Question 1

A favorable variance

Accepted Answer

A)   is an indication that the company is not operating in an optimal manner.
B)   implies a positive result if quality control standards are met.
C)   implies a positive result if standards are flexible.
D)   means that standards are too loosely specified. B

Question 2

A standard differs from a budget because a standard

Accepted Answer

A)   is a predetermined cost.
B)   contributes to management planning and control.
C)   is a unit amount.
D)   none of these; a standard does not differ from a budget. C

Question 3

Which department is usually responsible for a labor price variance attributable to misallocation of workers?

Accepted Answer

A)   Quality control
B)   Purchasing
C)   Engineering
D)   Production D

Question 4

Adam Corporation prepared the following variance report.  
Instructions
Fill in the appropriate amounts or letters for the question marks in the report.

Accepted Answer

The answer of Adam Corporation prepared the following variance report....

Question 5

Information on Jayhawk's direct labor costs for the month of August is as follows:  What was the standard rate for August?

Accepted Answer

A)   $9.96
B)   $9.60
C)   $10.40
D)   $10.04

Question 6

Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:  
During March 2016, the following activity was recorded by the company relating to the production of tybos:
1. The company produced 9,000 units during the month.
2. A total of 24,000 pounds of materials were purchased at a cost of $66,000.
3. A total of 24,000 pounds of materials were used in production.
4. 5,000 hours of labor were incurred during the month at a total wage cost of $55,000.
Instructions
Calculate the following variances for March for Riggins, Inc.
(a) Materials price variance
(b) Materials quantity variance
(c) Labor price variance
(d) Labor quantity variance

Accepted Answer

The answer of Riggins, Inc. manufactures one product called tybos....

Question 7

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?

Accepted Answer

A)   $2
B)   $4
C)   $6
D)   Cannot be determined from the data provided.

Question 8

The labor time requirements for standards may be determined by the

Accepted Answer

A)   sales manager.
B)   product manager.
C)   industrial engineers.
D)   payroll department manager.

Question 9

Variance reports are

Accepted Answer

A)   external financial reports.
B)   SEC financial reports.
C)   internal reports for management.
D)   All of these answers are correct.

Question 10

Flagstaff, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of which the variable portion was $0.50 per bat and the fixed portion was $1.00 per bat with an estimate of 6,300 bats to be produced. Flagstaff identifies price variances at the earliest possible point in time.
During March, the company had the following results:
Direct labor used = 4,800 hours at a cost of $56,400
Actual manufacturing overhead fixed costs = $6,000
Actual manufacturing overhead variable costs = $3,100
Bats produced = 6,000
Instructions
Compute the following variances for March.
1. Labor quantity variance
2. Total labor variance
3. Overhead controllable variance
4. Overhead volume variance

Accepted Answer

The answer of Flagstaff, Inc. uses standard costing for its...

Question 11

If the materials price variance is $3,600 F and the materials quantity and labor variances are each $2,700 U, what is the total materials variance?

Accepted Answer

A)   $3,600 F
B)   $2,700 U
C)   $900 F
D)   $4,050 U

Question 12

The materials price standard is based on the purchasing department's best estimate of the cost of raw materials.

Accepted Answer

A) True 
 B)False

Question 13

Pane Corp. manufactures and sells a nutrition drink for children. It wants to develop a standard cost per gallon. The following are required for production of a 100 gallon batch:
1,960 ounces of lime Kool-Drink at $.12 per ounce
40 pounds of granulated sugar at $.60 per pound
63 kiwi fruit at $.50 each
100 protein tablets at $.90 each
4,000 ounces of water at $.003 per ounce
Pane estimates that 2% of the lime Kool-Drink is wasted, 20% of the sugar is lost, and 10% of the kiwis cannot be used.
Instructions
Compute the standard cost of the ingredients for one gallon of the nutrition drink.

Accepted Answer

The answer of Pane Corp. manufactures and sells a nutrition...

Question 14

Clark Company manufactures a product with a standard direct labor cost of two hours at $18.00 per hour. During July, 2,000 units were produced using 4,200 hours at $18.30 per hour. The labor quantity variance was

Accepted Answer

A)   $3,660 F.
B)   $3,600 U.
C)   $2,460 U.
D)   $3,660 U.

Question 15

Income statements prepared internally for management often show cost of goods sold at standard cost and variances are

Accepted Answer

A)   separately disclosed.
B)   deducted as other expenses and revenues.
C)   added to cost of goods sold.
D)   closed directly to retained earnings.

Question 16

If actual costs are greater than standard costs, there is a(n)

Accepted Answer

A)   normal variance.
B)   unfavorable variance.
C)   favorable variance.
D)   error in the accounting system.

Question 17

Use the following information for questions .
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct labor hours per unit is

Accepted Answer

A)   1 hour.
B)   1.1 hours.
C)   1.2 hours.
D)   1.3 hours.

Question 18

Use the following information for questions .
Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.
-The standard direct materials quantity per unit is

Accepted Answer

A)   2.6 pounds.
B)   2.7 pounds.
C)   2.9 pounds.
D)   3.0 pounds.

Question 19

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 20

An advantage of standard costs is that they simplify costing of inventories and reduce clerical costs.

Accepted Answer