Question 1

Standard cost + price variance + quantity variance = Budgeted cost.

Accepted Answer

A) True 
 B)False  False

Question 2

A company purchases 12,000 pounds of materials.The materials price variance is $6,000 favorable.What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00
B)  $.50
C)  $2.00
D)  $6.00 B

Question 3

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound.In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135.
-Dillon's total variance is

Accepted Answer

A)  $450 F.
B)  $135 U.
C)  $465 U.
D)  $600 U. B

Question 4

The per-unit standards for direct materials are 2 gallons at $4 per gallon.Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product.The direct materials quantity variance for last month was

Accepted Answer

A)  $3,200 favorable.
B)  $2,400 favorable.
C)  $3,200 unfavorable.
D)  $5,600 unfavorable.

Question 5

Shipp, Inc.manufactures a product requiring two pounds of direct material.During 2013, Shipp purchases 24,000 pounds of material for $99,200 when the standard price per pound is $4.During 2013, Shipp uses 22,000 pounds to make 12,000 products.The standard direct material cost per unit of finished product is

Accepted Answer

A)  $8.27.
B)  $9.01.
C)  $8.00.
D)  $8.53.

Question 6

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound.In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135.
-Dillon's materials quantity variance is

Accepted Answer

A)  $135 F.
B)  $465 U.
C)  $600 U.
D)  $1,050 U.

Question 7

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour.If in producing 1,800 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is

Accepted Answer

A)  $1,800 unfavorable.
B)  $6,000 favorable.
C)  $3,750 unfavorable.
D)  $6,000 unfavorable.

Question 8

All of the following are advantages of standard costs except they

Accepted Answer

A)  facilitate management planning.
B)  are useful in setting selling prices.
C)  simplify costing in inventories.
D)  increase net income.

Question 9

The per-unit standards for direct materials are 2 pounds at $5 per pound.Last month, 11,200 pounds of direct materials that actually cost $53,000 were used to produce 6,000 units of product.The direct materials quantity variance for last month was

Accepted Answer

A)  $4,000 favorable.
B)  $3,000 favorable.
C)  $4,000 unfavorable.
D)  $7,000 unfavorable.

Question 10

Marburg Co.expects direct materials cost of $6 per unit for 100,000 units (a total of $600,000 of direct materials costs).Marburg's standard direct materials cost and budgeted direct materials cost is $\begin{array}{lcc}&\text { Standard }&\text { Budgeted }\
a.&\$ 6 \text { per unit } & \$ 600,000 \text { per year } \
b.&\$ 6 \text { per unit } & \$ 6 \text { per unit } \
c.&\$ 600,000 \text { per year } & \$ 6 \text { per unit } \
d.&\$ 600,000 \text { per vear } & \$ 600,000 \text { per vear }
\end{array}$

Accepted Answer

The answer of Marburg Co.expects direct materials cost of $6...

Question 11

The materials price variance is normally caused by the production department.

Accepted Answer

A) True 
 B)False

Question 12

The costing of inventories at standard cost for external financial statement reporting purposes is

Accepted Answer

A)  not permitted.
B)  preferable to reporting at actual costs.
C)  in accordance with generally accepted accounting principles if significant differences exist between actual and standard costs.
D)  in accordance with generally accepted accounting principles if significant differences do not exist between actual and standard costs.

Question 13

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon.Last month, 3,000 gallons of direct materials were purchased for $22,800.The direct materials price variance for last month was

Accepted Answer

A)  $22,800 favorable.
B)  $600 favorable.
C)  $1,200 favorable.
D)  $1,200 unfavorable.

Question 14

The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing

Accepted Answer

A)  budgeted overhead costs by an expected standard activity index.
B)  actual overhead costs by an expected standard activity index.
C)  budgeted overhead costs by actual activity.
D)  actual overhead costs by actual activity.

Question 15

Edgar, Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. 
- Edgar, Inc.'s total materials variance is

Accepted Answer

A)  $2,400 U.
B)  $2,400 F.
C)  $2,520 U.
D)  $2,520 F.

Question 16

The standard direct labor cost for producing one unit of product is 5 direct labor hours at a standard rate of pay of $20.Last month, 15,000 units were produced and 73,500 direct labor hours were actually worked at a total cost of $1,350,000.The direct labor quantity variance was

Accepted Answer

A)  $30,000 unfavorable.
B)  $45,000 unfavorable.
C)  $45,000 favorable.
D)  $30,000 favorable.

Question 17

In using variance reports, management looks for

Accepted Answer

A)  total assets invested.
B)  significant variances.
C)  competitors' costs in comparison to the company's costs.
D)  more efficient ways of valuing inventories.

Question 18

Dillon has a standard of 2 hours of labor per unit, at $12 per hour.In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970.
-Dillon's total labor variance is

Accepted Answer

A)  $1,030 U.
B)  $800 U.
C)  $-1,030 F.
D)  $1,930 F.

Question 19

A company purchases 20,000 pounds of materials.The materials price variance is $4,000 favorable.What is the difference between the standard and actual price paid for the materials?

Accepted Answer

A)  $1.00
B)  $0.20
C)  $5.00
D)  Cannot be determined from the data provided.

Question 20

Dillon has a standard of 2 hours of labor per unit, at $12 per hour.In producing 2,000 units, Dillon used 3,850 hours of labor at a total cost of $46,970.
-Dillon's labor price variance is

Accepted Answer

A)  $770 U.
B)  $800 U.
C)  $1,030 F.
D)  $1,930 F.

Exam 11: Reporting and Analyzing Stockholders Equity