Question 1

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The direct labor efficiency variance is

Accepted Answer

A)  $12,000 favorable 
B)  $12,000 unfavorable 
C)  $36,000 favorable 
D)  $36,000 unfavorable

Question 2

When computing the direct-material price variance, it is not important to distinguish between the quantity purchased and the quantity used.

Accepted Answer

A) True 
 B)False

Question 3

During March 20,000 direct labor hours were worked at a standard cost of $20per hour. The direct labor rate variance for March was $60,000 unfavorable. The actual cost for direct labor in March was:

Accepted Answer

A)  $45 
B)  $27 
C)  $25 
D)  $23

Question 4

An unfavorable labor rate variance might be caused by

Accepted Answer

A)  Using less skilled labor 
B)  Using higher quality materials 
C)  Using poorly maintained machinery 
D)  Using more highly skilled workers

Question 5

When computing the direct material quantity variance, it is important to use the quantity actually used, rather than the quantity purchased.

Accepted Answer

A) True 
 B)False

Question 6

Hirsch Co. uses three types of direct materials in producing one of its products. The overall material quantity variance is favorable. Which of the following combinations of mix and yield variance could not have occurred?

Accepted Answer

A)  Item A 
B)  Item B 
C)  Item C 
D)  Item D

Question 7

Use the following to answer questions:
Stanton Co. uses the following standards in the production of its only product:
Direct material 18 pounds at $25 per pound
Direct labor: 6 hours at $18 per hour.
During March company records showed the following:
 
-The material quantity variance is

Accepted Answer

A)  $36,000 unfavorable 
B)  $36,000 favorable 
C)  $15,000 unfavorable 
D)  $15,000 favorable

Question 8

Kaizen costing is the process of cost reduction during the manufacturing phase of a product.

Accepted Answer

A) True 
 B)False

Question 9

Perfection standards may encourage employees to sacrifice product quality to achieve lower costs.

Accepted Answer

A) True 
 B)False

Question 10

The following statements relate to standard costing systems:
I Traditional standard costing systems focus too much on the cost and efficiency of direct labor which is rapidly becoming a relatively unimportant factor of production
II Traditional standard cost variances are too aggregated in the sense that they are not tied to specific product lines, production batches, or flexible manufacturing systems
III Traditional standard costing systems tend to focus too much on cost minimization rather than increasing product quality or customer service
IV Traditional standard costing is not defined broadly enough to capture various important aspects of performance
Which of these statements relate to disadvantages of standard costing under modern cost management systems?

Accepted Answer

A)  I 
B)  I, II 
C)  I, II, III 
D)  I, II, III, IV

Question 11

How much direct material was purchased in March?
Duffy's records for March show the following information from its standard costing system:

Accepted Answer

A)  12,000 pounds 
B)  13,500 pounds 
C)  14,500 pounds 
D)  15,000 pounds

Question 12

Use the following to answer questions:
Cabot Inc. uses a standard costing system for its only product. The standards are as follows:
  
Actual data for September are:
 
-Which of the following is the journal entry that was made when the material was purchased?

Accepted Answer

A)  Item A 
B)  Item B 
C)  Item C 
D)  Item D

Question 13

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The material price variance is

Accepted Answer

A)  $87,500 favorable 
B)  $87,500 unfavorable 
C)  $90,000 favorable 
D)  $90,000 unfavorable

Question 14

Use the following to answer questions:
Stanton Co. uses the following standards in the production of its only product:
Direct material 18 pounds at $25 per pound
Direct labor: 6 hours at $18 per hour.
During March company records showed the following:
 
-The material purchase price variance is

Accepted Answer

A)  $36,000 unfavorable 
B)  $36,000 favorable 
C)  $15,000 unfavorable 
D)  $15,000 favorable

Question 15

The following actual production information was recorded in May:
  Lilac Company uses two different types of labor in the manufacture of its only product. The standards are as follows:
 
Required: Yield 8,000 units
(1) Calculate the labor efficiency, mix and yield variances.
(2) Based on the actual mix numbers and standard prices, above, what does it seem as if the company was trying to do and did it succeed?
Yield 63,000 units

Accepted Answer

The answer of The following actual production information was recorded...

Question 16

Employee behavior may be adversely affected when standard cost variances are used as part of the employee reward structure.

Accepted Answer

A) True 
 B)False

Question 17

When manufacturing firms adopt advanced manufacturing methods, they totally discontinue their use of standard costing.

Accepted Answer

A) True 
 B)False

Question 18

Manufacturing processes using multiple types of direct material conduct additional analyses of the quantity variance because of the assumption of some degree of substitutability among the materials in the production process.

Accepted Answer

A) True 
 B)False

Question 19

Use the following to answer questions:
The following standard cost information is available for Leah Co.'s only product: Direct material 9 feet at $5.00 per foot. Actual information for July: 2,000 units were produced; 20,000 feet of direct material were purchased at a cost of $92,000 and 19,000 feet of material were used.
-What is the material quantity variance for July?

Accepted Answer

A)  $ 4,500 favorable 
B)  $ 4,500 unfavorable 
C)  $ 5,000 favorable 
D)  $ 5,000 unfavorable

Question 20

Use the following to answer questions:
Stanton Co. uses the following standards in the production of its only product:
Direct material 18 pounds at $25 per pound
Direct labor: 6 hours at $18 per hour.
During March company records showed the following:
 
-The direct labor efficiency variance is

Accepted Answer

A)  $1,800 unfavorable 
B)  $1,800 favorable 
C)  $14,100 unfavorable 
D)  $14,100 favorable

Exam 16: Standard Costing, Variance Analysis, and Kaizen Costing

When computing the direct-material price variance, it is not important to distinguish between the quantity purchased and the quantity used.

During March 20,000 direct labor hours were worked at a standard cost of $20per hour. The direct labor rate variance for March was $60,000 unfavorable. The actual cost for direct labor in March was:

An unfavorable labor rate variance might be caused by

When computing the direct material quantity variance, it is important to use the quantity actually used, rather than the quantity purchased.

Hirsch Co. uses three types of direct materials in producing one of its products. The overall material quantity variance is favorable. Which of the following combinations of mix and yield variance could not have occurred?

Use the following to answer questions: Stanton Co. uses the following standards in the production of its only product: Direct material 18 pounds at $25 per pound Direct labor: 6 hours at $18 per hour. During March company records showed the following: -The material quantity variance is

Kaizen costing is the process of cost reduction during the manufacturing phase of a product.

Perfection standards may encourage employees to sacrifice product quality to achieve lower costs.

How much direct material was purchased in March? Duffy's records for March show the following information from its standard costing system:

Use the following to answer questions: Cabot Inc. uses a standard costing system for its only product. The standards are as follows: Actual data for September are: -Which of the following is the journal entry that was made when the material was purchased?

Use the following to answer questions: Stanton Co. uses the following standards in the production of its only product: Direct material 18 pounds at $25 per pound Direct labor: 6 hours at $18 per hour. During March company records showed the following: -The material purchase price variance is

Employee behavior may be adversely affected when standard cost variances are used as part of the employee reward structure.

When manufacturing firms adopt advanced manufacturing methods, they totally discontinue their use of standard costing.

Manufacturing processes using multiple types of direct material conduct additional analyses of the quantity variance because of the assumption of some degree of substitutability among the materials in the production process.

Use the following to answer questions: Stanton Co. uses the following standards in the production of its only product: Direct material 18 pounds at $25 per pound Direct labor: 6 hours at $18 per hour. During March company records showed the following: -The direct labor efficiency variance is