Deck 11: Standard Costs and Variances

Question 1

Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $19 per hour. Happy Helpers incurs payroll tax expense of 12% of the direct labor rate and incurs costs for sick-days and vacation days of $3 per hour. What is the standard rate per direct labor hour?

A)$22.00
B)$24.28
C)$19.00
D)$21.28

Answer 1

B

Question 2

A(n)________ is a carefully predetermined cost that is usually expressed on a per unit basis.

A)allocated cost
B)applied cost
C)standard cost
D)flexible cost

Answer 2

C

Question 3

Standards should be reviewed and adjusted at least

A)yearly.
B)monthly.
C)weekly.
D)daily.

Answer 3

A

Question 4

The direct materials price variance tells managers how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

Question 5

If a company produces many different products, it will develop a standard cost for each type of product.

Question 6

Theresa Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $21.00 per hour. Payroll taxes are 9% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $4.00 per hour. What is the standard rate per direct labor hour?

A)$26.89
B)$21.00
C)$22.89
D)$25.00

Question 7

Perfection standards do not allow for poor-quality raw materials, waste in the production process, machine-breakdown, or other inefficiencies.

Question 8

The type of standard that expects no waste and no inefficiencies in the production process is referred to as a(n)

A)ideal standard.
B)efficiency standard.
C)realistic standard.
D)practical standard.

Question 9

The standard cost of direct materials per unit is calculated by

A)multiplying the standard quantity of direct materials by the standard price of direct materials.
B)dividing the standard quantity of direct materials by the standard price of direct materials.
C)adding the standard quantity of direct materials to the standard price of direct materials.
D)multiplying the actual quantity of direct materials by the standard price of direct materials.

Question 10

Piper Corporation, which manufactures dog toys, is developing direct labor standards. The basic direct labor rate is $16.79 per hour. Payroll taxes are 15% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $6.41 per hour. What is the standard rate per direct labor hour?

A)$25.72
B)$23.20
C)$16.79
D)$19.31

Question 11

Kalanja Designs, which produces earrings, is developing direct material standards. Each earring requires 0.32 kilograms of a special metal. The allowance for waste is 0.70 kilograms per earring, while the allowance for rejects is 0.10 kilograms per earring. What is the standard quantity of metal per earring?

A)0)32 kilograms
B)1)02 kilograms
C)1)12 kilograms
D)0)42 kilograms

Question 12

Standard costs for production inputs are used to develop flexible budgets.

Question 13

Sandy's Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of sauce requires 0.79 kilograms of base. The allowance for waste is 0.40 kilograms per bottle, while the allowance for rejects is 0.20 kilograms per bottle. What is the standard quantity of base per bottle?

A)0)79 kilograms
B)0)99 kilograms
C)1)19 kilograms
D)1)39 kilograms

Question 14

As managers use less and different types of direct materials, which of the following standards do managers focus on to enhance sustainability in the workplace?

A)Quantity/Efficiency standard
B)Price standard
C)Flexible standard
D)Both A and B

Question 15

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Question 16

DOT Safety Systems manufactures motorcycle helmets. What is the standard quantity of material used to manufacture each helmet if the material required is 1.00 pounds, and DOT allows for 0.21 pounds of waste and 0.28 pounds of rejected material?

A)1)49 pounds
B)1)21 pounds
C)1)28 pounds
D)1)00 pounds

Question 17

Ideal standards allow for a normal amount of waste and inefficiency.

Question 18

The standard for the direct labor rate per hour does not include fringe benefits such as health care insurance and vacations.

Question 19

The standard cost of direct labor per unit is calculated by

A)multiplying the standard quantity of direct labor by the standard price of direct labor.
B)dividing the standard quantity of direct labor by the standard price of direct labor.
C)adding the standard quantity of direct labor to the standard price of direct labor.
D)multiplying the actual quantity of direct labor by the standard price of direct labor.

Question 20

The type of standard that provides allowances for normal amounts of waste and inefficiency in the production process is referred to as a(n)

A)ideal standard.
B)perfection standard.
C)realistic standard.
D)practical standard.

Question 21

A favorable direct materials price variance indicates which of the following?

A)The actual cost of materials purchased was greater than the standard cost of materials purchased.
B)The standard cost of materials purchased was less than the actual cost of materials purchased.
C)The Actual Quantity (AQ)of materials used was less than the standard quantity of materials used for actual production.
D)The standard cost of materials purchased was greater than the actual cost of materials purchased.

Question 22

A price variance for production inputs is the difference between the actual unit price of an input and the standard unit price of the input, multiplied by the actual input quantity.

Question 23

A quantity (efficiency)variance for production inputs (materials and labor)is the difference between the Actual Quantity (AQ)of input used and the standard quantity of input, multiplied by the standard price per unit of input.

Question 24

A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?

A)Less expensive, inferior materials requiring less than the standard amount were used in production.
B)Less expensive, inferior materials requiring more than the standard amount were used in production.
C)More expensive, superior materials requiring more than the standard amount were used in production.
D)More expensive, superior materials requiring less than the standard amount were used in production.

Question 25

The ________ tells managers how much of the overall variance id due to paying a higher or lower price than expected for the quantity of materials it purchased.

A)production volume variance
B)overhead flexible budget variance
C)price variance
D)quantity variance

Question 26

Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 27

Circumstances can occur that result in favorable direct materials price variances and unfavorable direct materials quantity variances.

Question 28

The direct materials flexible budget variance can be divided into which of the following two variances?

A)Price variance and the rate variance
B)Price variance and the standard variance
C)Price variance and the quantity variance
D)Quantity variance and the efficiency variance

Question 29

Raw material, ruined through mistakes during production, results in a materials quantity variance.

Question 30

A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 31

Which of the following situations may lead to a favorable direct materials price variance?

A)The purchasing manager was able to negotiate a lower purchase price for raw materials.
B)A vendor shipped a greater quantity of raw materials than ordered.
C)The purchasing manager paid a premium price for a higher quality of raw materials.
D)Raw materials waste was substantially reduced in the factory.

Question 32

The Standard Quantity (SQ)of direct materials is calculated as

A)the budgeted quantity of units less the Standard Quantity (SQ)of units.
B)the Standard Quantity (SQ)of input per unit times the number of units budgeted.
C)the number of units actually made times the direct materials price standard.
D)the Standard Quantity (SQ)of input per unit times the number of units actually made.

Question 33

If the Standard Quantity Allowed (SQA)for direct materials is greater than the Actual Quantity (AQ)used, the quantity variance is unfavorable.

Question 34

A direct materials flexible budget variance can be broken down into a price variance and a quantity variance.

Question 35

A price variance for direct materials measures how well a company keeps unit prices of material within standards.

Question 36

A favorable direct materials quantity variance indicates which of the following?

A)The actual cost of direct materials was less than the standard cost of direct materials.
B)The Standard Quantity (SQ)of direct materials for actual output was less than the Actual Quantity (AQ)of direct materials used.
C)The Actual Quantity (AQ)of direct materials used was less than the standard quantity for actual output.
D)The Actual Quantity (AQ)of direct materials used was greater than the standard quantity for budgeted output.

Question 37

The direct materials price variance is the difference between the Actual Price (AP)and the Standard Price (SP), multiplied by the Actual Quantity Purchased (AQP).

Question 38

The direct materials price variance is calculated as

A)the difference in Actual Quantities (AQ)multiplied by the Actual Price (AP)of the input.
B)the Actual Quantity (AQP)of direct materials divided by the Actual Quantity (AQ).
C)the difference in prices of the Actual Quantity Purchased (AQP)and the Actual Price (AP)multiplied by the Actual Quantity Purchased (AQP)and the Standard Price (SP)of the input purchased.
D)the direct materials Actual Quantity Purchased (AQ)divided by the per unit price.

Question 39

If the purchasing manager purchased a greater quantity of raw materials than budgeted, but paid the Standard Price (SP), which variance may be affected?

A)Materials price variance
B)Materials quantity variance
C)Both of the variances may be affected
D)Neither of the variances may be affected

Question 40

A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 41

Baskets Inc. gathered the following actual results for the current month: Budgeted production and standard costs were:
What is the direct materials price variance?

A)$7300 unfavorable
B)$7300 favorable
C)$5200 favorable
D)$5200 unfavorable

Question 42

Fitness Bands Corporation gathered the following information for Job #928: What is the direct materials price variance?

A)$4550.00 favorable
B)$4550.00 unfavorable
C)$2800.00 favorable
D)$2800.00 unfavorable

Question 43

Coach Industries reported the following results from its most recent quarter: What is Coach's direct material quantity variance?

A)$11,550 favorable
B)$11,550 unfavorable
C)$15,750 unfavorable
D)$15,750 favorable

Question 44

Oliver Enterprises has collected the following data for one of its products: How much is the direct materials quantity variance?

A)$38,640 favorable
B)$16,560 unfavorable
C)$22,080 favorable
D)$38,640 unfavorable

Question 45

Keegan Inc. budgeted 10,800 pounds of direct materials costing $16.50 per pound to make 5100 units of product. The company actually purchased 10,900 pounds of direct materials costing $25.00 per pound to make the 5100 units. What is the direct materials quantity variance?

A)$2500 favorable
B)$1650 favorable
C)$1650 unfavorable
D)$2500 unfavorable

Question 46

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 12,000 pounds of direct material with a standard cost of $14 per pound to produce 14,000 units of finished product. Armstrong actually purchased 24,000 pounds and used 15,000 pounds of direct material with a cost of $30 per pound to produce 14,000 units of finished product. Given these results, what is Armstrong's direct material quantity variance?

A)$168,000 favorable
B)$42,000 favorable
C)$168,000 unfavorable
D)$42,000 unfavorable

Question 47

The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 10,000 pounds of direct material with a standard cost of $13 per pound to produce 10,000 units of finished product. Armstrong actually purchased 19,000 pounds and used 12,000 pounds of direct material with a cost of $29 per pound to produce 10,000 units of finished product. Given these results, what is Armstrong's direct material price variance?

A)$160,000 favorable
B)$160,000 unfavorable
C)$304,000 unfavorable
D)$304,000 favorable

Question 48

Keegan Inc. budgeted 10,500 pounds of direct materials costing $18.00 per pound to make 4900 units of product. The company actually purchased 10,600 pounds of direct materials costing $27.50 per pound to make the 4900 units. What is the direct materials price variance?

A)$100,700 favorable
B)$100,700 unfavorable
C)$99,750 unfavorable
D)$99,750 favorable

Question 49

Baskets Inc. gathered the following actual results for the current month: Budgeted production and standard costs were:
What is the direct materials quantity variance?

A)$38,000 unfavorable
B)$12,000 unfavorable
C)$38,000 favorable
D)$12,000 favorable

Question 50

Fitness Bands Corporation gathered the following information for Job #928: What is the direct materials quantity variance?

A)$1700.00 favorable
B)$1700.00 unfavorable
C)$1300.00 unfavorable
D)$1300.00 favorable

Question 51

Oliver Enterprises has collected the following data for one of its products: What is the actual cost of the Direct Materials Used (AQU)per pound?

A)$4.36
B)$3.94
C)$5.14
D)$0.58

Question 52

Oliver Enterprises has collected the following data for one of its products: What is the total actual cost of the direct materials used?

A)$57,720
B)$23,440
C)$51,440
D)$37,440

Question 53

Benny Company budgeted 610 pounds of direct materials costing $18.00 per pound to make 8000 units of product. The company actually used 650 pounds of direct materials costing $30.00 per pound to make the 8000 units. What is the direct materials quantity variance?

A)$1200 favorable
B)$720 favorable
C)$1200 unfavorable
D)$720 unfavorable

Question 54

Hushovd Iron Works has collected the following data for its Thunderbolt line of products: What is the direct material price variance?

A)$3200 favorable
B)$3200 unfavorable
C)$2000 favorable
D)$2000 unfavorable

Question 55

The ________ "tells managers how much of the total direct materials variance is due to using more or less materials than anticipated the by standards."

A)production volume variance
B)overhead flexible budget variance
C)price variance
D)quantity variance

Question 56

The actual cost of direct materials is $47.50 per pound. The standard cost per pound is $51.75. During the current period, 7200 pounds were used in production. The standard quantity for actual units produced is 7100 pounds. How much is the direct materials price variance?

A)$30,175 favorable
B)$30,175 unfavorable
C)$30,600 favorable
D)$30,600 unfavorable

Question 57

Oliver Enterprises has collected the following data for one of its products: How much is the direct materials price variance?

A)$2610 favorable
B)$2610 unfavorable
C)$2880 favorable
D)$2880 unfavorable

Question 58

Hushovd Iron Works has collected the following data for its Thunderbolt line of products: What is the direct materials quantity variance?

A)$2,750 unfavorable
B)$2,750 favorable
C)$6,250 unfavorable
D)$6,250 favorable

Question 59

The actual cost of direct materials is $13.00 per pound. The standard cost per pound is $8.75. During the current period, 9900 pounds of direct materials were used in production and 18,500 pounds were purchased. The standard quantity of direct materials for actual units produced is 16,200 pounds. How much is the direct materials quantity variance?

A)$55,125 favorable
B)$55,125 unfavorable
C)$81,900 unfavorable
D)$81,900 favorable

Question 60

The Southside Corporation budgeted 4600 pounds of direct materials to make 2700 units of product. The company actually used 5700 pounds of direct materials to make the 2700 units. The direct materials quantity variance is $1200 unfavorable. What is the Standard Price (SP)per pound of direct materials?

A)$0.44
B)$2.25
C)$4.75
D)$1.09

Question 61

Culinary Kitchen Supply produces bamboo cutting boards. The standard material cost for the bamboo used in each lamp is $18 per square foot. Each board requires 2 square feet of bamboo. In August, the company produced 700 cutting boards. There were 1100 square feet of bamboo used during the month. The bamboo used had an actual cost $26 per square foot. What was the materials quantity variance in August for bamboo?

A)$5400 favorable
B)$5400 unfavorable
C)$7800 favorable
D)$7800 unfavorable

Question 62

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the direct material quantity variance for plastic in the dolls?

A)$59 favorable
B)$2341 favorable
C)$59 unfavorable
D)$2341unfavorable

Question 63

Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows: What is the direct materials price variance for ammonia?

A)$6400 favorable
B)$6400 unfavorable
C)$900 favorable
D)$900 unfavorable

Question 64

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the direct materials flexible budget variance for steel used to manufacture the trains?

A)$475 unfavorable
B)$475 favorable
C)$3275 unfavorable
D)$3275 favorable

Question 65

Performance Nutrition produces a protein shake which contains whey protein as one of its ingredients. The whey protein (materials)standards for each batch of protein shake produced are 11 pounds of whey protein at a standard cost of $5.00 per pound. During July, Performance Nutrition purchased and used 55,000 pounds of whey protein at a total of $198,000 to make a total of 3500 batches of protein shake. What is the materials quantity variance for whey protein in July?

A)$82,500 unfavorable
B)$82,500 favorable
C)$93,500 favorable
D)$93,500 unfavorable

Question 66

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies): What is the direct materials flexible budget variance for the flour in cupcakes?

A)$181 favorable
B)$241 unfavorable
C)$241 favorable
D)$181 unfavorable

Question 67

Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows: What is the direct materials flexible budget variance for ammonia?

A)$100 unfavorable
B)$2700 unfavorable
C)$100 favorable
D)$2700 favorable

Question 68

Puget Company has gathered the following information about its purchase and use of raw materials for December: Puget Company uses a standard cost system. What is the materials price variance?

A)$7500.00 favorable
B)$7500.00 unfavorable
C)$6600.00 favorable
D)$6600.00 unfavorable

Question 69

Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows: What is the direct material quantity variance for the bleach?

A)$1571 favorable
B)$1571 unfavorable
C)$2891 favorable
D)$2891 unfavorable

Question 70

An LCD screen is purchased to be used in the manufacturing of a digital watch. The Standard Price (SP)for the LCD screen used is $60.00. During the month of February, 4200 screens were purchased and used. The materials price variance was $14,700 unfavorable. The standard number of screens allowed for the actual number of watches manufactured during the period was 26,000 screens. The actual purchase price of each LCD screen may be closest to

A)$1.77 per LCD screen.
B)$60.29 per LCD screen.
C)$56.50 per LCD screen.
D)$63.50 per LCD screen.

Question 71

Bling Corporation manufactures jeweled cell phone cases. The following materials standards have been established for the jewels used to decorate the cell phone cases. The following data relates to the production of the cell phone cases during June:
What is the materials price variance for jewels in June?

A)$4750 favorable
B)$4750 unfavorable
C)$9500 favorable
D)$9500 unfavorable

Question 72

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the price variance for steel used to manufacture the trains?

A)$2625 favorable
B)$703 favorable
C)$2625 unfavorable
D)$703 unfavorable

Question 73

Squeaky Clean produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows: What is the Standard Price (SP)for bleach?

A)$0.63/oz.
B)$2.10/oz.
C)$7.91/oz.
D)$7.14/oz.

Question 74

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies): The actual direct material quantity used per batch for Cupcakes may be closest to

A)0)2 lb.
B)1)6 lbs.
C)2227.0 lbs.
D)0)6 lbs.

Question 75

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies): What is the direct material quantity variance for butter in the cookies?

A)$4100 favorable
B)$2500 favorable
C)$4100 unfavorable
D)$2500 unfavorable

Question 76

Trendy T's Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of May, the company produced 1200 t-shirts. Related production data for the month follows:
What is the direct materials price variance for the month?

A)$9300 unfavorable
B)$9300 favorable
C)$12,300 favorable
D)$12,300 unfavorable

Question 77

Sole Purpose manufactures beach shoes that use a canvas as the main raw material. Data related to the shoes for June follows: What is the materials quantity variance for canvas for June?

A)$92,000 favorable
B)$86,250 favorable
C)$92,000 unfavorable
D)$86,250 unfavorable

Question 78

Trendy T's Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of May, the company produced 1900 t-shirts. Related production data for the month follows:
What is the direct materials quantity variance for the month?

A)$6900 favorable
B)$6900 unfavorable
C)$32,000 favorable
D)$32,000 unfavorable

Question 79

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the standard direct material price per pound for the plastic in the dolls?

A)$6.00/lb.
B)$6.55/lb.
C)$2.25/lb.
D)$0.25/lb.

Question 80

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies): What is the standard direct material price per pound for the butter in the cookies?

A)$6.40/lb.
B)$2.80/lb.
C)$2.50/lb.
D)$1.80/lb.