Deck 12: Standard Costs and Variances

Question 1

The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in response to the demands of the production manager due to a mistake in production scheduling. The materials were shipped by airfreight at a rate higher than that ordinarily charged for shipment by truck, resulting in an unfavorable materials price variance. The lower quality material proved to be unsuitable on the production line and resulted in excessive waste. In this situation, who should be held responsible for the materials price and quantity variances?

A)Option A
B)Option B
C)Option C
D)Option D

Answer 1

C

Question 2

Generally speaking, it is the responsibility of the production department to see that material usage is kept in line with standards.

Answer 2

True

Question 3

The materials quantity variance should be computed:

A)when materials are purchased.
B)based upon the amount of materials used in production.
C)based upon the difference between the actual and standard prices per unit times the actual quantity used.
D)only when there is a difference between standard and actual cost per unit for the materials.

Answer 3

B

Question 4

Which department should usually be held responsible for an unfavorable materials price variance?

A)Production.
B)Materials Handling.
C)Engineering.
D)Purchasing.

Question 5

Standard costs should generally be based on the actual costs of prior periods.

Question 6

Standard costs greatly increase the complexity of the bookkeeping process.

Question 7

The standard quantity per unit for direct materials should not include an allowance for waste.

Question 8

An unfavorable direct labor efficiency variance could be caused by:

A)an unfavorable materials quantity variance.
B)an unfavorable variable overhead rate variance.
C)a favorable materials quantity variance.
D)a favorable variable overhead rate variance.

Question 9

Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for one unit of Teragram include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Teragram. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:

A)more materials were purchased than were used.
B)more materials were used than were purchased.
C)the actual cost of materials was less than the standard cost.
D)the actual usage of materials was less than the standard alloweD.Materials price variance = AQ (AP - SP)

Question 10

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production.

Question 11

A labor efficiency variance resulting from the use of poor quality materials should be charged to:

A)the production manager.
B)the purchasing agent.
C)manufacturing overhead.
D)the industrial engineering department.

Question 12

Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six pounds of materials at $0.30 per pound. Actual production in November was 3,100 units of Titactium. There was an unfavorable materials price variance of $380 and a favorable materials quantity variance of $120. Based on these variances, one could conclude that:

A)more materials were purchased than were used.
B)more materials were used than were purchased.
C)the actual cost per pound for materials was less than the standard cost per pound.
D)the actual usage of materials was less than the standard alloweD.Materials quantity variance = (AQ - SQ) SP

Question 13

Ideal standards should be used for forecasting and planning.

Question 14

A materials price variance is favorable if the actual price exceeds the standard price.

Question 15

The standard cost per unit is computed by multiplying the standard quantity or hours by the standard price or rate.

Question 16

When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n):

A)combined price and quantity variance.
B)efficiency variance.
C)price variance.
D)quantity variance.

Question 17

The general model for calculating a price variance is:

A)actual quantity of inputs × (actual price - standard price).
B)standard price × (actual quantity of inputs - standard quantity allowed for output).
C)(actual quantity of inputs at actual price) - (standard quantity allowed for output at standard price).
D)actual price × (actual quantity of inputs - standard quantity allowed for output).

Question 18

If the labor efficiency variance is unfavorable, then

A)actual hours exceeded standard hours allowed for the actual output.
B)standard hours allowed for the actual output exceeded actual hours.
C)the standard rate exceeded the actual rate.
D)the actual rate exceeded the standard rate.

Question 19

In general, the purchasing agent is responsible for the materials price variance.

Question 20

When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable.

Question 21

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)$13,805 U
B)$13,530 U
C)$15,305 U
D)$15,305 F

Question 22

Dowen Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 4,400 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 4,460 machine-hours during the month. The standard hours allowed for the actual output were 4,310 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

A)$2,198 favorable
B)$1,695 unfavorable
C)$150 unfavorable
D)$503 favorable

Question 23

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)$1,325 U
B)$1,780 F
C)$430 F
D)$430 U

Question 24

The standards for direct labor for a product are 2.5 hours at $8 per hour. Last month, 9,000 units of the product were made and the labor efficiency variance was $8,000

A)23,500
B)22,500
C)20,500
D)21,500
F)The actual number of hours worked during the past period was:

Question 25

The standard cost card for a product shows that the product should use 4 kilograms of material B per finished unit and that the standard price of material B is $4.50 per kilogram. During April, when the budgeted production level was 1,000 units, 1,040 units were actually made. A total of 4,100 kilograms of material B were used in production and the inventories of material B were reduced by 300 kilograms during April. The total cost of material B purchased during April was $14,400. The material variances for material B during April were:

A)Option A
B)Option B
C)Option C
D)Option D

Question 26

Millonzi 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)$4,350 favorable
B)$2,000 unfavorable
C)$2,650 favorable
D)$1,700 favorable

Question 27

Borden Enterprises uses standard costing. For the month of April, the company reported the following data: • Standard direct labor rate: $10 per hour
• Standard hours allowed for actual production: 8,000 hours
• Actual direct labor rate: $9.50 per hour
• Labor efficiency variance: $4,800 Favorable
The labor rate variance for April is:

A)$3,760 U
B)$3,760 F
C)$2,850 F
D)$2,850 U

Question 28

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)$9,219 U
B)$10,179 U
C)$9,867 U
D)$648 U

Question 29

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)$1,200 F
B)$9,625 F
C)$8,425 F
D)$990 U

Question 30

The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 Unfavorable; and the standard quantity of materials allowed for July production was 21,750 pounds. The materials price variance for July was:

A)$2,725 F
B)$2,725 U
C)$3,250 F
D)$3,250 U

Question 31

The Wright Company has a standard costing system. The following data are available for September: The actual price per pound of direct materials purchased in September is:

A)$1.85
B)$2.00
C)$2.10
D)$2.15

Question 32

Which of the following statements concerning ideal standards is incorrect?

A)Ideal standards generally do not provide the best motivation for workers.
B)Ideal standards do not make allowances for waste, spoilage, and machine breakdowns.
C)Ideal standards are better suited for cash budgeting than practical standards.
D)Ideal standards may be better than practical standards when managers seek continual improvement.

Question 33

The Reedy Company uses a standard costing system. The following data are available for November: The actual direct labor rate for November is:

A)$8.80
B)$8.90
C)$9.00
D)$9.20

Question 34

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)$15,405 F
B)$5,775 U
C)$5,925 U
D)$1,600 U

Question 35

Furson Corporation makes a single product. In a recent period 6,500 units were made and there was an unfavorable labor efficiency variance of $26,000. Direct labor workers were paid $8 per hour and total wages were $182,000. The labor rate variance was zero. The standard labor-hours per unit of output is closest to:

A)3.0
B)3.5
C)4.0
D)4.5

Question 36

The Cox Company uses standard costing. The following data are available for April: The standard quantity of material allowed for April production is:

A)14,200 gallons
B)12,700 gallons
C)11,700 gallons
D)10,200 gallons

Question 37

Lafountaine Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company's cost formula for variable manufacturing overhead is $4.70 per MH. During the month, the actual total variable manufacturing overhead was $20,210 and the actual level of activity for the period was 4,700 MHs. What was the variable overhead rate variance for the month?

A)$400 unfavorable
B)$1,880 favorable
C)$1,880 unfavorable
D)$400 favorable

Question 38

Last month 75,000 pounds of direct material were purchased and 71,000 pounds were used. If the actual purchase price per pound was $0.50 more than the standard purchase price per pound, then the materials price variance was:

A)$2,000 F
B)$37,500 F
C)$37,500 U
D)$35,500 U

Question 39

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: $\begin{array}{ll}\text {Actual materials purchased }&6,600 & \text { Pounds } \\\text {Actual cost of materials purchased }&\$ 91,740 & \\\text {Actual materials used in production. }&5,900 & \text { Pounds } \\\text {Actual output. }&1,000 & \text { Units }\end{array}$ What is the materials quantity variance for the month?

A)$19,460 F
B)$9,730 U
C)$10,115 U
D)$20,230 F

Question 40

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

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

Question 41

The materials price variance is:

A)$400 U
B)$400 F
C)$600 F
D)$600 U

Question 42

The labor efficiency variance for June is:

A)$995 U
B)$950 U
C)$995 F
D)$950 F

Question 43

The labor rate variance for March is:

A)$4,578 unfavorable
B)$1,470 unfavorable
C)$4,578 favorable
D)$1,470 favorable

Question 44

The variable overhead rate variance is:

A)$240 U
B)$220 U
C)$220 F
D)$240 F

Question 45

The materials quantity variance for June is:

A)$1,760 U
B)$1,782 F
C)$1,760 F
D)$1,782 U

Question 46

Ruston 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 4,500 machine-hours. The company actually worked 4,590 machine-hours during the month and the standard hours allowed for the actual output were 4,700 machine-hours. What was the overall variable overhead efficiency variance for the month?

A)$50 unfavorable
B)$869 favorable
C)$969 unfavorable
D)$100 unfavorable

Question 47

Kornfeld Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 2,800 poles. Actual production was 3,200 poles. According to standards, each pole requires 2.2 machine-hours. The actual machine-hours for the month were 6,890 machine-hours. The standard variable manufacturing overhead rate is $9.20 per machine-hour. The actual variable manufacturing cost for the month was $67,020. The variable overhead efficiency variance is:

A)$1,380 U
B)$1,380 F
C)$2,252 F
D)$2,252 U

Question 48

The labor rate variance for June is:

A)$4,095 F
B)$4,050 F
C)$4,095 U
D)$4,050 U

Question 49

The materials quantity variance for March is:

A)$900 favorable
B)$1,950 favorable
C)$1,950 unfavorable
D)$900 unfavorable

Question 50

The variable overhead efficiency variance is:

A)$520 F
B)$520 U
C)$500 U
D)$500 F

Question 51

The labor rate variance is:

A)$480 F
B)$480 U
C)$440 F
D)$440 U

Question 52

The materials price variance for June is:

A)$3,180 U
B)$2,860 F
C)$2,860 U
D)$3,180 F

Question 53

The materials quantity variance is:

A)$800 U
B)$4,000 U
C)$760 U
D)$760 F

Question 54

The materials price variance for March is:

A)$860 unfavorable
B)$860 favorable
C)$281 unfavorable
D)$281 favorable

Question 55

Acri Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 6,900 doors. Actual production was 7,300 doors. According to standards, each door requires 5.6 machine-hours. The actual machine-hours for the month were 40,360 machine-hours. The standard supplies cost, and element of variable manufacturing overhead, is $4.20 per machine-hour. The actual supplies cost for the month was $168,251. The variable overhead efficiency variance for supplies cost is:

A)$3,445 U
B)$2,184 F
C)$2,184 U
D)$3,445 F

Question 56

The variable overhead efficiency variance for March is:

A)$320 unfavorable
B)$320 favorable
C)$360 unfavorable
D)$360 favorable

Question 57

The labor efficiency variance for March is:

A)$480 favorable
B)$480 unfavorable
C)$192 favorable
D)$192 unfavorable

Question 58

The following data have been provided by Spraglin 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)$484 U
B)$2,643 U
C)$484 F
D)$2,643 F

Question 59

The labor efficiency variance is:

A)$800 F
B)$800 U
C)$840 F
D)$840 U

Question 60

Tavorn Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's standard variable manufacturing overhead rate is $1.80 per machine-hour. The actual variable manufacturing overhead cost for the month was $13,080. The original budget for the month was based on 7,100 machine-hours. The company actually worked 7,210 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 7,070 machine-hours. What was the variable overhead efficiency variance for the month?

A)$354 unfavorable
B)$252 unfavorable
C)$54 favorable
D)$102 unfavorable

Question 61

The labor rate variance for May is:

A)$1,302 U
B)$1,440 U
C)$1,440 F
D)$1,302 F

Question 62

The materials quantity variance for June is:

A)$392 U
B)$392 F
C)$400 F
D)$400 U

Question 63

The labor rate variance for June is:

A)$238 U
B)$238 F
C)$224 U
D)$224 F

Question 64

The variable overhead efficiency variance for May is:

A)$1,380 F
B)$1,242 U
C)$1,242 F
D)$1,380 U

Question 65

The materials quantity variance for May is:

A)$13,150 F
B)$12,361 F
C)$13,150 U
D)$12,361 U

Question 66

The materials price variance for October is:

A)$620 F
B)$616 F
C)$616 U
D)$620 U

Question 67

The labor efficiency variance for May is:

A)$6,302 U
B)$6,440 U
C)$6,440 F
D)$6,302 F

Question 68

The variable overhead rate variance for October is:

A)$33 F
B)$35 U
C)$35 F
D)$33 U

Question 69

The variable overhead rate variance for June is:

A)$1,365 U
B)$1,365 F
C)$1,350 F
D)$1,350 U

Question 70

The variable overhead rate variance for June is:

A)$96 U
B)$102 F
C)$96 F
D)$102 U

Question 71

The variable overhead efficiency variance for June is:

A)$54 F
B)$54 U
C)$60 F
D)$60 U

Question 72

The labor rate variance for October is:

A)$495 U
B)$495 F
C)$525 U
D)$525 F

Question 73

The labor efficiency variance for June is:

A)$454 F
B)$454 U
C)$440 F
D)$440 U

Question 74

The variable overhead efficiency variance for June is:

A)$185 F
B)$200 U
C)$185 U
D)$200 F

Question 75

The variable overhead rate variance for May is:

A)$1,440 U
B)$1,302 F
C)$1,302 U
D)$1,440 F

Question 76

The materials quantity variance for October is:

A)$1,798 U
B)$1,798 F
C)$1,740 F
D)$1,740 U

Question 77

The materials price variance for May is:

A)$11,880 U
B)$11,880 F
C)$12,120 F
D)$12,120 U

Question 78

The variable overhead efficiency variance for October is:

A)$82 U
B)$80 U
C)$82 F
D)$80 F

Question 79

The materials price variance for June is:

A)$3,332 F
B)$3,590 U
C)$3,332 U
D)$3,590 F

Question 80

The labor efficiency variance for October is:

A)$510 U
B)$480 F
C)$480 U
D)$510 F