Deck 18: Standard Costing and Variance Analysis 2: Further Aspects

Question 1

Figure 18-2
Allende Company has developed capacity standards. Information is as follows for a value-added activity: $\begin{array}{lr}\text { Activity capacity acquired } & 60 \\\text { Activity capacity used } & 50 \\\text { Actual activity usage } & 30 \\\text { Standard fixed activity rate } & £ 2,000\end{array}$

-Refer to Figure 18-2. The unused capacity variance is

A)£20,000 favourable.
B)£40,000 favourable.
C)£60,000 favourable.
D)There is no variance.

Answer 1

£60,000 favourable.

Question 2

Figure 18-1
Froelech Company has developed capacity standards. Information is as follows: $\begin{array}{lr}\text { Standard cost of the activity capacity acquired } & £ 150,000 \\\text { Standard cost of the activity capacity used } & 100,000 \\\text { Standard cost of the actual activity used } & 120,000\end{array}$

-Refer to Figure 18-1. The unused capacity variance is

A)£20,000 favourable.
B)£30,000 favourable.
C)£50,000 favourable.
D)There is no variance.

Answer 2

£30,000 favourable.

Question 3

When should variances be investigated?

A)when they fall out of the accepted range or the control limit
B)when the variances are unfavourable
C)when the variances are over £10,000
D)All variances should be investigated.

Answer 3

when they fall out of the accepted range or the control limit

Question 4

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: $\begin{array}{cccc}\text { Material } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \\\mathrm{X} & 3,500 \text { units } & £ 1.00 \text { per unit } & £ 3,500 \\\mathrm{Y} & 1,500 \text { units } & 3.00 \text { per unit } & £ 4,500\\\text { Yield }& 4,000 \text { units }\end{array}$ During April, the following actual production information was provided: $\begin{array}{cc}\text { Material } & \text { Actual Mix } \\\mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\& \\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to Figure 18-4. What is the materials yield variance?

A)£4,000 (F)
B)£8,000 (F)
C)£8,000 (U)
D)£9,000 (U)

Question 5

Roberts Company uses a standard costing system. The following information pertains to direct materials for the month of July: $\begin{array}{lr}\text { Standard price per lb. } & £ 18.00 \\\text { Actual purchase price per } 1 \mathrm{~b} . & £ 16.50 \\\text { Quantity purchased } & 3,100 \mathrm{lbs} . \\\text { Quantity used } & 2,950 \mathrm{lbs} \text {. } \\\text { Standard quantity allowed for actual output } & 3,000 \mathrm{lbs} \text {. } \\\text { Actual output } & 1,000 \text { units }\end{array}$ Roberts Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?
a.
$\begin{array}{llr} \text { Materials } &55,800\\ \text { Accounta Payable } &&55,800\\\end{array}$


b.
$\begin{array}{llr} \text { Accesunts Payable} &55,800\\ \text { Materials } &&55,800\\\end{array}$

c.
$\begin{array}{llr} \text { Materials} &55,800\\ \text { Materials price Variance } &&4,650\\ \text { Accounta Payable } &&51,150\end{array}$

d.
$\begin{array}{llr} \text {Materials } &51,150\\ \text { Materials price Variance } &4,650\\ \text { Accounta Payable } &&55,800\end{array}$

Question 6

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: $\begin{array}{cccc}\text { Material } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \\\mathrm{X} & 3,500 \text { units } & £ 1.00 \text { per unit } & £ 3,500 \\\mathrm{Y} & 1,500 \text { units } & 3.00 \text { per unit } & £ 4,500\\\text { Yield }& 4,000 \text { units }\end{array}$ During April, the following actual production information was provided: $\begin{array}{cc}\text { Material } & \text { Actual Mix } \\\mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\& \\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to Figure 18-4. What is the materials mix variance?

A)£5,000 (F)
B)£10,000 (U)
C)£10,000 (F)
D)£15,000 (F)

Question 7

Figure 18-4
Regis Ltd. uses two materials in the production of its product. The materials, X and Y, have the following standards: $\begin{array}{cccc}\text { Material } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \\\mathrm{X} & 3,500 \text { units } & £ 1.00 \text { per unit } & £ 3,500 \\\mathrm{Y} & 1,500 \text { units } & 3.00 \text { per unit } & £ 4,500\\\text { Yield }& 4,000 \text { units }\end{array}$ During April, the following actual production information was provided: $\begin{array}{cc}\text { Material } & \text { Actual Mix } \\\mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\& \\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to Figure 18-4. What is the materials usage variance?

A)£10,000 (U)
B)£ 8,000 (U)
C)£ 8,000 (F)
D)£18,000 (U)

Question 8

Laune Co.'s standard cost is £200,000, and its allowable deviation is £20,000. Laune's upper and lower control limits are

A)£220,000 and £200,000.
B)£200,000 and £180,000.
C)£220,000 and £180,000.
D)£210,000 and £190,000.

Question 9

Figure 18-3
Pippen Company's activity-based performance report revealed that actual inspection costs totaled £100,000 at an actual activity level of 50 inspections. Further analysis of inspection costs revealed the following: $\begin{array}{l}&\text { Actual Cost } & \text { Budgeted Cost } \\\text { Inspection costs: }\\\text { Fixed } & £ 30,000 & £ 28,500 \\\text { Variable } & 20,000 & 17,500\end{array}$ Fixed inspection costs consist of the salaries of two inspectors, who are paid £14,250. Each inspector is capable of efficiently conducting inspections of 30 batches.
Variable inspection costs consist of materials used during the inspections.

-Refer to Figure 18-3. The fixed spending variance is

A)£1,500 U.
B)£1,500 F.
C)£2,100 U.
D)£2,100 F.

Question 10

Figure 18-1
Froelech Company has developed capacity standards. Information is as follows: $\begin{array}{lr}\text { Standard cost of the activity capacity acquired } & £ 150,000 \\\text { Standard cost of the activity capacity used } & 100,000 \\\text { Standard cost of the actual activity used } & 120,000\end{array}$

-Refer to Figure 18-1. The volume variance is

A)£20,000 unfavourable.
B)£30,000 unfavourable.
C)£50,000 unfavourable.
D)There is no variance.

Question 11

Davis Industries' activity-based performance report revealed that actual inspection costs totaled £225,000 at an actual activity level of 80 inspections. Further analysis of inspection costs revealed the following: Fixed inspection costs consist of the salaries of four inspectors, paid £21,000 each. Each inspector is capable of efficiently conducting inspections of 50 batches. Variable inspection costs consist of materials used during the inspections.
a.Calculate the following fixed activity budget variances for inspection:Total fixed activity varianceFixed spending varianceVolume varianceUnused capacity variance
b.Calculate the following variable activity budget variances for inspection:Spending varianceEfficiency variance

Question 12

Figure 18-3
Pippen Company's activity-based performance report revealed that actual inspection costs totaled £100,000 at an actual activity level of 50 inspections. Further analysis of inspection costs revealed the following: $\begin{array}{l}&\text { Actual Cost } & \text { Budgeted Cost } \\\text { Inspection costs: }\\\text { Fixed } & £ 30,000 & £ 28,500 \\\text { Variable } & 20,000 & 17,500\end{array}$ Fixed inspection costs consist of the salaries of two inspectors, who are paid £14,250. Each inspector is capable of efficiently conducting inspections of 30 batches.
Variable inspection costs consist of materials used during the inspections.

-Refer to Figure 18-3. The volume variance is

A)£26,250 U.
B)£26,250 F.
C)£28,500 U.
D)£28,500 F.