Deck 17: Standard Costing and Variance Analysis 1

Question 1

A favourable materials price variance may be caused by

A)excessive rework.
B)a special price offered by suppliers.
C)use of experienced workers.
D)none of the above.

Answer 1

B

Question 2

The labour rate variance is calculated as

A)(Actual hourly wage rate - Standard hourly wage rate) * Actual direct labour hours used.
B)(Actual hourly wage rate - Standard hourly wage rate) * Standard direct labour hours that should have been used.
C)(Actual direct labour hours used - Standard direct labour hours that should have been used) * Actual hourly wage rate.
D)(Actual direct labour hours used - Standard direct labour hours that should have been used) * Standard hourly wage rate.

Answer 2

(Actual hourly wage rate - Standard hourly wage rate) * Actual direct labour hours used.

Question 3

Using more highly skilled direct labourers might affect which of the following variances?

A)materials usage variance
B)labour efficiency variance
C)variable manufacturing overhead efficiency variance
D)all of the above

Answer 3

D

Question 4

Price variances focus on the difference between

A)actual price and standard price for actual quantity allowed for units actually produced.
B)actual price and standard price for standard quantity allowed for units actually produced.
C)actual price and standard price for actual quantity allowed for estimated activity.
D)none of the above.

Question 5

A 5 per cent wage increase for all factory employees would affect which of the following variances?

A)materials price variance
B)labour rate variance
C)labour efficiency variance
D)variable manufacturing overhead efficiency variance

Question 6

Who is responsible for unfavourable labour efficiency variances caused by poor quality materials?

A)warehouse manager
B)production manager
C)purchasing manager
D)engineering manager

Question 7

Labour efficiency variances may be caused by

A)the use of highly skilled workers.
B)frequent machinery breakdowns.
C)the use of marginally skilled workers.
D)all of the above.

Question 8

The purchase of inferior direct materials at a lower price might affect which of the following variances?

A)materials price variance
B)materials usage variance
C)labour efficiency variance
D)all of the above

Question 9

For better control of direct material prices, when should direct material price variance be recognized?

A)when material is purchased
B)when material is issued from the storeroom
C)when material is put into production
D)when production is completed

Question 10

Labour rate variances can be the result of

A)the use of an average wage rate.
B)unexpected overtime.
C)seniority mix changes.
D)all of the above.

Question 11

Variances indicate

A)the cause of the variance.
B)who is responsible for the variance.
C)that actual performance is not going according to plan.
D)when the variance should be investigated.

Question 12

An unfavourable materials price variance with a favourable materials usage variance would most likely be the result of

A)machines breaking down.
B)problems with labour efficiency.
C)purchase of high quality materials.
D)problems with labour rates.

Question 13

An unfavourable materials usage variance may be caused by

A)excessive rework.
B)a special price offered by suppliers.
C)use of experienced workers.
D)none of the above.

Question 14

An unfavourable materials price variance may be caused by

A)excessive rework.
B)a special price offered by suppliers.
C)use of experienced workers.
D)none of the above.

Question 15

A favourable materials usage variance may be caused by

A)excessive rework.
B)a special price offered by suppliers.
C)use of experienced workers.
D)none of the above.

Question 16

To determine the unit standard cost for a particular input, a company must decide how much

A)input should be used per unit of output and how much should be paid for the quantity of the input to be used.
B)input should be used per unit of output and how much output should be produced.
C)output should be produced and how much should be paid for each unit produced.
D)should be paid for the quantity of the input to be used and how much input should be purchased.

Question 17

The two variances for variable overhead are

A)spending and efficiency variances.
B)spending and budget variances.
C)budget and volume variances.
D)budget and efficiency variances.

Question 18

Standard cost systems can enhance operational control through the use of

A)price variances, which indicate the need for enhanced spending control.
B)efficiency variances, which indicate the need for corrective action.
C)standard costs, which indicate the desired cost of a unit of input.
D)actual costs, which indicate the price received for units sold.

Question 19

Efficiency variances focus on the difference between

A)actual quantity used and standard quantity allowed for estimated activity.
B)actual quantity used and standard quantity allowed for units actually produced.
C)quantity allowed for estimated production and standard quantity allowed for units actually produced.
D)none of the above.

Question 20

Which of the following is information that would be included in the standard cost card (sheet)?

A)quantity and price of direct materials for each unit of output
B)retail price of the product charged to the customers
C)delivery cost per unit of product
D)all of the above

Question 21

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-2. Rax's materials price variance would be

A)£4,000 unfavourable.
B)£4,000 favourable.
C)£1,600 unfavourable.
D)£1,600 favourable.

Question 22

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-2. Rax's variable standard cost per unit would be

A)£78.
B)£192.
C)£246.
D)£222.

Question 23

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-2. Rax's labour rate variance would be

A)£4,300 favourable.
B)£4,300 unfavourable.
C)£2,500 favourable.
D)£2,500 unfavourable.

Question 24

Figure 17-1
Max Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 15 \text { pounds } \times £ 16 \text { per pound } \\\text { Direct labour } & 4 \text { hours } \times £ 24 \text { per hour } \\\text { Variable overhead } & 4 \text { hours } \times £ 14 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{lc}\text { Materials purchased } & 10,000 \text { pounds costing } £ 170,000 \\\text { Materials used } & 7,200 \text { pounds } \\\text { Units produced } & 500 \text { units } \\\text { Direct labour } & 2,300 \text { hours at } £ 23.60 \text { per hour } \\\text { Actual variable overhead } & £ 30,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-1. Max's materials usage variance would be

A)£40,000 unfavourable.
B)£40,000 favourable.
C)£4,800 unfavourable.
D)£4,800 favourable.

Question 25

During October, 16,000 direct labour hours were worked at a standard cost of £6 per hour. If the labour rate variance for October was £4,000 unfavourable, the actual cost per labour hour must be

A)£6.25.
B)£6.00.
C)£5.75.
D)none of the above.

Question 26

During May, 6,000 pounds of raw materials were purchased at a cost of £2.60 per pound. If there was a favourable materials price variance of £900 for December, the standard cost per pound must be

A)£2.75.
B)£2.60.
C)£2.45.
D)none of the above.

Question 27

Figure 17-1
Max Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 15 \text { pounds } \times £ 16 \text { per pound } \\\text { Direct labour } & 4 \text { hours } \times £ 24 \text { per hour } \\\text { Variable overhead } & 4 \text { hours } \times £ 14 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{lc}\text { Materials purchased } & 10,000 \text { pounds costing } £ 170,000 \\\text { Materials used } & 7,200 \text { pounds } \\\text { Units produced } & 500 \text { units } \\\text { Direct labour } & 2,300 \text { hours at } £ 23.60 \text { per hour } \\\text { Actual variable overhead } & £ 30,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-1. Max's materials price variance would be

A)£50,000 favourable.
B)£50,000 unfavourable.
C)£10,000 unfavourable.
D)£10,000 favourable.

Question 28

The volume variance provides information to management about

A)utilization of plant facilities.
B)cost control.
C)performance for evaluation purposes.
D)all of the above.

Question 29

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-2. Rax's labour efficiency variance would be

A)£4,300 unfavourable.
B)£4,300 favourable.
C)£1,800 unfavourable.
D)£1,800 favourable.

Question 30

Figure 17-1
Max Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 15 \text { pounds } \times £ 16 \text { per pound } \\\text { Direct labour } & 4 \text { hours } \times £ 24 \text { per hour } \\\text { Variable overhead } & 4 \text { hours } \times £ 14 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{lc}\text { Materials purchased } & 10,000 \text { pounds costing } £ 170,000 \\\text { Materials used } & 7,200 \text { pounds } \\\text { Units produced } & 500 \text { units } \\\text { Direct labour } & 2,300 \text { hours at } £ 23.60 \text { per hour } \\\text { Actual variable overhead } & £ 30,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-1. Max's labour efficiency variance would be

A)£7,200 unfavourable.
B)£7,200 favourable.
C)£6,280 unfavourable.
D)£6,280 favourable.

Question 31

During April, 80,000 units of product were produced. The standard quantity of material allowed per unit was two pounds at a standard cost of £5 per pound. If there was a favourable materials usage variance of £40,000 for April, the actual quantity of materials used must have been

A)168,000 pounds.
B)152,000 pounds.
C)84,000 pounds.
D)76,000 pounds.

Question 32

Figure 17-1
Max Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 15 \text { pounds } \times £ 16 \text { per pound } \\\text { Direct labour } & 4 \text { hours } \times £ 24 \text { per hour } \\\text { Variable overhead } & 4 \text { hours } \times £ 14 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{lc}\text { Materials purchased } & 10,000 \text { pounds costing } £ 170,000 \\\text { Materials used } & 7,200 \text { pounds } \\\text { Units produced } & 500 \text { units } \\\text { Direct labour } & 2,300 \text { hours at } £ 23.60 \text { per hour } \\\text { Actual variable overhead } & £ 30,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-1. Max's variable standard cost per unit would be

A)£392.
B)£336.
C)£296.
D)£152.

Question 33

The two variances for fixed overhead are

A)spending and efficiency variances.
B)efficiency and volume variances.
C)spending and volume variances.
D)budget and efficiency variances.

Question 34

During September, 40,000 units of product were produced. The standard quantity of material allowed per unit was four pounds at a standard cost of £6.00 per pound. If there was a favourable materials usage variance of £30,000 for April, the actual quantity of materials used must be

A)41,250 pounds.
B)38,750 pounds.
C)165,000 pounds.
D)155,000 pounds.

Question 35

If a company was concerned with controlling expenditures on overhead items, which variance would be useful?

A)fixed overhead volume variance
B)variable overhead efficiency variance
C)variable overhead spending variance
D)both b and c

Question 36

Figure 17-1
Max Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 15 \text { pounds } \times £ 16 \text { per pound } \\\text { Direct labour } & 4 \text { hours } \times £ 24 \text { per hour } \\\text { Variable overhead } & 4 \text { hours } \times £ 14 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{lc}\text { Materials purchased } & 10,000 \text { pounds costing } £ 170,000 \\\text { Materials used } & 7,200 \text { pounds } \\\text { Units produced } & 500 \text { units } \\\text { Direct labour } & 2,300 \text { hours at } £ 23.60 \text { per hour } \\\text { Actual variable overhead } & £ 30,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-1. Max's labour rate variance would be

A)£920 unfavourable.
B)£920 favourable.
C)£800 unfavourable.
D)£800 favourable.

Question 37

If variable overhead is applied based on direct labour hours and there is an unfavourable labour efficiency variance,

A)the materials usage variance will be unfavourable.
B)the labour rate variance will be favourable.
C)the variable overhead efficiency variance will be unfavourable.
D)the variable overhead spending variance will be unfavourable.

Question 38

The standard fixed overhead rate is calculated as

A)Actual fixed overhead/Actual activity.
B)Budgeted fixed overhead/Budgeted activity.
C)Budgeted fixed overhead/Actual activity.
D)Budgeted overhead/Budgeted activity.

Question 39

During December, 6,000 pounds of raw materials were purchased at a cost of £16 per pound. If there was an unfavourable materials price variance of £6,000 for December, the standard cost per pound must be

A)£17.
B)£16.
C)£15.
D)none of the above.

Question 40

Figure 17-2
Rax Company has developed the following standards for one of its products:
Direct materials
12 pounds * £14 per pound
Direct labour
3 hours * £18 per hour
Variable overhead
3 hours * £8 per hour
The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 10,000 \text { pounds at } £ 13.60 \text { per pound } \\\text { Materials used } & 9,000 \text { pounds } \\\text { Units produced } & 800 \text { units } \\\text { Direct labour } & 2,500 \text { hours at } £ 19.00 \text { per hour } \\\text { Actual variable overhead } & £ 22,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-2. Rax's materials usage variance would be

A)£8,400 unfavourable.
B)£8,400 favourable.
C)£5,600 unfavourable.
D)£5,600 favourable.

Question 41

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's labour efficiency variance would be

A)£18,000 favourable.
B)£18,000 unfavourable.
C)£17,700 unfavourable.
D)£17,700 favourable.

Question 42

Figure 17-3
Tuvok Ltd. has developed the following standards for one of its products: $\begin{array}{ll}\text { Standard cost of materials } & £ 0.50 \text { per pound } \\\text { Materials purchased and used } & 20,000 \text { pounds } \\\text { Total paid to suppliers } & £ 11,000 \\\text { Standard quantity allowed } & 18,000 \text { pounds }\end{array}$

-Refer to Figure 17-3. Tuvok's materials usage variance is

A)£1,000 unfavourable.
B)£1,100 unfavourable.
C)£2,000 unfavourable.
D)cannot be determined from the information given.

Question 43

Figure 17-6 $\begin{array}{lr}\text { Budgeted fixed overhead for the year } & £ 300,000 \\\text { Budgeted direct labour hours for the year } & 30,000 \\\text { Actual fixed overhead for August } & £ 24,000 \\\text { Actual variable overhead for August } & £ 10,000 \\\text { Direct labour hours worked in August } & 2,600 \\\text { Standard variable overhead cost per direct labour hour } & £ 4 \\\text { Standard direct labour hours allowed for August production } & 2,750\end{array}$

-Refer to Figure 17-6. The standard rate for total overhead is

A)£14.
B)£13.
C)£10.
D)£4.

Question 44

Fixed overhead was budgeted at £500,000 and 25,000 direct labour hours were budgeted. If the fixed overhead volume variance was £12,000 favourable and the fixed overhead spending variance was £16,000 unfavourable, fixed overhead applied must be

A)£516,000.
B)£512,000.
C)£504,000.
D)£528,000.

Question 45

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's variable overhead spending variance would be

A)£36,000 favourable.
B)£36,000 unfavourable.
C)£40,000 favourable.
D)£40,000 unfavourable.

Question 46

Figure 17-6 $\begin{array}{lr}\text { Budgeted fixed overhead for the year } & £ 300,000 \\\text { Budgeted direct labour hours for the year } & 30,000 \\\text { Actual fixed overhead for August } & £ 24,000 \\\text { Actual variable overhead for August } & £ 10,000 \\\text { Direct labour hours worked in August } & 2,600 \\\text { Standard variable overhead cost per direct labour hour } & £ 4 \\\text { Standard direct labour hours allowed for August production } & 2,750\end{array}$

-Refer to Figure 17-6. The fixed overhead volume variance would be

A)£2,500 unfavourable.
B)£2,500 favourable.
C)£1,000 unfavourable.
D)£1,000 favourable.

Question 47

Figure 17-6 $\begin{array}{lr}\text { Budgeted fixed overhead for the year } & £ 300,000 \\\text { Budgeted direct labour hours for the year } & 30,000 \\\text { Actual fixed overhead for August } & £ 24,000 \\\text { Actual variable overhead for August } & £ 10,000 \\\text { Direct labour hours worked in August } & 2,600 \\\text { Standard variable overhead cost per direct labour hour } & £ 4 \\\text { Standard direct labour hours allowed for August production } & 2,750\end{array}$

-Refer to Figure 17-6. The variable overhead efficiency variance would be

A)£1,000 favourable.
B)£600 favourable.
C)£400 favourable.
D)£200 favourable.

Question 48

Fortensky Construction planned to produce 275,000 units using 34,375 machine hours. Actual output was 290,000 units using 37,425 machine hours. Fortensky's volume variance

A)was favourable.
B)was unfavourable.
C)was zero.
D)cannot be determined from the information given.

Question 49

Figure 17-4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours * £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.

-Refer to Figure 17-4. Shannon's standard hours allowed for production was

A)12,500.
B)15,000.
C)16,250.
D)13,000.

Question 50

Figure 17-4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours * £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.

-Refer to Figure 17-4. Shannon's labour efficiency variance was

A)£4,625 unfavourable.
B)£4,000 unfavourable.
C)£27,750 unfavourable.
D)£24,000 unfavourable.

Question 51

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's materials price variance would be

A)£46,000 favourable.
B)£46,000 unfavourable.
C)£44,000 favourable.
D)£44,000 unfavourable.

Question 52

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's materials usage variance would be

A)£120,000 favourable.
B)£120,000 unfavourable.
C)£80,000 unfavourable.
D)£80,000 favourable.

Question 53

Figure 17-3
Tuvok Ltd. has developed the following standards for one of its products: $\begin{array}{ll}\text { Standard cost of materials } & £ 0.50 \text { per pound } \\\text { Materials purchased and used } & 20,000 \text { pounds } \\\text { Total paid to suppliers } & £ 11,000 \\\text { Standard quantity allowed } & 18,000 \text { pounds }\end{array}$

-Refer to Figure 17-3. Tuvok's material price variance is

A)£1,000 unfavourable.
B)£2,000 unfavourable.
C)£1,100 unfavourable.
D)cannot be computed from the information given.

Question 54

Figure 17-4
Shannon Ltd.'s standard cost card contained the following information:
Direct labour: 1.25 hours * £8.00 per hour = £10.00
Shannon planned to make 12,000 units. Shannon actually made 10,000 units using 13,000 hours.

-Refer to Figure 17-4. If Shannon's actual labour cost was £136,500, Shannon's labour rate variance was

A)£32,500 unfavourable.
B)£32,500 favourable.
C)£6,500 unfavourable.
D)£6,500 favourable.

Question 55

During October, 14,000 direct labour hours were worked at a standard cost of £40 per hour. If the labour rate variance for October was £70,000 favourable, the actual cost per labour hour must be

A)£35.
B)£40.
C)£45.
D)none of the above.

Question 56

Figure 17-6 $\begin{array}{lr}\text { Budgeted fixed overhead for the year } & £ 300,000 \\\text { Budgeted direct labour hours for the year } & 30,000 \\\text { Actual fixed overhead for August } & £ 24,000 \\\text { Actual variable overhead for August } & £ 10,000 \\\text { Direct labour hours worked in August } & 2,600 \\\text { Standard variable overhead cost per direct labour hour } & £ 4 \\\text { Standard direct labour hours allowed for August production } & 2,750\end{array}$

-Refer to Figure 17-6. The variable overhead spending variance would be

A)£2,000 favourable.
B)£1,200 favourable.
C)£400 favourable.
D)£200 favourable.

Question 57

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's variable overhead efficiency variance would be

A)£4,000 favourable.
B)£4,000 unfavourable.
C)£8,000 favourable.
D)£12,000 unfavourable.

Question 58

If actual fixed overhead was £120,000 and there was a £2,600 favourable spending variance and a £2,000 unfavourable volume variance, budgeted fixed overhead must have been

A)£124,600.
B)£122,000.
C)£120,000.
D)£122,600.

Question 59

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-5. Ebola's labour rate variance would be

A)£15,000 unfavourable.
B)£15,000 favourable.
C)£15,300 unfavourable.
D)£15,300 favourable.

Question 60

Figure 17-6 $\begin{array}{lr}\text { Budgeted fixed overhead for the year } & £ 300,000 \\\text { Budgeted direct labour hours for the year } & 30,000 \\\text { Actual fixed overhead for August } & £ 24,000 \\\text { Actual variable overhead for August } & £ 10,000 \\\text { Direct labour hours worked in August } & 2,600 \\\text { Standard variable overhead cost per direct labour hour } & £ 4 \\\text { Standard direct labour hours allowed for August production } & 2,750\end{array}$

-Refer to Figure 17-6. The fixed overhead spending variance would be

A)£2,500 unfavourable.
B)£2,500 favourable.
C)£1,000 unfavourable.
D)£1,000 favourable.

Question 61

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's variable overhead spending variance would be

A)£4,800 favourable.
B)£4,800 unfavourable.
C)£3,600 unfavourable.
D)£1,200 unfavourable.

Question 62

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}\text { STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \\\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \\\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \\\text { Fixed overhead } & & ?& \\\text { Total standard cost per unit } & &? \end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 10,500 \\\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \\& \\\text { Overhead incurred: } & £ 182,000 \\\text { Variable } & £ 430,000\end{array}$

-Refer to Figure 17-8. Noelle's fixed overhead volume variance would be

A)£10,000 unfavourable.
B)£11,000 unfavourable.
C)£21,000 favourable.
D)£31,000 favourable.

Question 63

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}\text { STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \\\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \\\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \\\text { Fixed overhead } & & ?& \\\text { Total standard cost per unit } & &? \end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 10,500 \\\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \\& \\\text { Overhead incurred: } & £ 182,000 \\\text { Variable } & £ 430,000\end{array}$

-Refer to Figure 17-8. Noelle's variable overhead spending variance would be

A)£7,000 favourable.
B)£8,000 unfavourable.
C)£15,000 favourable.
D)£23,000 unfavourable.

Question 64

If actual fixed overhead was £164,000 and there was a £4,800 favourable spending variance and a £1,000 unfavourable volume variance, budgeted fixed overhead must have been

A)£168,800.
B)£167,800.
C)£165,000.
D)£163,000.
E)£159,200.

Question 65

Franklin Company expected sales were 2,000 units at £100 per unit. During 2011, it had actual sales of 1,800 units at £110 per unit. Budgeted variable costs were £60 per unit. What is Franklin's sales price variance?

A)£8,000 (U)
B)£20,000 (U)
C)£18,000 (F)
D)£2,000 (U)

Question 66

A sales volume variance will be favourable when:

A)actual units sold is greater than budgeted sales volume.
B)actual units sold is less than budgeted sales volume.
C)actual selling price is greater than budgeted selling price.
D)actual contribution margin is greater than budgeted contribution margin.

Question 67

Taylor Company's budgeted sales were 10,000 units at £200 per unit. Actual sales were 9,200 units at £210 per unit. Taylor's sales price variance is

A)£68,000 (U).
B)£100,000 (U).
C)£8,000 (U).
D)£92,000 (F).

Question 68

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's materials price variance would be

A)£22,000 unfavourable.
B)£18,000 unfavourable.
C)£6,000 unfavourable.
D)£4,000 unfavourable.

Question 69

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's labour rate variance would be

A)£12,000 unfavourable.
B)£12,000 favourable.
C)£8,400 favourable.
D)£3,600 unfavourable.

Question 70

The volume variance is caused by:

A)the difference between the activity allowed for the actual output and the budgeted activity used in computing the fixed overhead rate.
B)the difference between total budgeted fixed overhead and total standard fixed overhead assigned to production.
C)the difference between the activity allowed for the actual output and the total standard fixed overhead assigned to production.
D)the difference between the standard fixed overhead rate and the actual fixed overhead rate.

Question 71

The following standard costs were developed for one of Commodore Company's products:
STANDARD COST CARD
PER UNIT $\begin{array}{llr}\text { Direct materials: } & 4 \text { pounds } \times £ 5 \text { per pound } & £ 20.00 \\\text { Direct labour: } & 1.5 \text { hours } \times £ 20 \text { per hour } & 30.00 \\\text { Variable overhead: } & £ 10 \text { per hour } & ?\end{array}$

Fixed overhead
Total standard cost per unit The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 15,000 \\\text { Materials purchased } & 90,000 \text { pounds at } £ 3.60 \text { per pound } \\\text { Materials used } & 80,000 \text { pounds } \\\text { Direct labour } & 9,000 \text { hours at } £ 16.50 \text { per hour }\\\text { Overhead incurred: }\\\text { Variable } & £ 220,000 \\\text { Fixed } & £ 640,000\end{array}$ Budgeted fixed overhead for the period is £600,000, and expected capacity for the period is 20,000 direct labour hours.
a.Calculate the standard fixed overhead rate.
b.Complete the standard cost card for the product.

Question 72

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's materials usage variance would be

A)£22,000 unfavourable.
B)£12,000 favourable.
C)£10,000 unfavourable.
D)£4,000 unfavourable.

Question 73

The following standard costs were developed for one of Commodore Company's products: $\begin{array}{c}\text {STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 3 \text { pounds } \times £ 2 \text { per pound } & £ 6.00 \\\text { Direct labour: } & 2 \text { hours } \times £ 12 \text { per hour } & 24.00 \\\text { Variable overhead: } & £ 4 \text { per hour } & ? \\\text { Fixed overhead } & &\underline{ ?} \\\text { Total standard cost per unit } & & ?\end{array}\end{array}$ The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 12,000 \\\text { Materials purchased } & 50,000 \text { pounds at } £ 2 \text { per pound } \\\text { Materials used } & 40,000 \text { pounds } \\\text { Direct labour } & 25,000 \text { hours at } £ 13 \text { per hour }\\\text { Overhead incurred: }\\\text { Variable } & £ 90,000 \\\text { Fixed } & £ 300,000\end{array}$ Budgeted fixed overhead for the period is £280,000, and expected capacity for the period is 28,000 direct labour hours.
a.Calculate the standard fixed overhead rate.
b.Complete the standard cost card for the product.

Question 74

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}\text { STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \\\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \\\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \\\text { Fixed overhead } & & ?& \\\text { Total standard cost per unit } & &? \end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 10,500 \\\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \\& \\\text { Overhead incurred: } & £ 182,000 \\\text { Variable } & £ 430,000\end{array}$

-Refer to Figure 17-8. Noelle's fixed overhead spending variance would be

A)£10,000 unfavourable.
B)£11,000 unfavourable.
C)£21,000 favourable.
D)£31,000 favourable.

Question 75

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's variable overhead efficiency variance would be

A)£1,200 unfavourable.
B)£3,600 unfavourable.
C)£4,800 unfavourable.
D)£4,800 favourable.

Question 76

Figure 17-7
Orient Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 10 \text { pounds } \times £ 8 \text { per pound } \\\text { Direct labour } & 6 \text { hours } \times £ 20 \text { per hour } \\\text { Variable overhead } & 6 \text { hours } \times £ 6 \text { per hour }\end{array}$ The following activities occurred during the month of November: $\begin{array}{ll}\text { Materials purchased } & 8,000 \text { pounds costing } £ 70,000 \\\text { Materials used } & 6,500 \text { pounds } \\\text { Units produced } & 600 \text { units } \\\text { Direct labour } & 4,200 \text { hours costing } £ 75,600 \\\text { Actual variable overhead } & £ 26,400\end{array}$ The company records materials price variances at the time of purchase.

-Refer to Figure 17-7. Orient's labour efficiency variance would be

A)£12,000 unfavourable.
B)£12,000 favourable.
C)£8,400 favourable.
D)£3,600 unfavourable.

Question 77

The sales price variance is created by a difference between

A)actual and standard contribution margin.
B)actual and expected sales price.
C)expected and standard net income.
D)actual and expected sales volume.

Question 78

For planning and control purposes, fixed overhead is NOT included in the standard cost per unit because:

A)it is incurred based on the number of units produced.
B)the number of units produced do not vary from period to period.
C)it can best be controlled on a lump-sum basis.
D)of all of the above

Question 79

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}\text { STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \\\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \\\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \\\text { Fixed overhead } & & ?& \\\text { Total standard cost per unit } & &? \end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 10,500 \\\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \\& \\\text { Overhead incurred: } & £ 182,000 \\\text { Variable } & £ 430,000\end{array}$

-Refer to Figure 17-8. Noelle's standard fixed overhead rate is

A)£14.82.
B)£14.48.
C)£14.34.
D)£14.00.

Question 80

Figure 17-8
The following information was extracted from the accounting records of Noelle Company: $\begin{array}{c}\text { STANDARD COST CARD}\\\text { PER UNIT}\\\begin{array}{llc}\text { Direct materials: } & 8 \text { pounds } \times £ 1.20 \text { per pound } & £ 9.60 \\\text { Direct labour: } & 3 \text { hours } \times £ 20 \text { per hour } & 60.00 \\\text { Variable overhead: } & 3 \text { hours } \times £ 6 \text { per hour } & 18.00 \\\text { Fixed overhead } & & ?& \\\text { Total standard cost per unit } & &? \end{array}\end{array}$ Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours.
The following information is available regarding the company's operations for the period: $\begin{array}{ll}\text { Units produced } & 10,500 \\\text { Direct labour } & 29,000 \text { hours costing } £ 590,000 \\& \\\text { Overhead incurred: } & £ 182,000 \\\text { Variable } & £ 430,000\end{array}$

-Refer to Figure 17-8. Noelle's variable overhead efficiency variance would be

A)£7,000 favourable.
B)£8,000 unfavourable.
C)£15,000 favourable.
D)£23,000 unfavourable.