Question 1

The variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate multiplied by the actual value of the cost driver.This is the formula for the variable overhead rate variance.

Accepted Answer

A) True 
 B)False

Question 2

In a standard cost system,overhead is applied per unit by multiplying the standard overhead rate times the standard quantity of the cost driver.This is a key difference between the standard cost system and the normal cost system - overhead is applied based on the standard quantity of the cost driver rather than the actual quantity.

Accepted Answer

A) True 
 B)False

Question 3

Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon.During July,Scarlett Company purchased and used 7,500 gallons.The direct material quantity variance was $750 unfavorable and the direct material price variance was $3,000 favorable.What price per gallon was paid for the purchases?

Accepted Answer

A) $5.00 
B) $5.40 
C) $4.60 
D) $2.50

Question 4

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the over- or underapplied variable overhead?

Accepted Answer

A) $10,400 overapplied 
B) $8,440 overapplied 
C) $8,440 underapplied 
D) $1,960 overapplied

Question 5

An ideal standard is one which can be achieved only under perfect conditions.This is the definition of an ideal standard.

Accepted Answer

A) True 
 B)False

Question 6

The difference between the actual labor rate and the standard labor rate,multiplied by the actual labor hours is the

Accepted Answer

A) direct labor spending variance. 
B) direct labor volume variance. 
C) direct labor rate variance. 
D) direct labor efficiency variance.

Question 7

The formula SP × (SQ - AQ)is the

Accepted Answer

A) direct materials spending variance. 
B) direct materials volume variance. 
C) direct materials price variance. 
D) direct materials quantity variance.

Question 8

Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon.During July,Cooper Company purchased and used 13,000 gallons,paying $93,200.The direct materials quantity variance was $1,500 unfavorable.How many units were produced?

Accepted Answer

A) 13,000 units 
B) 6,600 units 
C) 6,214 units 
D) 6,400 units

Question 9

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead rate variance?

Accepted Answer

A) $3,600 unfavorable 
B) $3,600 favorable 
C) $5,400 favorable 
D) $1,800 favorable

Question 10

In a standard cost system,an unfavorable variance will appear as

Accepted Answer

A) a credit entry. 
B) a debit entry. 
C) either a debit or a credit entry. 
D) variances do not affect journal entries.

Question 11

The fixed overhead volume variance is the difference between

Accepted Answer

A) Actual fixed overhead and budgeted fixed overhead. 
B) Actual fixed overhead and applied fixed overhead. 
C) Applied fixed overhead and budgeted fixed overhead. 
D) Actual fixed overhead and the standard fixed overhead rate times actual cost driver.

Question 12

The difference between the actual quantity and the standard quantity,multiplied by the standard price is the

Accepted Answer

A) direct materials spending variance. 
B) direct materials volume variance. 
C) direct materials price variance. 
D) direct materials quantity variance.

Question 13

The price variance for direct labor is called the direct labor rate variance.Because the price of direct labor is called the direct labor rate,the price variance for labor is called the direct labor rate variance.

Accepted Answer

A) True 
 B)False

Question 14

The production manager is typically responsible for the direct labor rate variance.It is difficult to hold an individual manager responsible for the direct labor rate variance because many factors can influence the wage rate.

Accepted Answer

A) True 
 B)False

Question 15

A fixed overhead rate based on _______________ highlights for management attention the cost of unutilized capacity.

Accepted Answer

A) budgeted production 
B) practical capacity 
C) utilized capacity 
D) actual production

Question 16

The formula SR × (SH - AH)is the

Accepted Answer

A) direct labor spending variance. 
B) direct labor volume variance. 
C) direct labor rate variance. 
D) direct labor efficiency variance.

Question 17

The difference between budgeted volume and practical capacity,multiplied by the fixed overhead rate,is the

Accepted Answer

A) Expected (planned)capacity variance. 
B) Unexpected (unplanned)capacity variance. 
C) Total capacity variance. 
D) Volume variance.

Question 18

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead rate variance?

Accepted Answer

A) $8,440 favorable 
B) $1,960 favorable 
C) $10,400 favorable 
D) $1,960 unfavorable

Question 19

The difference between the actual price and the standard price,multiplied by the actual quantity of materials purchased is the

Accepted Answer

A) direct materials spending variance. 
B) direct materials volume variance. 
C) direct materials price variance. 
D) direct materials quantity variance.

Question 20

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the direct labor efficiency variance?

Accepted Answer

A) $1,150 favorable 
B) $4,950 favorable 
C) $6,100 favorable 
D) $302 favorable

Exam 9: Standard Costing and Variances

The variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate multiplied by the actual value of the cost driver.This is the formula for the variable overhead rate variance.

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the over- or underapplied variable overhead?

An ideal standard is one which can be achieved only under perfect conditions.This is the definition of an ideal standard.

The difference between the actual labor rate and the standard labor rate,multiplied by the actual labor hours is the

The formula SP × (SQ - AQ) is the

Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon.During July,Cooper Company purchased and used 13,000 gallons,paying $93,200.The direct materials quantity variance was $1,500 unfavorable.How many units were produced?

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead rate variance?

In a standard cost system,an unfavorable variance will appear as

The fixed overhead volume variance is the difference between

The difference between the actual quantity and the standard quantity,multiplied by the standard price is the

The price variance for direct labor is called the direct labor rate variance.Because the price of direct labor is called the direct labor rate,the price variance for labor is called the direct labor rate variance.

The production manager is typically responsible for the direct labor rate variance.It is difficult to hold an individual manager responsible for the direct labor rate variance because many factors can influence the wage rate.

A fixed overhead rate based on _______________ highlights for management attention the cost of unutilized capacity.

The formula SR × (SH - AH) is the

The difference between budgeted volume and practical capacity,multiplied by the fixed overhead rate,is the

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead rate variance?

The difference between the actual price and the standard price,multiplied by the actual quantity of materials purchased is the

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the direct labor efficiency variance?