Deck 11: Standard Costs and Variances

Question 1

As managers use less and different types of direct materials,which of the following standards do managers focus on to enhance sustainability in the workplace?

A)Quantity/Efficiency standard
B)Price standard
C)Flexible standard
D)Both A and B

Answer 1

D

Question 2

Theresa Corporation,which manufactures baskets,is developing direct labor standards.The basic direct labor rate is $23.00 per hour.Payroll taxes are 10% of the basic direct labor rate,while fringe benefits such as vacation and health care insurance,are $8.00 per hour.What is the standard rate per direct labor hour?

A)$33.30
B)$23.00
C)$25.30
D)$31.00

Answer 2

A
Explanation:A)
$23.00 × 110 % = $25.30
Fringe benefits 8.00
Total $33.30

Question 3

The direct materials price variance tells managers how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

Answer 3

True

Question 4

Sandy's Sauces,which produces stir-fry sauces,is developing direct material standards.Each bottle of sauce requires 0.70 kilograms of base.The allowance for waste is 0.05 kilograms per bottle,while the allowance for rejects is 0.09 kilograms per bottle.What is the standard quantity of base per bottle?

A)0.70 kilograms
B)0.79 kilograms
C)0.75 kilograms
D)0.84 kilograms

Question 5

If a company produces many different products,it will develop a standard cost for each type of product.

Question 6

A price variance for direct materials measures how well a company keeps unit prices of material within standards.

Question 7

The standard for the direct labor rate per hour does not include fringe benefits such as health care insurance and vacations.

Question 8

DOT Safety Systems manufactures motorcycle helmets.What is the standard quantity of material used to manufacture each helmet if the material required is 1.2 pounds,and DOT allows for .25 pounds of waste and .35 pounds of rejected material?

A)1.80 pounds
B)1.45 pounds
C)1.55 pounds
D)1.20 pounds

Question 9

A(n)________ is a carefully predetermined cost that is usually expressed on a per unit basis.

A)allocated cost
B)applied cost
C)standard cost
D)flexible cost

Question 10

Circumstances can occur that result in favorable direct materials price variances and unfavorable direct materials quantity variances.

Question 11

The type of standard that provides allowances for normal amounts of waste and inefficiency in the production process is referred to as a(n)

A)ideal standard.
B)perfection standard.
C)realistic standard.
D)practical standard.

Question 12

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Question 13

A sales volume variance will occur when the number of units actually sold differs from the volume originally planned for in the master budget.

Question 14

Standard costs for production inputs are used to develop flexible budgets.

Question 15

Ideal standards allow for a normal amount of waste and inefficiency.

Question 16

Perfection standards do not allow for poor-quality raw materials,waste in the production process,machine-breakdown,or other inefficiencies.

Question 17

Happy Helpers Maid Service is calculating its standard direct labor rate.The direct labor rate is $12 per hour.Happy Helpers incurs payroll tax expense of 15% of the direct labor rate and incurs costs for sick-days and vacation days of $3 per hour.What is the standard rate per direct labor hour?

A)$15.00
B)$16.80
C)$12.00
D)$13.80

Question 18

Kalanja Designs,which produces earrings,is developing direct material standards.Each earring requires 0.52 kilograms of a special metal.The allowance for waste is 0.03 kilograms per earring,while the allowance for rejects is 0.02 kilograms per earring.What is the standard quantity of metal per earring?

A)0.52 kilograms
B)0.55 kilograms
C)0.57 kilograms
D)0.54 kilograms

Question 19

Piper Corporation,which manufactures dog toys,is developing direct labor standards.The basic direct labor rate is $12.00 per hour.Payroll taxes are 13% of the basic direct labor rate,while fringe benefits such as vacation and health care insurance,are $6.00 per hour.What is the standard rate per direct labor hour?

A)$19.56
B)$18.00
C)$12.00
D)$13.56

Question 20

A price variance for production inputs is the difference between the actual unit price of an input and the standard unit price of the input,multiplied by the actual input quantity.

Question 21

The Standard Quantity (SQ)of direct materials is calculated as

A)the budgeted quantity of units less the Standard Quantity (SQ)of units.
B)the Standard Quantity (SQ)of input per unit times the number of units budgeted.
C)the number of units actually made times the direct materials price standard.
D)the Standard Quantity (SQ)of input per unit times the number of units actually made.

Question 22

The direct materials flexible budget variance can be divided into which of the following two variances?

A)Price variance and the rate variance
B)Price variance and the standard variance
C)Price variance and the quantity variance
D)Quantity variance and the efficiency variance

Question 23

The ________ "tells managers how much of the total direct materials variance is due to using more or less materials than anticipated the by standards."

A)production volume variance
B)overhead flexible budget variance
C)price variance
D)quantity variance

Question 24

The ________ "shows how well management has controlled overhead costs."

A)overhead flexible budget variance
B)production volume variance
C)quantity variance
D)price variance

Question 25

Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 26

The ________ tells managers how much of the overall variance id due to paying a higher or lower price than expected for the quantity of materials it purchased.

A)production volume variance
B)overhead flexible budget variance
C)price variance
D)quantity variance

Question 27

A favorable direct materials quantity variance indicates which of the following?

A)The actual cost of direct materials was less than the standard cost of direct materials.
B)The Standard Quantity (SQ)of direct materials for actual output was less than the Actual Quantity (AQ)of direct materials used.
C)The Actual Quantity (AQ)of direct materials used was less than the standard quantity for actual output.
D)The Actual Quantity (AQ)of direct materials used was greater than the standard quantity for budgeted output.

Question 28

A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?

A)Less expensive,inferior materials requiring less than the standard amount were used in production.
B)Less expensive,inferior materials requiring more than the standard amount were used in production.
C)More expensive,superior materials requiring more than the standard amount were used in production.
D)More expensive,superior materials requiring less than the standard amount were used in production.

Question 29

The direct materials price variance is the difference between the Actual Price (AP)and the Standard Price (SP),multiplied by the Actual Quantity Purchased (AQP).

Question 30

A company uses sugar in producing its product.If the price of sugar doubles,which variance is directly impacted?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 31

A direct materials flexible budget variance can be broken down into a price variance and a quantity variance.

Question 32

Raw material,ruined through mistakes during production,results in a materials quantity variance.

Question 33

A favorable direct materials price variance indicates which of the following?

A)The actual cost of materials purchased was greater than the standard cost of materials purchased.
B)The standard cost of materials purchased was less than the actual cost of materials purchased.
C)The Actual Quantity (AQ)of materials used was less than the standard quantity of materials used for actual production.
D)The standard cost of materials purchased was greater than the actual cost of materials purchased.

Question 34

A quantity (efficiency)variance for production inputs (materials and labor)is the difference between the Actual Quantity (AQ)of input used and the standard quantity of input,multiplied by the standard price per unit of input.

Question 35

Which of the following situations may lead to a favorable direct materials price variance?

A)The purchasing manager was able to negotiate a lower purchase price for raw materials.
B)A vendor shipped a greater quantity of raw materials than ordered.
C)The purchasing manager paid a premium price for a higher quality of raw materials.
D)Raw materials waste was substantially reduced in the factory.

Question 36

If the purchasing manager purchased a greater quantity of raw materials than budgeted,but paid the Standard Price (SP),which variance may be affected?

A)Materials price variance
B)Materials quantity variance
C)Both of the variances may be affected
D)Neither of the variances may be affected

Question 37

The direct materials price variance is calculated as

A)the difference in Actual Quantities (AQ)multiplied by the Actual Price (AP)of the input.
B)the Actual Quantity (AQP)of direct materials divided by the Actual Quantity (AQ).
C)the difference in prices of the Actual Quantity Purchased (AQP)and the Actual Price (AP)multiplied by the Actual Quantity Purchased (AQP)and the Standard Price (SP)of the input purchased.
D)the direct materials Actual Quantity Purchased (AQ)divided by the per unit price.

Question 38

Jackson Industries has collected the following data for one of its products:

What is the total actual cost of the direct materials used?

A)$19,250
B)$73,800
C)$97,800
D)$85,800

Question 39

If the Standard Quantity Allowed (SQA)for direct materials is greater than the Actual Quantity (AQ)used,the quantity variance is unfavorable.

Question 40

A company's purchasing department negotiates all of the purchasing contracts for raw materials.Which variance is most useful in assessing the performance of the purchasing department?

A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance

Question 41

Razzle Baking Company gathered the following actual results for the current month:

Budgeted production and standard costs were:

What is the direct materials price variance?

A)$2,500 unfavorable
B)$2,500 favorable
C)$2,750 favorable
D)$2,750 unfavorable

Question 42

The Southside Corporation budgeted 4,400 pounds of direct materials to make 2,600 units of product.The company actually used 4,800 pounds of direct materials to make the 2,600 units.The direct materials quantity variance is $1,500 unfavorable.What is the Standard Price (SP)per pound of direct materials?

A)$0.59
B)$2.22
C)$6.35
D)$3.75

Question 43

The Armstrong Corporation developed a flexible budget for its production process.Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $18 per pound to produce 12,000 units of finished product.Armstrong actually purchased 18,000 pounds and used 17,000 pounds of direct material with a cost of $21 per pound to produce 12,000 units of finished product.
Given these results,what is Armstrong's direct material price variance?

A)$48,000 favorable
B)$48,000 unfavorable
C)$54,000 unfavorable
D)$54,000 favorable

Question 44

Jackson Industries has collected the following data for one of its products:

How much is the direct materials price variance?

A)$1,750 favorable
B)$1,750 unfavorable
C)$1,900 favorable
D)$1,900 unfavorable

Question 45

Hushovd Iron Works has collected the following data for its Thunderbolt line of products:

What is the direct materials quantity variance?

A)$3,750 unfavorable
B)$3,750 favorable
C)$6,750 unfavorable
D)$6,750 favorable

Question 46

Dozen Bakery makes cupcakes and cookies.Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):

What is the direct materials flexible budget variance for the flour in cupcakes?

A)$200 favorable
B)$800 unfavorable
C)$800 favorable
D)$200 unfavorable

Question 47

Hushovd Iron Works has collected the following data for its Thunderbolt line of products:

What is the direct material price variance?

A)$4,000 favorable
B)$4,000 unfavorable
C)$3,500 favorable
D)$3,500 unfavorable

Question 48

Myles Company budgeted 10,500 pounds of direct materials costing $23.50 per pound to make 5,300 units of product.The company actually purchased 11,000 pounds of direct materials costing $25.00 per pound to make the 5,300 units.What is the direct materials quantity variance?

A)$12,500 favorable
B)$11,750 favorable
C)$11,750 unfavorable
D)$12,500 unfavorable

Question 49

The actual cost of direct materials is $50.25 per pound.The standard cost per pound is $56.00.During the current period,6,800 pounds were used in production.The standard quantity for actual units produced is 6.500 pounds.How much is the direct materials price variance?

A)$37,375 favorable
B)$37,375 unfavorable
C)$39,100 favorable
D)$39,100 unfavorable

Question 50

Myles Company budgeted 10,500 pounds of direct materials costing $23.50 per pound to make 5,300 units of product.The company actually purchased 11,000 pounds of direct materials costing $25.00 per pound to make the 5,300 units.What is the direct materials price variance?

A)$16,500 favorable
B)$16,500 unfavorable
C)$15,750 unfavorable
D)$15,750 favorable

Question 51

Active Lifestyle Beverages gathered the following information for Job #928:

What is the direct materials price variance?

A)$612.50 favorable
B)$612.50 unfavorable
C)$550.00 favorable
D)$550.00 unfavorable

Question 52

Razzle Baking Company gathered the following actual results for the current month:

Budgeted production and standard costs were:

What is the direct materials quantity variance?

A)$2,500 unfavorable
B)$2,250 unfavorable
C)$2,500 favorable
D)$2,250 favorable

Question 53

The Armstrong Corporation developed a flexible budget for its production process.Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $18 per pound to produce 12,000 units of finished product.Armstrong actually purchased 18,000 pounds and used 17,000 pounds of direct material with a cost of $21 per pound to produce 12,000 units of finished product.
Given these results,what is Armstrong's direct material quantity variance?

A)$36,000 favorable
B)$18,000 favorable
C)$36,000 unfavorable
D)$18,000 unfavorable

Question 54

Farrar Industries reported the following results from its most recent quarter:

What is Farrar's direct material quantity variance?

A)$2,750 favorable
B)$2,750 unfavorable
C)$2,875 unfavorable
D)$2,875 favorable

Question 55

Jackson Industries has collected the following data for one of its products:

What is the actual cost of the Direct Materials Used (AQU)per pound?

A)$2.79
B)$2.45
C)$2.11
D)$0.55

Question 56

Dorsey Corporation Company budgeted 600 pounds of direct materials costing $28.00 per pound to make 7,000 units of product.The company actually used 630 pounds of direct materials costing $30.00 per pound to make the 7,000 units.What is the direct materials quantity variance?

A)$900 favorable
B)$840 favorable
C)$900 unfavorable
D)$840 unfavorable

Question 57

Dozen Bakery makes cupcakes and cookies.Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):

The actual direct material quantity used per batch for Cupcakes may be closest to

A)2.9 lb.
B)1.7 lbs.
C)2.0 lbs.
D)0.4 lbs.

Question 58

The actual cost of direct materials is $10.50 per pound.The standard cost per pound is $10.25.During the current period,9,100 pounds of direct materials were used in production and 17,500 pounds were purchased.The standard quantity of direct materials for actual units produced is 17,300 pounds.How much is the direct materials quantity variance?

A)$84,050 favorable
B)$84,050 unfavorable
C)$86,100 unfavorable
D)$86,100 favorable

Question 59

Active Lifestyle Beverages gathered the following information for Job #928:

What is the direct materials quantity variance?

A)$1,250.00 favorable
B)$1,250.00 unfavorable
C)$1,187.50 unfavorable
D)$1,187.50 favorable

Question 60

Jackson Industries has collected the following data for one of its products:

How much is the direct materials quantity variance?

A)$78,550 favorable
B)$27,940 unfavorable
C)$66,550 favorable
D)$78,550 unfavorable

Question 61

Rzepka Corporation manufactures jeweled cell phone cases.The following materials standards have been established for the jewels used to decorate the cell phone cases.

The following data relates to the production of the cell phone cases during June:

What is the materials price variance for jewels in June?

A)$100 favorable
B)$100 unfavorable
C)$4,200 favorable
D)$4,200 unfavorable

Question 62

An LCD screen is purchased to be used in the manufacturing of a digital watch.The Standard Price (SP)for the LCD screen used is $40.00.During the month of February,3,400 screens were purchased and used.The materials price variance was $6,000 unfavorable.The standard number of screens allowed for the actual number of watches manufactured during the period was 25,000 screens.The actual purchase price of each LCD screen may be closest to

A)$39.76 per LCD screen.
B)$40.24 per LCD screen.
C)$38.24 per LCD screen.
D)$41.76 per LCD screen.

Question 63

Tommy's Toys produces two types of toys: trains and dolls.Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls.Information regarding the usage of steel and plastic for the past year follows:

What is the standard direct material price per pound for the plastic in the dolls?

A)$2.75/lb.
B)$4.18/lb.
C)$5.27/lb.
D)$2.44/lb.

Question 64

Dozen Bakery makes cupcakes and cookies.Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):

What is the standard direct material price per pound for the butter in the cookies?

A)$7.25/lb.
B)$6.00/lb.
C)$5.50/lb.
D)$4.75/lb.

Question 65

Michael Corporation manufactures railroad cars,which is its only product.The standards for the railroad cars are as follows:

During the month of March,the company produced 1,650 cars.Related production data for the month follows:

What is the direct materials price variance for the month?

A)$850 favorable
B)$850 unfavorable
C)$1,950 favorable
D)$1,950 unfavorable

Question 66

Tommy's Toys produces two types of toys: trains and dolls.Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls.Information regarding the usage of steel and plastic for the past year follows:

What is the direct material quantity variance for plastic in the dolls?

A)$378 favorable
B)$1,422 favorable
C)$378 unfavorable
D)$1,422 unfavorable

Question 67

Sole Purpose manufactures beach shoes that use a canvas as the main raw material.Data related to the shoes for June follows:

What is the materials quantity variance for canvas for June?

A)$1,645 favorable
B)$2,100 favorable
C)$1,645 unfavorable
D)$2,100 unfavorable

Question 68

Culinary Kitchen Supply produces bamboo cutting boards.The standard material cost for the bamboo used in each lamp is $18 per square foot.Each board requires 3 square feet of bamboo.In August,the company produced 1,200 cutting boards.There were 3,400 square feet of bamboo used during the month.The bamboo used had an actual cost $20 per square foot.What was the materials quantity variance in August for bamboo?

A)$3,600 favorable
B)$3,600 unfavorable
C)$4,000 favorable
D)$4,000 unfavorable

Question 69

Puget Company has gathered the following information about its purchase and use of raw materials for December:

Puget Company uses a standard cost system.What is the materials price variance?

A)$575 favorable
B)$575 unfavorable
C)$500 favorable
D)$500 unfavorable

Question 70

Dozen Bakery makes cupcakes and cookies.Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):

What is the direct material quantity variance for butter in the cookies?

A)$2,900 favorable
B)$1,900 favorable
C)$2,900 unfavorable
D)$1,900 unfavorable

Question 71

Madden Corporation manufactures t-shirts,which is its only product.The standards for t-shirts are as follows:

During the month of May,the company produced 1,250 t-shirts.Related production data for the month follows:

What is the direct materials price variance for the month?

A)$4,300 unfavorable
B)$4,300 favorable
C)$3,800 favorable
D)$3,800 unfavorable

Question 72

Sherwin Chemicals produces commercial strength cleansing supplies.Two of its main products are window cleanser that uses ammonia,and floor cleanser that uses bleach.Information for the most recent period follows:

What is the direct materials price variance for ammonia?

A)$2,500 favorable
B)$2,500 unfavorable
C)$375 favorable
D)$375 unfavorable

Question 73

Tommy's Toys produces two types of toys: trains and dolls.Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls.Information regarding the usage of steel and plastic for the past year follows:

What is the price variance for steel used to manufacture the trains?

A)$625 favorable
B)$103 favorable
C)$625 unfavorable
D)$103 unfavorable

Question 74

Sherwin Chemicals produces commercial strength cleansing supplies.Two of its main products are window cleanser that uses ammonia,and floor cleanser that uses bleach.Information for the most recent period follows:

What is the direct materials flexible budget variance for ammonia?

A)$1,125 unfavorable
B)$1,875 unfavorable
C)$1,125 favorable
D)$1,875 favorable

Question 75

Tommy's Toys produces two types of toys: trains and dolls.Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls.Information regarding the usage of steel and plastic for the past year follows:

What is the direct materials flexible budget variance for steel used to manufacture the trains?

A)$419 unfavorable
B)$419 favorable
C)$831 unfavorable
D)$831 favorable

Question 76

Sherwin Chemicals produces commercial strength cleansing supplies.Two of its main products are window cleanser that uses ammonia,and floor cleanser that uses bleach.Information for the most recent period follows:

What is the Standard Price (SP)for bleach?

A)$0.79/oz.
B)$0.88/oz.
C)$0.92/oz.
D)$1.14/oz.

Question 77

Michael Corporation manufactures railroad cars,which is its only product.The standards for the railroad cars are as follows:

During the month of March,the company produced 1,650 cars.Related production data for the month follows:

What is the direct materials quantity variance for the month?

A)$850 favorable
B)$850 unfavorable
C)$1,950 favorable
D)$1,950 unfavorable

Question 78

Sherwin Chemicals produces commercial strength cleansing supplies.Two of its main products are window cleanser that uses ammonia,and floor cleanser that uses bleach.Information for the most recent period follows:

What is the direct material quantity variance for the bleach?

A)$378 favorable
B)$378 unfavorable
C)$978 favorable
D)$978 unfavorable

Question 79

Kahn Performance Nutrition produces a protein shake which contains whey protein as one of its ingredients.The whey protein (materials)standards for each batch of protein shake produced are 12 pounds of whey protein at a standard cost of $3.00 per pound.During July,Kahn Performance Nutrition purchased and used 54,000 pounds of whey protein at a total of $170,000 to make a total of 4,300 batches of protein shake.What is the materials quantity variance for whey protein in July?

A)$7,200 unfavorable
B)$7,200 favorable
C)$141,900 favorable
D)$141,900 unfavorable

Question 80

Madden Corporation manufactures t-shirts,which is its only product.The standards for t-shirts are as follows:

During the month of May,the company produced 1,250 t-shirts.Related production data for the month follows:

What is the direct materials quantity variance for the month?

A)$4,300 favorable
B)$4,300 unfavorable
C)$3,800 favorable
D)$3,800 unfavorable