Question 1

Though favorable fixed factory overhead volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

Accepted Answer

A) True 
 B)False  True

Question 2

The standard cost is how much a product should cost to manufacture.

Accepted Answer

A) True 
 B)False  True

Question 3

Favorable volume variances may be harmful when

Accepted Answer

A)   machine repairs cause work stoppages
B)   supervisors fail to maintain an even flow of work
C)   production in excess of normal capacity cannot be sold
D)   all of the answers are correct C

Question 4

The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00
Actual costs 7,500 hours at $11.40
What is the direct labor rate variance?

Accepted Answer

A)   $18,000 unfavorable
B)   $4,500 favorable
C)   $17,100 unfavorable
D)   $3,600 favorable

Question 5

The standard factory overhead rate is $10 per direct labor hour $8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: 
-What is the amount of the variable factory overhead controllable variance?

Accepted Answer

A)   $10,000 favorable
B)   $2,500 unfavorable
C)   $10,000 unfavorable
D)   $2,500 favorable

Question 6

Rosser Company produces a container that requires 4 yards of material per unit. The standard price of one yard of material is $4.50. During the month, 9,500 chairs were manufactured using 37,300 yards of material.
Journalize the entry to record the standard direct materials used in production.

Accepted Answer

The answer of Rosser Company produces a container that requires...

Question 7

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

Accepted Answer

A) True 
 B)False

Question 8

Calculate the direct materials quantity variance.

Accepted Answer

A)   $4,512.50 unfavorable
B)   $4,512.50 favorable
C)   $4,750.00 unfavorable
D)   $4,750.00 favorable

Question 9

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour. Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor time variance?

Accepted Answer

A)   $1,650 favorable
B)   $1,650 unfavorable
C)   $1,500 favorable
D)   $1,500 unfavorable

Question 10

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Accepted Answer

A) True 
 B)False

Question 11

Match the following descriptions with the term a-e) it describes:
-actual cost < standard cost at actual volumes

Accepted Answer

A)  Ideal standard
B)  Nonfinancial performance measure
C)  Currently attainable standard
D)  Unfavorable cost variance
E)  Favorable cost variance

Question 12

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable.

Accepted Answer

A) True 
 B)False

Question 13

Standard costs are determined by multiplying expected price by expected quantity.

Accepted Answer

A) True 
 B)False

Question 14

Standards are set for only direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 15

If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the

Accepted Answer

A)   work in process account
B)   cost of goods sold account
C)   finished goods account
D)   work in process, cost of goods sold, and finished goods accounts

Question 16

Which of the following would not lend itself to applying direct labor variances?

Accepted Answer

A)   help desk assistant
B)   research and development scientist
C)   customer service personnel
D)   telemarketer

Question 17

Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard.
Determine the a) price variance, b) quantity variance, and c) cost variance.

Accepted Answer

The answer of Ruby Company produces a chair that requires...

Question 18

The following data relate to direct labor costs for the current period: Standard costs 9,000 hours at $5.50
Actual costs 8,500 hours at $5.75
What is the direct labor rate variance?

Accepted Answer

A)   $2,250 unfavorable
B)   $2,125 unfavorable
C)   $2,250 favorable
D)   $2,125 favorable

Question 19

In most businesses, cost standards are established principally by accountants.

Accepted Answer

A) True 
 B)False

Question 20

Prepare an income statement for the year ended December 31, through the gross profit for Baxter Company using the following information. Baxter Company sold 8,600 units at $125 per unit. Normal production is 9,000 units. Do not round fixed overhead rate calculation when determining fixed factory overhead volume variance.)

Accepted Answer

The answer of Prepare an income statement for the year...

Exam 22: Performance Evaluation Using Variances From Standard Costs

Though favorable fixed factory overhead volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

The standard cost is how much a product should cost to manufacture.

Favorable volume variances may be harmful when

The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00 Actual costs 7,500 hours at $11.40 What is the direct labor rate variance?

Rosser Company produces a container that requires 4 yards of material per unit. The standard price of one yard of material is $4.50. During the month, 9,500 chairs were manufactured using 37,300 yards of material. Journalize the entry to record the standard direct materials used in production.

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

Calculate the direct materials quantity variance.

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour. Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor time variance?

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

Match the following descriptions with the term a-e) it describes: -actual cost < standard cost at actual volumes

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable.

Standard costs are determined by multiplying expected price by expected quantity.

Standards are set for only direct labor and direct materials.

If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the

Which of the following would not lend itself to applying direct labor variances?

The following data relate to direct labor costs for the current period: Standard costs 9,000 hours at $5.50 Actual costs 8,500 hours at $5.75 What is the direct labor rate variance?

In most businesses, cost standards are established principally by accountants.