variance is labeled favorable (F) if the actual hours used is less than the standard hours allowed for the actual output.

Question 21

The standard cost card for one unit of a finished product shows the following: If the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is:

A) $2
B) $3
C) $4
D) $5

Question 22

Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August?

A) $1,500 Unfavorable
B) $18,000 Favorable
C) $19,500 Unfavorable
D) $54,000 Unfavorable

Question 23

Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April: The company's materials price variance for April was $3,000 Favorable. Its materials quantity variance for April was $5,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?

A) $5.75 per yard
B) $6.50 per yard
C) $6.25 per yard
D) $6.00 per yard

Question 24

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
What is the materials price variance for the month?

A) $3,141 U
B) $2,025 U
C) $8,600 U
D) $8,725 U

Question 25

Poorly trained workers could have an unfavorable effect on which of the following variances? $\begin{array}{lcc}& \text { Labor Rate Variance } & \text { Materials Quantity Variance } \\\text { A) } & \text { Yes } & \text { Yes } \\\text { B) } & \text { Yes } & \text { No } \\\text { C) } & \text { No } & \text { Yes } \\\text { D) }&\text { No } & \text { No }\end{array}$

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question 26

Zanny Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Zanny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Zanny's labor rate variance for August?

A) $972 Favorable
B) $1,188 Unfavorable
C) $2,160 Favorable
D) $2,808 Unfavorable

Question 27

The Fime Corporation uses a standard costing system. The following data have been assembled for December: The standard hours allowed for December's production is:

A) 5,900 hours
B) 6,500 hours
C) 6,200 hours
D) 6,000 hours

Question 28

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
What is the materials quantity variance for the month?

A) $9,940 U
B) $15,351 U
C) $14,484 U
D) $10,535 U

Question 29

Krizun Industries makes heavy construction equipment. The standard for a particular crane calls for 20 direct labor-hours at $24 per direct labor-hour. During a recent period 875 cranes were made. The labor efficiency variance was $1,200 Unfavorable. How many actual direct labor-hours were worked?

A) 17,600 direct labor-hours
B) 17,450 direct labor-hours
C) 17,500 direct labor-hours
D) 17,550 direct labor-hours

Question 30

The production department should generally be responsible for materials price variances that resulted from:

A) purchases made in uneconomical lot-sizes.
B) rush orders arising from poor scheduling.
C) purchase of the wrong grade of materials.
D) changes in the market prices of raw materials.

Question 31

Suver Corporation has a standard costing system. The following data are available for June: The actual price per pound of direct materials purchased in June was:

A) $6.10 per pound
B) $5.90 per pound
C) $6.25 per pound
D) $6.30 per pound

Question 32

The general model for calculating a quantity variance is:

A) Actual quantity of inputs used × (Actual price − Standard price).
B) Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).
C) (Actual quantity of inputs used × Actual price) − (Standard quantity allowed for output × Standard price).
D) Actual price × (Actual quantity of inputs used − Standard quantity allowed for output).

Question 33

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

A) the actual variable overhead rate exceeded the standard rate.
B) the standard variable overhead rate exceeded the actual rate.
C) the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output.
D) the standard direct labor-hours allowed for the actual output exceeded the actual hours.

Question 34

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
What is the labor efficiency variance for the month?

A) $9,790 F
B) $11,095 U
C) $9,955 F
D) $11,095 F

Question 35

An unfavorable materials quantity variance indicates that:

A) actual usage of material exceeds the standard material allowed for output.
B) standard material allowed for output exceeds the actual usage of material.
C) actual material price exceeds standard price.
D) standard material price exceeds actual price.

Question 36

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

A) favorable.
B) unfavorable.
C) zero.
D) either favorable or unfavorable.

Question 37

The standard quantity or standard hours allowed refers to the amount of the input that should have been used to produce the actual output of the period.

Question 38

Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

A) 1,250 hours
B) 1,000 hours
C) 1,200 hours
D) 1,300 hours

Question 39

A total of 6,850 kilograms of a raw material was purchased at a total cost of $21,920. The materials price variance was $1,370 favorable. The standard price per kilogram for the raw material must be:

A) $0.20
B) $3.00
C) $3.20
D) $3.40

Question 40

A favorable labor rate variance indicates that

A) actual hours exceed standard hours.
B) standard hours exceed actual hours.
C) the actual rate exceeds the standard rate.
D) the standard rate exceeds the actual rate.

Question 41

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?

A) $2,724 U
B) $3,492 U
C) $840 F
D) $768 U

Question 42

The following data have been provided by Moretta Corporation, a company that produces forklift trucks: Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

A) $135 U
B) $135 F
C) $966 U
D) $966 F

Question 43

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

A) $305 U
B) $300 U
C) $300 F
D) $305 F

Question 44

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:

A) $2,482 F
B) $2,740 U
C) $2,482 U
D) $2,740 F

Question 45

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the variable overhead rate variance for the month?

A) $2,000 Favorable
B) $720 Favorable
C) $1,260 Unfavorable
D) $1,980 Favorable

Question 46

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
What is the labor rate variance for the month?

A) $11,160 F
B) $13,320 U
C) $11,160 U
D) $2,430 F

Question 47

Hermansen Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 5,100 doors. Actual production was 5,400 doors. According to standards, each door requires 3.8 machine-hours. The actual machine-hours for the month were 20,880 machine-hours. The standard supplies cost is $7.90 per machine-hour. The actual supplies cost for the month was $152,063. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

A) $10,045 F
B) $10,045 U
C) $2,844 F
D) $2,844 U

Question 48

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month:
What is the variable overhead efficiency variance for the month?

A) $15,550 U
B) $15,200 U
C) $16,530 U
D) $980 F

Question 49

Information on Westcott Corporation's direct labor costs for a recent month follows: What were the actual hours worked during the month, rounded to the nearest hour?

A) 10,714
B) 11,120
C) 11,200
D) 11,914

Question 50

Elliott Corporation makes and sells a single product. Last period the company's labor rate variance was $14,400 U. During the period, the company worked 36,000 actual direct labor-hours at an actual cost of $338,400. The standard labor rate for the product in dollars per hour is:

A) $9.40
B) $9.00
C) $8.50
D) $8.10

Question 51

The direct labor standards for a particular product are 4 hours of direct labor at $12.00 per direct labor-hour = $48.00. During October, 3,350 units of this product were made, which was 150 units less than budgeted. The labor cost incurred was $159,786 and 13,450 direct labor-hours were worked. The direct labor variances for the month were:

A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question 52

Pyrdum Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 3,500 poles. Actual production was 3,800 poles. According to standards, each pole requires 4.6 machine-hours. The actual machine-hours for the month were 17,800 machine-hours. The standard variable manufacturing overhead rate is $5.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $96,712. The variable overhead efficiency variance is:

A) $2,320 U
B) $1,728 F
C) $2,320 F
D) $1,728 U

Question 53

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 3,600 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 3,900 machine-hours during the month. The standard hours allowed for the actual output were 3,890 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

A) $760 Favorable
B) $104 Unfavorable
C) $180 Favorable
D) $656 Favorable

Question 54

Pleiss Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's standard variable manufacturing overhead rate is $2.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $5,240. The original budget for the month was based on 2,100 machine-hours. The company actually worked 2,270 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,280 machine-hours. What was the variable overhead efficiency variance for the month?

A) $24 Favorable
B) $232 Favorable
C) $208 Favorable
D) $432 Unfavorable

Question 55

The following information relates to the direct labor at Padmaja Manufacturing, Inc. for March: During March, Padmaja produced 2,100 units. What is Padmaja's labor efficiency variance for March?

A) $1,575 Favorable
B) $2,625 Unfavorable
C) $3,675 Unfavorable
D) $3,780 Unfavorable

Question 56

Warp Manufacturing Corporation uses a standard cost system for the production of its ski lift chairs. Warp uses machine-hours as an overhead base. The variable manufacturing overhead standards for each chair are 1.2 machine-hours at a standard cost of $18 per hour. During the month of September, Warp incurred 34,000 machine-hours in the production of 32,000 ski lift chairs. The total variable manufacturing overhead cost was $649,400. What is Warp's variable overhead rate variance for September?

A) $37,400 Unfavorable
B) $41,800 Favorable
C) $79,200 Favorable
D) $84,040 Favorable

Question 57

Amirault Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $4.00 per MH. During the month, the actual total variable manufacturing overhead was $18,040 and the actual level of activity for the period was 4,100 MHs. What was the variable overhead rate variance for the month?

A) $410 Favorable
B) $1,640 Unfavorable
C) $1,640 Favorable
D) $410 Unfavorable

Question 58

At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July showed that actual maintenance costs totaled $8,650 and that the associated rate variance was $250 unfavorable. If 5,000 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was:

A) $1.73 per MH
B) $1.78 per MH
C) $1.68 per MH
D) $1.83 per MH

Question 59

The Haney Corporation has a standard costing system. Variable manufacturing overhead is applied on the basis of direct labor-hours. The following data are available for January: $\bullet$ Actual variable manufacturing overhead: $25,500
$\bullet$ Actual direct labor-hours worked: 5,800
$\bullet$ Variable overhead rate variance: $600 Favorable
$\bullet$ Variable overhead efficiency variance: $2,475 Unfavorable
The standard hours allowed for January production is:

A) 5,975 hours
B) 5,800 hours
C) 5,425 hours
D) 5,250 hours

Question 60

Mongar Corporation applies manufacturing overhead to products on the basis of standard machine-hours. Budgeted and actual overhead costs for the most recent month appear below: The original budget was based on 4,200 machine-hours. The company actually worked 4,350 machine-hours during the month and the standard hours allowed for the actual output were 4,190 machine-hours. What was the overall variable overhead efficiency variance for the month?

A) $130 Unfavorable
B) $950 Favorable
C) $1,310 Favorable
D) $1,440 Unfavorable

Question 61

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
The direct materials purchases variance is computed when the materials are purchased.
What is the materials quantity variance for the month?

A) $6,550 U
B) $15,982 U
C) $16,104 U
D) $6,600 U

Question 62

Luma Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for September:
The raw materials price variance for the month is closest to:

A) $9,081 U
B) $9,450 F
C) $9,450 U
D) $9,081 F

Question 63

Casivant Corporation makes a product that uses a material with the following direct material standards: The materials quantity variance for November is:

A) $3,880 F
B) $3,686 U
C) $3,686 F
D) $3,880 U

Question 64

The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: There were no beginning inventories of direct materials.
The standard cost of direct material for one unit of output is:

A) $2 per unit
B) $16 per unit
C) $8 per unit
D) $10 per unit

Question 65

Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The labor rate variance is:

A) $625 U
B) $500 F
C) $500 U
D) $625 F

Question 66

Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The materials quantity variance is:

A) $1,200 U
B) $1,100 U
C) $1,100 F
D) $1,200 F

Question 67

Devoto Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for June:
The raw materials price variance for the month is closest to:

A) $51,600 U
B) $48,568 F
C) $51,600 F
D) $48,568 U

Question 68

Devoto Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for June:
The raw materials quantity variance for the month is closest to:

A) $77 U
B) $85 F
C) $85 U
D) $77 F

Question 69

Leonesio Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,100 units in August, but actual production was 3,200 units. The company used 27,600 kilos of direct material to produce this output. The company purchased 29,000 kilos of the direct material at a total cost of $118,900. The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for August is:

A) $5,576 F
B) $5,576 U
C) $5,440 F
D) $5,440 U

Question 70

Bumgardner Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for April:
The direct materials purchases variance is computed when the materials are purchased.
The raw materials quantity variance for the month is closest to:

A) $50 U
B) $57 U
C) $57 F
D) $50 F

Question 71

The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: There were no beginning inventories of direct materials.
The actual cost of direct material was:

A) $8.12 per pound
B) $8.00 per pound
C) $7.60 per pound
D) $7.42 per pound

Question 72

Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The labor efficiency variance is:

A) $4,000 F
B) $4,125 F
C) $4,125 U
D) $4,000 U

Question 73

Turrubiates Corporation makes a product that uses a material with the following standards: The company budgeted for production of 2,300 units in April, but actual production was 2,400 units. The company used 16,410 liters of direct material to produce this output. The company purchased 18,600 liters of the direct material at $1.10 per liter.
The direct materials purchases variance is computed when the materials are purchased.
The materials quantity variance for April is:

A) $891 U
B) $810 U
C) $891 F
D) $810 F

Question 74

Casivant Corporation makes a product that uses a material with the following direct material standards: The company produced 7,300 units in November using 28,710 pounds of the material. During the month, the company purchased 30,800 pounds of the direct material at a total cost of $117,040. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for November is:

A) $5,548 U
B) $6,160 U
C) $6,160 F
D) $5,548 F

Question 75

Bumgardner Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for April:
The direct materials purchases variance is computed when the materials are purchased.
The raw materials price variance for the month is closest to:

A) $45,780 F
B) $45,780 U
C) $41,447 U
D) $41,447 F

Question 76

Turrubiates Corporation makes a product that uses a material with the following standards: The company budgeted for production of 2,300 units in April, but actual production was 2,400 units. The company used 16,410 liters of direct material to produce this output. The company purchased 18,600 liters of the direct material at $1.10 per liter.
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for April is:

A) $1,860 U
B) $1,860 F
C) $1,560 U
D) $1,560 F

Question 77

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month:
The direct materials purchases variance is computed when the materials are purchased.
What is the materials price variance for the month?

A) $480 F
B) $430 F
C) $430 U
D) $480 U

Question 78

Leonesio Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,100 units in August, but actual production was 3,200 units. The company used 27,600 kilos of direct material to produce this output. The company purchased 29,000 kilos of the direct material at a total cost of $118,900. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for August is:

A) $2,900 U
B) $2,624 U
C) $2,900 F
D) $2,624 F

Question 79

Solly Corporation produces a product for national distribution. Standards for the product are: Materials: 12 ounces per unit at 60¢ per ounce.
Labor: 2 hours per unit at $8 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows:
Materials: 14,000 ounces purchased and used at a total cost of $7,700.
Labor: 2,500 hours worked at a total cost of $20,625.
The materials price variance is:

A) $700 U
B) $600 F
C) $600 U
D) $700 F

Question 80

Luma Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for September:
The raw materials quantity variance for the month is closest to:

A) $69 F
B) $78 F
C) $69 U
D) $78 U