Ch.11 Tietz Standard Costs And Variances Verified Test Bank

Managerial Accounting, 6e (Braun et al.)

Chapter 11 Standard Costs and Variances

11.1 Explain how and why standard costs are developed

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) 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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) 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.

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) The type of standard that expects no waste and no inefficiencies in the production process is referred to as a(n)

A) ideal standard.

B) efficiency standard.

C) realistic standard.

D) practical standard.

Diff: 1

LO: 11-1

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) The standard cost of direct materials per unit is calculated by

A) multiplying the standard quantity of direct materials by the standard price of direct materials.

B) dividing the standard quantity of direct materials by the standard price of direct materials.

C) adding the standard quantity of direct materials to the standard price of direct materials.

D) multiplying the actual quantity of direct materials by the standard price of direct materials.

Diff: 1

LO: 11-1

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) The standard cost of direct labor per unit is calculated by

A) multiplying the standard quantity of direct labor by the standard price of direct labor.

B) dividing the standard quantity of direct labor by the standard price of direct labor.

C) adding the standard quantity of direct labor to the standard price of direct labor.

D) multiplying the actual quantity of direct labor by the standard price of direct labor.

Diff: 1

LO: 11-1

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) 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

Diff: 1

LO: 11-1

EOC: S11-15

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) Jenny Designs, which produces earrings, is developing direct material standards. Each earring requires 0.35 kilograms of a special metal. The allowance for waste is 0.50 kilograms per earring, while the allowance for rejects is 0.70 kilograms per earring. What is the standard quantity of metal per earring?

A) 0.35 kilograms

B) 0.85 kilograms

C) 1.55 kilograms

D) 1.05 kilograms

Diff: 2

LO: 11-1

EOC: S11-1

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) Tees Corporation, which manufactures dog toys, is developing direct labor standards. The basic direct labor rate is $11.48 per hour. Payroll taxes are 12% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $2.55 per hour. What is the standard rate per direct labor hour?

A) $15.41

B) $14.03

C) $11.48

D) $12.86

Diff: 2

LO: 11-1

EOC: S11-2

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

15) Sauces by Sam, 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 0.50 kilograms per bottle, while the allowance for rejects is 0.40 kilograms per bottle. What is the standard quantity of base per bottle?

A) 0.70 kilograms

B) 1.10 kilograms

C) 1.20 kilograms

D) 1.60 kilograms

Diff: 2

LO: 11-1

EOC: S11-1

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) Woven Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $23.00 per hour. Payroll taxes are 15% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $5.00 per hour. What is the standard rate per direct labor hour?

A) $31.45

B) $23.00

C) $26.45

D) $28.00

Diff: 2

LO: 11-1

EOC: S11-2

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) Cranium Corporation manufactures motorcycle helmets. What is the standard quantity of material used to manufacture each helmet if the material required is 1.50 pounds, and the company allows for 0.25 pounds of waste and 0.37 pounds of rejected material?

A) 2.12 pounds

B) 1.75 pounds

C) 1.87 pounds

D) 1.50 pounds

Diff: 2

LO: 11-1

EOC: S11-1

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) K-9 Fluff and Puff, a dog grooming service, is calculating its standard direct labor rate. The direct labor rate is $15 per hour. The company incurs payroll tax expense of 15% of the direct labor rate and incurs costs for sick-days and vacation days of $4 per hour. What is the standard rate per direct labor hour?

A) $19.00

B) $21.25

C) $15.00

D) $17.25

Diff: 2

LO: 11-1

EOC: S11-2

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) Standards should be reviewed and adjusted at least

A) yearly.

B) monthly.

C) weekly.

D) daily.

Diff: 1

LO: 11-1

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.2 Compute and evaluate direct material variances

1) 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.

Diff: 1

LO: 11-2

EOC: QC11-2

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-2

EOC: S11-2

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) 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.

Diff: 1

LO: 11-2

EOC: E11-22A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-2

EOC: S11-4

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-2

EOC: S11-4

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) 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.

Diff: 1

LO: 11-2

EOC: E11-22A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) 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).

Diff: 1

LO: 11-2

EOC: E11-18A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-2

EOC: E11-18A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

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

Diff: 1

LO: 11-2

EOC: E11-18A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) 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

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) 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

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) 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

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) 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

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) 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.

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

15) 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.

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) 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.

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) 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.

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) 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.

Diff: 2

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) 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

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

20) 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.

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

21) 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

Diff: 1

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

22) 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

Diff: 1

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

23) Sunny Corporation has collected the following data for one of its products:

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

A) $48,960

B) $22,680

C) $40,680

D) $31,680

Diff: 3

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

24) Sunny Corporation has collected the following data for one of its products:

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

A) $0.96

B) $0.61

C) $1.67

D) $0.53

Diff: 3

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

25) Sunny Corporation has collected the following data for one of its products:

How much is the direct materials quantity variance?

A) $35,250 favorable

B) $17,390 unfavorable

C) $17,860 favorable

D) $35,250 unfavorable

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

26) Sunny Corporation has collected the following data for one of its products:

How much is the direct materials price variance?

A) $3,900 favorable

B) $3,900 unfavorable

C) $5,070 favorable

D) $5,070 unfavorable

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

27) Larry's Woodworks has collected the following data for its cutting board line of products:

What is the direct materials quantity variance?

A) $10,880 unfavorable

B) $10,880 favorable

C) $5,120 unfavorable

D) $5,120 favorable

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

28) Larry's Woodworks has collected the following data for its cutting board line of products:

What is the direct material price variance?

A) $13,800 favorable

B) $13,800 unfavorable

C) $1,150 favorable

D) $1,150 unfavorable

Diff: 2

LO: 11-2

EOC: E11-18A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

29) The actual cost of direct materials is $45.50 per pound. The standard cost per pound is $50.25. During the current period, 6,600 pounds were used in production. The standard quantity for actual units produced is 5,800 pounds. How much is the direct materials price variance?

A) $27,550 favorable

B) $27,550 unfavorable

C) $31,350 favorable

D) $31,350 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

30) The actual cost of direct materials is $13.00 per pound. The standard cost per pound is $8.25. During the current period, 12,400 pounds of direct materials were used in production and 18,200 pounds were purchased. The standard quantity of direct materials for actual units produced is 16,000 pounds. How much is the direct materials quantity variance?

A) $29,700 favorable

B) $29,700 unfavorable

C) $46,800 unfavorable

D) $46,800 favorable

Diff: 2

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

31) Feline Industries reported the following results from its most recent quarter:

What is the company's direct material quantity variance?

A) $650 favorable

B) $650 unfavorable

C) $750 unfavorable

D) $750 favorable

Diff: 2

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

32) Techno Company budgeted 620 pounds of direct materials costing $15.00 per pound to make 6,000 units of product. The company actually used 650 pounds of direct materials costing $30.00 per pound to make the 6,000 units. What is the direct materials quantity variance?

A) $900 favorable

B) $450 favorable

C) $900 unfavorable

D) $450 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

33) Riverbirch Corporation budgeted 3,900 pounds of direct materials to make 2,300 units of product. The company actually used 5,100 pounds of direct materials to make the 2,300 units. The direct materials quantity variance is $1,800 unfavorable. What is the Standard Price (SP) per pound of direct materials?

A) $0.78

B) $1.28

C) $2.83

D) $1.50

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

34) Tugwell Inc. budgeted 10,900 pounds of direct materials costing $19.50 per pound to make 4,700 units of product. The company actually purchased 11,200 pounds of direct materials costing $27.50 per pound to make the 4,700 units. What is the direct materials price variance?

A) $89,600 favorable

B) $89,600 unfavorable

C) $87,200 unfavorable

D) $87,200 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

35) Tugwell Inc. budgeted 10,700 pounds of direct materials costing $23.50 per pound to make 5,100 units of product. The company actually purchased 11,000 pounds of direct materials costing $26.00 per pound to make the 5,100 units. What is the direct materials quantity variance?

A) $7,800 favorable

B) $7,050 favorable

C) $7,050 unfavorable

D) $7,800 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

36) Sleepwell Corporation developed a flexible budget for its production process. Sleepwell budgeted to use 19,000 pounds of direct material with a standard cost of $16 per pound to produce 20,000 units of finished product. The company actually purchased 25,000 pounds and used 22,000 pounds of direct material with a cost of $30 per pound to produce 20,000 units of finished product.

Given these results, what is Sleepwell's direct material price variance?

A) $266,000 favorable

B) $266,000 unfavorable

C) $350,000 unfavorable

D) $350,000 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

37) Sleepwell Corporation developed a flexible budget for its production process. Sleepwell budgeted to use 10,000 pounds of direct material with a standard cost of $14 per pound to produce 11,000 units of finished product. The company actually purchased 24,000 pounds and used 15,000 pounds of direct material with a cost of $25 per pound to produce 11,000 units of finished product.

Given these results, what is Sleepwell's direct material quantity variance?

A) $196,000 favorable

B) $70,000 favorable

C) $196,000 unfavorable

D) $70,000 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

38) Amazing Corporation gathered the following information for Job #928:

What is the direct materials price variance?

A) $8,750.00 favorable

B) $8,750.00 unfavorable

C) $8,050.00 favorable

D) $8,050.00 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

39) Amazing Corporation gathered the following information for Job #928:

What is the direct materials quantity variance?

A) $3,000.00 favorable

B) $3,000.00 unfavorable

C) $2,500.00 unfavorable

D) $2,500.00 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

40) Poles Inc. gathered the following actual results for the current month:

Budgeted production and standard costs were:

What is the direct materials price variance?

A) $28,400 unfavorable

B) $28,400 favorable

C) $22,400 favorable

D) $22,400 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

41) Poles Inc. gathered the following actual results for the current month:

Budgeted production and standard costs were:

What is the direct materials quantity variance?

A) $22,800 unfavorable

B) $76,650 unfavorable

C) $22,800 favorable

D) $76,650 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

42) Delicious Desserts makes cupcakes and cookies. The company 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) 0.4 lb.

B) 1.8 lbs.

C) 0.3 lbs.

D) 0.5 lbs.

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

43) Delicious Desserts makes cupcakes and cookies. The company 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) $260 favorable

B) $740 unfavorable

C) $740 favorable

D) $260 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

44) Delicious Desserts makes cupcakes and cookies. The company 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) $13.20/lb.

B) $2.80/lb.

C) $5.76/lb.

D) $5.20/lb.

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

45) Delicious Desserts makes cupcakes and cookies. The company 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) $4,500 favorable

B) $2,300 favorable

C) $4,500 unfavorable

D) $2,300 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

46) Timeless Treasures produces two types of toys: trains and dolls. The company 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) $500 favorable

B) $125 favorable

C) $500 unfavorable

D) $125 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

47) Timeless Treasures produces two types of toys: trains and dolls. The company 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) $437 unfavorable

B) $437 favorable

C) $963 unfavorable

D) $963 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

48) Timeless Treasures produces two types of toys: trains and dolls. The company 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) $4.50/lb.

B) $5.73/lb.

C) $2.69/lb.

D) $0.44/lb.

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

49) Timeless Treasures produces two types of toys: trains and dolls. The company 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) $150 favorable

B) $3,600 favorable

C) $150 unfavorable

D) $3,600 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

50) Reflections Corporation produces commercial strength cleaning supplies. Two of its main products are window cleaner that uses ammonia, and floor cleaner that uses bleach. Information for the most recent period follows:

What is the direct materials price variance for ammonia?

A) $9,450 favorable

B) $9,450 unfavorable

C) $2,275 favorable

D) $2,275 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

51) Reflections Corporation produces commercial strength cleaning supplies. Two of its main products are window cleaner that uses ammonia, and floor cleaner that uses bleach. Information for the most recent period follows:

What is the direct materials flexible budget variance for ammonia?

A) $1,875 unfavorable

B) $4,125 unfavorable

C) $1,875 favorable

D) $4,125 favorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

52) Reflections Corporation produces commercial strength cleaning supplies. Two of its main products are window cleaner that uses ammonia, and floor cleaner that uses bleach. Information for the most recent period follows:

What is the Standard Price (SP) for bleach?

A) $0.68/oz.

B) $0.31/oz.

C) $20.73/oz.

D) $20.00/oz.

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

53) Reflections Corporation produces commercial strength cleaning supplies. Two of its main products are window cleaner that uses ammonia, and floor cleaner that uses bleach. Information for the most recent period follows:

What is the direct material quantity variance for the bleach?

A) $2,250 favorable

B) $2,250 unfavorable

C) $3,150 favorable

D) $3,150 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

54) Arbor Inc. has gathered the following information about its purchase and use of raw materials for December:

Arbor Inc. uses a standard cost system. What is the materials price variance?

A) $14,000.00 favorable

B) $14,000.00 unfavorable

C) $12,000.00 favorable

D) $12,000.00 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

55) Bamboo Supply produces bamboo cutting boards. The standard material cost for the bamboo used in each lamp is $22 per square foot. Each board requires 5 square feet of bamboo. In August, the company produced 1,400 cutting boards. There were 4,400 square feet of bamboo used during the month. The bamboo used had an actual cost $25 per square foot. What was the materials quantity variance in August for bamboo?

A) $57,200 favorable

B) $57,200 unfavorable

C) $65,000 favorable

D) $65,000 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

56) Protein Punch Smoothies 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 11 pounds of whey protein at a standard cost of $3.00 per pound. During July, the company purchased and used 58,000 pounds of whey protein at a total of $139,000 to make a total of 4,600 batches of protein shake. What is the materials quantity variance for whey protein in July?

A) $22,200 unfavorable

B) $22,200 favorable

C) $108,600 favorable

D) $108,600 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

57) Barly Foot Company 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) $155,000 favorable

B) $50,375 favorable

C) $155,000 unfavorable

D) $50,375 unfavorable

Diff: 2

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

58) Ring 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) $5,700 favorable

B) $5,700 unfavorable

C) $9,500 favorable

D) $9,500 unfavorable

Diff: 2

LO: 11-2

EOC: E11-30A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

59) 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 $60.00. During the month of February, 3,700 screens were purchased and used. The materials price variance was $7,400 unfavorable. The standard number of screens allowed for the actual number of watches manufactured during the period was 5,200 screens. The actual purchase price of each LCD screen may be closest to

A) $61.42 per LCD screen.

B) $60.50 per LCD screen.

C) $58.00 per LCD screen.

D) $62.00 per LCD screen.

Diff: 3

LO: 11-2

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

60) Vintage Corporation manufactures vintage t-shirts, which is its only product. The standards for t-shirts are as follows:

During the month of May, the company produced 1,850 t-shirts. Related production data for the month follows:

What is the direct materials price variance for the month?

A) $9,100 unfavorable

B) $9,100 favorable

C) $7,350 favorable

D) $7,350 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

61) Vintage Corporation manufactures vintage t-shirts, which is its only product. The standards for t-shirts are as follows:

During the month of May, the company produced 1,500 t-shirts. Related production data for the month follows:

What is the direct materials quantity variance for the month?

A) $2,200 favorable

B) $2,200 unfavorable

C) $2,000 favorable

D) $2,000 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

62) Steely 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 1,400 cars. Related production data for the month follows:

What is the direct materials price variance for the month?

A) $37,500 favorable

B) $37,500 unfavorable

C) $21,500 favorable

D) $21,500 unfavorable

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

63) Steely 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 1,400 cars. Related production data for the month follows:

What is the direct materials quantity variance for the month?

A) $48,100 favorable

B) $48,100 unfavorable

C) $21,500 favorable

D) $21,500 unfavorable

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

64) On the line in front of each variance, enter the letters of the items needed to compute that variance. You will enter more than one item on each line.

A. Actual Price (AP)

B. Actual Quantity (AQ)

C. Standard Price (SP)

D. Standard quantity

________ Direct materials price variance

________ Direct materials quantity variance

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

65) Naco Corporation makes shoe polish. The standard direct materials quantity is .5 pounds per container at a cost of $2.25 per pound. The actual usage for the production of 33,000 containers was .55 pounds per cushion at an actual cost of $2.20 per pound. Calculate the direct materials price variance and the direct materials quantity variance.

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

66) Bliss Company reports the following standards for direct materials for the year:

Standard cost per pound $4.75

Standard amount per finished good 8.5 pounds

During the year, 460,000 finished goods were produced. The direct materials price variance was $14,200 unfavorable. The direct materials flexible budget variance was $980 favorable.

Calculate the following items regarding direct materials for Bliss Company for the year:

a. Direct materials quantity variance

b. Standard quantity of direct materials for actual production

c. Actual pounds of Actual Quantity Direct Materials Used (AQU) for actual production

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

67) Happy Manufacturing has the following information regarding direct materials:

Actual pounds of direct materials

purchased and used 47,000

Standard quantity of direct materials 2.5 pounds per finished good

Actual production 20,000 finished goods

Direct materials quantity variance $11,500 F

Direct materials price variance $9,400 U

Compute the company's Standard Price (SP) per pound and Actual Price (AP) per pound of direct materials.

Diff: 2

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

68) The following direct materials variance computations are incomplete. Fill in the missing values and identify the direct materials flexible budget variance as favorable or unfavorable.

Direct materials price variance = ($? - $12.50) × 7,000 pounds = $3,500 U

Direct materials quantity variance = (? - 6,700 pounds) × $12.50 = ? U

Direct materials flexible budget variance = $?

Diff: 3

LO: 11-2

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.3 Compute and evaluate direct labor variances

1) The direct labor efficiency variance tells managers how much of the total labor variance is due to using a greater or lesser amount of time than anticipated.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

2) The total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) The direct labor rate variance describes differences in the anticipated (standard) labor rate and the actual labor rate paid.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

4) The direct labor rate variance is calculated by multiplying the standard hours that should have been worked for the actual output by the difference between the standard labor rate and the actual labor rate.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

5) It is possible to encounter a situation where the direct labor rate variance is favorable and the direct labor efficiency variance is unfavorable.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) A rate variance for direct labor measures how well a company keeps unit prices of labor inputs within standards.

Diff: 1

LO: 11-3

EOC: E11-25

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) If the Standard Quantity Allowed (SQA) for direct labor is less than the Actual Quantity (AQ) used, the efficiency variance is favorable.

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) Which variance is directly impacted if the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired?

A) Direct materials price variance

B) Direct materials quantity variance

C) Direct labor efficiency variance

D) Direct labor rate variance

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) How is the direct labor rate variance calculated?

A) The difference between the standard labor rate and the actual labor rate multiplied by the actual labor hours used

B) The difference between the standard labor rate and the actual labor rate multiplied by the standard allowable hours

C) The difference between the standard labor hours and the allowable labor hours

D) The difference between the standard labor rate and the actual labor rate

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) How is the direct labor efficiency variance calculated?

A) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate

B) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate

C) The difference between the standard labor hours and the actual labor hours used

D) The difference between the standard labor rate and the actual labor rate

Diff: 1

LO: 11-3

EOC: S11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) The direct labor variance can be divided into two variances,

A) rate variance and price variance.

B) price variance and usage variance.

C) rate variance and efficiency variance.

D) price variance and efficiency variance.

Diff: 2

LO: 11-3

EOC: S11-5

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) A favorable direct labor efficiency variance might indicate that

A) higher skilled workers were used that performed the task slower than expected.

B) higher skilled workers were used that performed the task faster than expected.

C) lower skilled workers were paid a higher wage than expected.

D) lower skilled workers were paid a lower wage than expected.

Diff: 2

LO: 11-3

EOC: S11-5

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which of the following variances may be directly impacted?

A) Direct materials price variance

B) Direct materials quantity variance

C) Direct labor efficiency variance

D) Direct labor rate variance

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) A company receives an unusually high number of orders in a month. To produce all of the orders within the scheduled dates of delivery, the company pays employees an extra $8 per hour for every hour of overtime the employees work. Which of the following variances may be directly impacted?

A) Direct materials price variance

B) Direct materials quantity variance

C) Direct labor efficiency variance

D) Direct labor rate variance

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

15) An unfavorable direct labor rate variance indicates which of the following?

A) Both Actual Quantity (AQ) and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output.

B) The Actual Quantity (AQ) of direct labor hours worked exceeded the standard quantity of hours for actual output.

C) The actual direct labor cost per hour exceeded the standard direct labor cost per hour for Actual Quantity (AQ) of direct labor hours.

D) The actual cost of direct labor per hour was less than the standard cost of direct labor per hour.

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) A favorable direct labor efficiency variance and an unfavorable direct labor rate variance might indicate which of the following?

A) Unskilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate

B) Unskilled workers using less actual hours than standard, paid a lesser rate per hour than the standard rate

C) Skilled workers using less actual hours than standard, paid at a higher rate per hour than the standard rate

D) Skilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) The ________ variance "measures how well the business keeps prices of direct labor inputs within standards."

A) direct labor production volume

B) direct labor overhead flexible budget

C) direct labor rate

D) direct labor efficiency

Diff: 1

LO: 11-3

EOC: E11-22A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) The ________ variance "measures whether the quantity of direct labor used to make the actual number of outputs is within the standard allowed for that number of outputs."

A) direct labor production volume

B) direct labor overhead flexible budget

C) direct labor rate

D) direct labor efficiency

Diff: 1

LO: 11-3

EOC: E11-21A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) Roster Corporation produces clocks. According to company standards, it should take 2 hours of direct labor to produce a clock. The company's standard labor cost is $14 per hour. During June, the company produced 6,200 stopwatches and used 13,100 hours of direct labor at a total cost of $262,000. What is Roster's direct labor rate variance for June?

A) $700 favorable

B) $700 unfavorable

C) $78,600 favorable

D) $78,600 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

20) The following information describes a company's usage of direct labor in a recent period:

How much is the direct labor efficiency variance?

A) $100,000 favorable

B) $100,000 unfavorable

C) $210,000 unfavorable

D) $210,000 favorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

21) The following information describes a company's usage of direct labor in a recent period:

How much is the direct labor rate variance?

A) $291,500 favorable

B) $440,000 favorable

C) $291,500 unfavorable

D) $440,000 unfavorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

22) The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $12.00. The direct labor hours allowed per finished unit is 0.50 hour. During the current period, 6,000 units of finished goods were produced using 3,400 direct labor hours. How much is the direct labor rate variance?

A) $13,600 favorable

B) $24,000 favorable

C) $13,600 unfavorable

D) $24,000 unfavorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

23) The actual cost of direct labor per hour is $18.00 and the standard cost of direct labor per hour is $16.00. The direct labor hours allowed per finished unit is 0.25 hour. During the current period, 4,900 units of finished goods were produced using 3,500 direct labor hours. How much is the direct labor efficiency variance?

A) $36,400.00 unfavorable

B) $36,400.00 favorable

C) $40,950.00 favorable

D) $40,950.00 unfavorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

24) When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $20 per hour, worked a total of 8,200 hours, and produced 2,200 cars. BMW budgeted for a standard labor rate of $26 per hour and 2.75 direct labor hours per car. What is the direct labor rate variance for the Rolls-Royce division?

A) $13,200 favorable

B) $49,200 favorable

C) $13,200 unfavorable

D) $49,200 unfavorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

25) When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $21 per hour, worked a total of 8,100 hours, and produced 2,500 cars. BMW budgeted for a standard labor rate of $29 per hour and 3.00 direct labor hours per car. What is the direct labor efficiency variance for the Rolls-Royce division?

A) $12,600 unfavorable

B) $12,600 favorable

C) $17,400 favorable

D) $17,400 unfavorable

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

26) The actual cost of direct labor per hour is $12.75. One and one half standard direct labor hours are allowed per unit of finished goods. During the current period, 2,100 units were produced using 2,800 direct labor hours. The direct labor efficiency variance is $2,700 favorable. Calculate the standard direct labor rate per hour.

A) $12.75

B) $7.71

C) $1.29

D) $1.17

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

27) The standard cost of direct labor per hour is $15.75. Two standard direct labor hours are allowed per unit of finished goods. During the current period, 70 units were produced using 1,300 direct labor hours. The direct labor rate variance is $1,600 unfavorable. Calculate the actual cost of direct labor per hour.

A) $15.75

B) $18.57

C) $16.98

D) $1.23

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

28) Turn of the Century Company budgeted 19.0 hours of direct labor per unit at $14.75 per hour to produce 700 replica doorknobs. The 700 knobs were completed using 500 hours of direct labor at $14.00 per hour. What is the direct labor rate variance?

A) $375 favorable

B) $9,975 favorable

C) $375 unfavorable

D) $9,975 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

29) Banister Company budgeted two hours of direct labor per unit at $12.50 per hour to produce 650 units of product. The 650 units were completed using 1,900 hours of direct labor at $13.00 per hour. What is the direct labor efficiency variance?

A) $7,500 unfavorable

B) $7,500 favorable

C) $7,800 unfavorable

D) $7,800 favorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

30) Banister Company budgeted two and one half hours of direct labor per unit at $10.25 per hour to produce 550 units of product. The 550 units were completed using 1,850 hours of direct labor at $11.75 per hour. What is the direct labor rate variance?

A) $825 favorable

B) $2,775 favorable

C) $825 unfavorable

D) $2,775 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

31) Amazing Corporation gathered the following information for Job #928:

What is the direct labor rate variance?

A) $150 favorable

B) $150 unfavorable

C) $175 favorable

D) $175 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

32) Amazing Corporation gathered the following information for Job #928:

What is the direct labor efficiency variance?

A) $3,325 favorable

B) $3,325 unfavorable

C) $4,550 favorable

D) $4,550 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

33) Natural Remedy Company gathered the following actual results for the current month:

Actual amounts:

Budgeted production and standard costs were:

What is the direct labor rate variance?

A) $56,000 unfavorable

B) $56,000 favorable

C) $65,000 unfavorable

D) $65,000 favorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

34) Natural Remedy Company gathered the following actual results for the current month:

Actual amounts:

Budgeted production and standard costs were:

What is the direct labor efficiency variance?

A) $94,000 favorable

B) $47,000 favorable

C) $94,000 unfavorable

D) $47,000 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

35) Pharrell's Auto Detailing reported the following results for the past week:

What is the company's direct labor rate variance? (Round intermediary calculations to two decimal places.)

A) $935 favorable

B) $49,751 favorable

C) $935 unfavorable

D) $49,751 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

36) Pharrell's Auto Detailing reported the following results for the past week:

What is the company's direct labor efficiency variance?

A) $2,579 favorable

B) $2,579 unfavorable

C) $3,251 favorable

D) $3,251 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

37) Hang Tight Curtain Company budgeted to manufacture 1,000 curtains in February. Actual output for March was with total direct materials cost of $3,700 and total direct labor cost of $5,800. The direct labor standard is 20 minutes per curtain at a direct labor rate of $15.50 per hour. The direct material standard is 0.75 yards of direct materials per curtain at a cost of $14 per pound. Actual direct labor hours were 225. A variance analysis for February may show a direct labor rate variance of (Round any intermediary calculations and your final answer to the nearest cent.)

A) $15,934.00 favorable.

B) $15,934.00 unfavorable.

C) $2,313.00 favorable.

D) $2,313.00 unfavorable.

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

38) Buster Corporation's direct labor costs and related information for the month of June were as follows:

What is Buster Corporation's direct labor efficiency variance? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

A) $14,850 favorable

B) $14,850 unfavorable

C) $7,508 unfavorable

D) $7,508 favorable

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

39) Shoreside Cakes and Pies bakes fresh pies that are very popular with the local residents. For July, the bakery budgeted 600 direct labor hours to produce 300 pies. In July, the bakery actually produced 620 pies and actually used 800 direct labor hours. The standard hours allowed during July may have been closest to

A) 1,653.

B) 600.

C) 1,240.

D) 290.

Diff: 2

LO: 11-3

EOC: E11-21A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

40) Vertical Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $19 per direct labor hour. During the month of May, Vertical Company used 2,000 direct labor hours to produce 2,100 pairs of boots. Total direct labor cost for May was $28,000. What is the labor rate variance for May?

A) $10,000 favorable

B) $10,000 unfavorable

C) $10,500 favorable

D) $10,500 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

41) Stylish Cuts provides men's haircuts. Labor standards for each cut are as follows:

The following data relates to the haircuts during the month of October:

What is the labor efficiency variance for the month of October?

A) $1,200 favorable

B) $1,200 unfavorable

C) $1,035 favorable

D) $1,035 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

42) University Auto performs oil changes for cars. Each oil change has a standard time of 0.7 direct labor hours. The standard direct labor hour rate is $15.00 per hour. Data relating to oil changes for the month of September follow:

What is the labor rate variance for September?

A) $11,200 favorable

B) $3,500 favorable

C) $11,200 unfavorable

D) $3,500 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

43) Flowering Sensation manufactures flowerpots. The following data relate to the standards for direct labor:

The company had the following actual results for April:

What is the direct labor efficiency variance for April?

A) $40,000 favorable

B) $40,000 unfavorable

C) $30,000 favorable

D) $30,000 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

44) Safe Toys is a regional manufacturer of baby toys produced from plastic derived from organic and non-toxic sources. Management budgeted one-half hour of direct labor per toy at a standard rate of $17.50 per hour. The most current production run produced 1,600 toys and used 1,900 labor hours at a total cost of $39,900. What is the direct labor rate variance for this production run?

A) $6,650 favorable

B) $6,650 unfavorable

C) $11,900 favorable

D) $11,900 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

45) University Auto performs routine vehicle maintenance. One such service is tire rotations. The company reports the following budgeted and actual amounts for tire rotations for the month of August.

What is the labor efficiency variance for the month of August?

A) $6,738 favorable

B) $6,738 unfavorable

C) $6,525 favorable

D) $6,525 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

46) Sweet Notes manufactures musical instrument for sale to students and professionals. The information for one of the company's most popular products, professional saxophones, follows:

What is the labor rate variance for saxophones?

A) $2,750 favorable

B) $3,190 favorable

C) $2,750 unfavorable

D) $3,190 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

47) Miles Corporation manufactures automobile tires. Miles Corporation reported the following budgeted (standard) and actual information last quarter data:

What is the direct labor efficiency variance for last quarter?

A) $15,000 favorable

B) $2,500 favorable

C) $15,000 unfavorable

D) $2,500 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

48) Rocking Times manufactures electric guitars. The following data relate to the standards for direct labor:

The company had the following actual results for March:

What is the direct labor efficiency variance for March?

A) $29,150 favorable

B) $29,150 unfavorable

C) $218 favorable

D) $218 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

49) Vintage T's Corporation manufactures vintage t-shirts, which is its only product. The standards for t-shirts are as follows:

During the month of January, the company produced 1,150 t-shirts. Related production data for the month follows:

What is the direct labor rate variance for the month?

A) $2,280 favorable

B) $2,280 unfavorable

C) $1,980 favorable

D) $1,980 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

50) Vintage T's Corporation manufactures vintage t-shirts, which is its only product. The standards for t-shirts are as follows:

During the month of January, the company produced 1,300 t-shirts. Related production data for the month follows:

What is the direct labor efficiency variance for the month?

A) $2,360 favorable

B) $2,360 unfavorable

C) $1,330 favorable

D) $1,330 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

51) Steely Corporation manufactures railroad cars, which is its only product. The standards for railroad cars are as follows:

During the month of March, the company produced 1,250 railroad cars. Related production data for the month follows:

What is the direct labor rate variance for the month?

A) $24,000 favorable

B) $24,000 unfavorable

C) $412,500 favorable

D) $412,500 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

52) Steely Corporation manufactures railroad cars, which is its only product. The standards for railroad cars are as follows:

During the month of March, the company produced 1,550 railroad cars. Related production data for the month follows:

What is the direct labor efficiency variance for the month?

A) $390,000 favorable

B) $390,000 unfavorable

C) $324,000 favorable

D) $324,000 unfavorable

Diff: 2

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

53) On the line in front of each variance, enter the letters of the items needed to compute that variance. You will enter more than one item on each line.

A. Actual labor rate

B. Actual labor hours

C. Standard labor rate

D. Standard labor hours

________ Direct labor rate variance

________ Direct labor efficiency variance

Diff: 1

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

54) Heron Corporation reports the following standards for direct labor for the year:

Standard cost per hour $17.75

Standard quantity per finished good 2.0 hours

During the year, 35,000 finished goods were produced. The direct labor efficiency variance was $2,650 favorable. The direct labor flexible budget variance was $550 favorable.

Calculate the following items regarding direct labor for Heron Corporation for the year:

A. Direct labor rate variance

B. Standard hours of direct labor for actual production

C. Actual hours of direct labor incurred for actual production

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

55) Luce Corporation's actual output for a period was assigned the standard labor cost of $32,500. If the company had an unfavorable direct labor rate variance of $1,750 and a favorable direct labor efficiency variance of $975, what was the total actual cost of direct labor incurred during the period?

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

56) Gallup Industries' actual direct labor cost was $67,000 during the current period. The company reported an unfavorable direct labor rate variance of $1,800 and a favorable direct labor efficiency variance of $2,900. What was the standard direct labor cost for actual output during the period?

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

57) Piesafe Inc. bakes pies in large batches. One batch of pies has the following standard costs and amounts:

The company baked 425 batches of pies in the most recent month. Actual costs and usage levels were as follows:

Required:

a. Calculate the material price variance.

b. Calculate the material quantity variance.

c. Calculate the labor rate variance.

d. Calculate the labor efficiency variance.

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

58) Wake Corporation manufactures a single product. The direct materials standard calls for 5 pounds of direct material per unit. The standard for direct material cost per pound is $10. A computer error has wiped out the records for the direct labor standards but the following information is found for the month of October:

Required:

a. Calculate the number of pounds of direct materials purchased and used during October.

b. Calculate the materials quantity variance.

c. Calculate the standard direct labor rate per hour.

d. Calculate the standard direct labor hours allowed for October's production.

Diff: 3

LO: 11-3

EOC: E11-22A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.4 Explain the advantages and disadvantages of using standard costs and variances

1) All variances discovered by management must be investigated.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

2) Up-to-date standard costs provide a benchmark by which to evaluate actual costs and operations.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) Managers will want to use management by exception to determine which variances are significant enough to warrant investigation.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

4) Price and quantity variances are a way to motivate employees.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

5) Direct labor standards are becoming less relevant to many companies due to the shift towards automated production processes.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) Standards are often used as the basis for many components in the master budget.

Diff: 1

LO: 11-4

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) Management should investigate all variances whether large or small.

Diff: 1

LO: 11-4

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) All of the following are advantages of using standard costs and variances except

A) standard costs establish benchmarks managers use to judge actual costs.

B) standard costs and benchmarks are useful tools that managers use as a basis for creating the master budget.

C) the timeliness that occurs when variances are computed once each month.

D) standard costing systems simplify the bookkeeping process.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) Which of the following is an advantage of using standard costs and variances?

A) Standard costs are benchmarks that managers use to judge actual costs.

B) Maintaining updated standards is inexpensive.

C) The timeliness that occurs when computing standards monthly.

D) Price and efficiency variances motivate front-line employees more than operational performance measures.

Diff: 1

LO: 11-4

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) Disadvantages of using standard costs and variances include all of the following except

A) the excessive cost to keep standards up to date.

B) companies that pay employees a salary because direct labor is a fixed cost rather than a variable cost.

C) those manufacturing costs that enter Work in Process Inventory are recorded at standard cost, rather than actual cost.

D) traditional standards can promote unfavorable employee behavior.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) A cost benchmark is valid only if the standards are

A) based on historical costs.

B) kept up to date.

C) reviewed by salaried assembly-line workers.

D) approved by management.

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) At lean companies, employees tend to be multi-skilled and cross-trained to perform a number of duties. These workers are held in high esteem by management and are considered to be part of a team effort, rather than a labor force to be controlled. Consequently, this

A) increases the importance of direct labor standards.

B) decreases the importance of direct labor standards.

C) Both of the above

D) None of the above

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) When deciding whether or not to adopt standard costs and perform variance analysis, management should do which of the following?

A) Examine the costs and benefits of a standard costing system

B) Update inaccurate standard costs

C) Adopt lean thinking

D) Increase automation of assembly lines

Diff: 1

LO: 11-4

EOC: S11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) Identify four advantages of standard costs and variances.

Diff: 2

LO: 11-4

EOC: QC11-6; E11-25A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.5 Compute and evaluate variable overhead variances

1) The variable manufacturing overhead (MOH) rate variance is calculated as Actual Hours × (Actual Rate - Standard Rate).

Diff: 1

LO: 11-5

EOC: QC11-7

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

2) The variable manufacturing overhead (MOH) efficiency variance is calculated as Actual Hours × (Actual Rate - Standard Rate).

Diff: 1

LO: 11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) The variable manufacturing overhead (MOH) efficiency variance is calculated as Standard Rate × (Actual Hours - Standard Hours Allowed).

Diff: 1

LO: 11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

4) The variable manufacturing overhead (MOH) rate variance is calculated as Standard Rate × (Actual Hours - Standard Hours Allowed).

Diff: 1

LO: 11-5

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

5) The variable overhead rate variance may be affected by both indirect labor and indirect materials.

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) The variable overhead efficiency variance tells management how efficiently manufacturing overhead was used during the period.

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) The variable overhead efficiency variance is also called the variable overhead spending variance.

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) The variable overhead rate variance tells managers whether more or less was spent on variable overhead than they expected for the hours worked.

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) The total variable manufacturing overhead variance is composed of the rate variance and the efficiency variance.

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) How is the variable manufacturing overhead efficiency variance calculated?

A) The difference between the actual overhead rate and the standard overhead rate multiplied by the standard overhead rate

B) The difference between the standard hours allowed and the actual hours used multiplied by the standard overhead rate

C) The difference between the standard hours allowed and the actual hours used

D) The difference between the standard hours allowed and the actual hours used multiplied by the actual overhead rate

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) How is the variable overhead rate variance calculated?

A) The difference between the actual overhead rate and the standard overhead rate multiplied by the actual hours

B) The difference between the actual overhead rate and the standard overhead rate multiplied by the standard hours allowed

C) The difference between the standard hours allowed and the actual hours used multiplied by the standard overhead rate

D) The difference between the standard hours allowed and the actual hours used multiplied by the actual overhead rate

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) How is the variable overhead efficiency variance calculated?

A) The difference between the actual overhead rate and the standard overhead rate multiplied by the actual hours

B) The difference between the actual overhead rate and the standard overhead rate multiplied by the standard hours allowed

C) The difference between the standard hours allowed and the actual hours used multiplied by the standard overhead rate

D) The difference between the standard hours allowed and the actual hours used multiplied by the actual overhead rate

Diff: 1

LO: 11-5

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) The variable overhead rate variance is also known as which of the following?

A) Variable overhead efficiency variance

B) Variable overhead usage variance

C) Variable overhead spending variance

D) Variable overhead price variance

Diff: 1

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) The variable overhead rate variance may be caused by variances in the following production inputs except

A) indirect materials.

B) indirect labor.

C) fixed manufacturing overhead.

D) None of the above impacts the variable overhead rate variance.

Diff: 2

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

15) The ________ is the difference between the actual machine hours run and the standard machine hours allowed for the actual production volume.

A) production volume variance

B) overhead flexible budget variance

C) variable overhead efficiency variance

D) both A and C

Diff: 2

LO: 11-5

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) How would you describe the Standard Hours Allowed?

A) Standard Hours Allowed is the number of hours it should have taken given the standard hours and the actual number of units produced.

B) Standard Hours Allowed is the predicted number of hours worked in the planning budget.

C) Standard Hours Allowed is the difference between the actual number of hours worked and the hours planned for in the static budget.

D) Standard Hours Allowed is the actual number of hours worked given the actual number of units produced.

Diff: 1

LO: 11-5

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) The Black Mountain Corporation manufactures Product X that consumes a large amount of overhead. For the month of October, the company produced 16,000 units of Product X and incurred actual overhead costs of $193,000. The standard costs developed for Product X by Black Mountain Corporation follow:

What was the total variable overhead variance for Product X in October?

A) $325,400 favorable

B) $325,400 unfavorable

C) $106,600 favorable

D) $106,600 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) Kenneth Frequency Inc. designs and manufactures high-end home theater speakers. Kenneth Frequency Inc. uses a standard overhead rate of 2.5 hours per unit at a cost of $6.50 per hour. Data for the month of June shows that the company produced 800 units and recorded actual overhead costs of $43,500. What is the total variable overhead variance for the month of June?

A) $30,500 favorable

B) $38,300 unfavorable

C) $38,300 favorable

D) $30,500 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) OMD Manufacturing reported the following budgeted and actual figures for one of its products:

Given this data, what is the total variable overhead variance for this product?

A) $1,900 favorable

B) $1,900 unfavorable

C) $1,200 favorable

D) $1,200 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

20) Smith Manufacturing designs and manufactures bathtubs for home and commercial applications. The company recorded the following data for its commercial bathtub production line during the month of March:

What is the variable manufacturing overhead rate variance in March?

A) $3,600 unfavorable

B) $10,500 unfavorable

C) $3,600 favorable

D) $10,500 favorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

21) Smith Manufacturing designs and manufactures bathtubs for home and commercial applications. The company recorded the following data for its commercial bathtub production line during the month of March:

What is the variable manufacturing overhead efficiency variance in March?

A) $9,800 unfavorable

B) $15,400 unfavorable

C) $9,800 favorable

D) $15,400 favorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

22) The Lewis Corporation specializes in manufacturing one type of desk lamp. The company allocates variable manufacturing overhead costs on the basis of machine hours. Lewis Corp. budgeted 0.3 machine hours per lamp and allocates overhead at a rate of $1.40 per machine hour. Last year it manufactured 18,000 lamps, used 72,000 machine hours and incurred actual overhead costs of $79,200.

What was Lewis Corp.'s variable manufacturing overhead rate variance last year?

A) $93,240 favorable

B) $93,240 unfavorable

C) $21,600 favorable

D) $21,600 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

23) The Lewis Corporation specializes in manufacturing one type of desk lamp. The company allocates variable manufacturing overhead costs on the basis of machine hours. Lewis Corp budgeted 0.7 machine hours per lamp and allocates overhead at a rate of $1.80 per machine hour. Last year Chilton manufactured 17,000 lamps, used 13,600 machine hours and incurred actual overhead costs of $16,320.

What was Lewis Corp's variable manufacturing overhead efficiency variance last year?

A) $3,060 favorable

B) $3,060 unfavorable

C) $8,160 favorable

D) $8,160 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

24) Harris Enterprises machines heavy-duty brake rotors that are used on commercial airliners. The company's management developed the following standard costs:

Actual activity for October:

What is the total variable manufacturing overhead variance in October?

A) $59,160 unfavorable

B) $120,900 unfavorable

C) $59,160 favorable

D) $120,900 favorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

25) Harris Enterprises machines heavy-duty brake rotors that are used on commercial airliners. The company's management developed the following standard costs:

Actual activity for October:

What is the variable manufacturing overhead rate variance in October?

A) $40,303 unfavorable

B) $37,700 unfavorable

C) $40,303 favorable

D) $37,700 favorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

26) Harris Enterprises machines heavy-duty brake rotors that are used on commercial airliners. The company's management developed the following standard costs:

Actual activity for October:

What is the variable manufacturing overhead efficiency variance in October?

A) $71,500 unfavorable

B) $14,375 unfavorable

C) $71,500 favorable

D) $14,375 favorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

27) Prime Factory uses the following standard costs for a single unit of product:

Actual data for the month showed overhead costs of $455,000 for 22,100 units produced. What is the difference between actual overhead costs and standard overhead costs allocated to products?

A) $377,650 favorable

B) $377,650 unfavorable

C) $86,450 favorable

D) $86,450 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

28) Devo Company uses the following overhead standard costs for a single unit of product: 5.5 hours at $16.00 per hour. Actual data for the month showed overhead costs of $112,000 for 2,300 units produced. What is the difference between actual overhead costs and standard overhead costs allocated to products?

A) $75,200 favorable

B) $75,200 unfavorable

C) $90,400 favorable

D) $90,400 unfavorable

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

29) Costello Corporation has the following information about its standards and production activity for November:

Actual manufacturing overhead cost incurred, $85,000

Standard manufacturing overhead:

Variable manufacturing overhead cost @ $4.75 per unit produced

Fixed manufacturing overhead cost @ $6.90 per unit produced

($48,300/7,000 budgeted units)

Actual units produced, 12,000

Assume the allocation base for fixed overhead costs is the number of units to be produced.

How much are the standard overhead costs allocated to actual production?

A) $139,800

B) $81,550

C) $85,000

D) $33,250

Diff: 3

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

30) Expo Industries has the following information about its standards and production activity for December:

Actual manufacturing overhead cost incurred, $89,000

Variable manufacturing overhead cost @ $3.00 per unit produced

Fixed manufacturing overhead cost @ $3.50 per unit produced

($70,000/20,000 budgeted units)

Actual units produced, 6,000

Assume the allocation base for fixed overhead costs is the number of units to be produced.

How much are the standard overhead costs allocated to actual production?

A) $60,000

B) $89,000

C) $130,000

D) $39,000

Diff: 3

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

31) Rogers Manufacturing gathered the following flexible budget information:

How much is the total budgeted overhead cost at 90% of normal capacity?

A) $138,000

B) $90,000

C) $133,200

D) $124,200

Diff: 3

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

32) Marshall Industries gathered the following information for the month ended June 31:

The static budget volume is 5,000 units:

Overhead flexible budget:

Actual production was 14,000 units. Actual overhead costs were $20,000 for variable costs and $30,000 for fixed costs. Actual machine hours worked were 20,000 hours.

What is the standard variable overhead rate per machine hour?

A) $1.68

B) $3.30

C) $1.79

D) $3.00

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

33) On the line in front of each variance, put the letter of the department that is most likely responsible for that variance. A letter may be used more than once or not at all.

A. Production department

B. Marketing department

C. Purchasing department

D. Personnel department

________ Direct labor rate variance

________ Direct material price variance

________ Sales volume variance

________ Direct labor efficiency variance

________ Direct material quantity variance

Diff: 2

LO: 11-5

EOC: E11-25

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

34) Enter the letters of the items needed to compute that variance on the line in front of each variance. You can enter more than one item on each line as applicable.

A. Standard overhead allocated to production

B. Flexible budget overhead for actual number of outputs

C. Actual variable overhead cost

D. Fixed overhead costs

________ Manufacturing overhead (MOH) flexible budget variance

________ Production volume variance

Diff: 2

LO: 11-5

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

35) The managerial accountant at Joy Company prepared a report in the previous quarter and reported 4,200 actual machine hours were used. The actual rate per machine hour was $32.75 while the standard rate was $28.50. The standard hours allowed was calculated at 4,000. Compute the variable manufacturing overhead (MOH) rate variance to determine the accuracy of the forecasted MOH and, the variable MOH efficiency variance, to determine whether the volume of output was consistent with the number of machine hours used.

Diff: 2

LO: 11-5

EOC: S11-6

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.6 Compute and evaluate fixed overhead variances

1) If production remains within the relevant range for the period, fixed costs are expected to remain fixed.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

2) The fixed overhead budget variance measures the difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) The cause of a fixed overhead variance, such as an unanticipated increase or decrease in property taxes at the factory, is always under the control of management.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

4) If the actual number of units produced is less than the number of units budgeted to produced, then the fixed overhead volume variance will always be unfavorable.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

5) The fixed overhead budget variance is also known as the fixed overhead spending variance.

Diff: 1

LO: 11-6

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) Variances are never calculated for fixed overhead because fixed overhead never changes even between budgeted numbers and actual.

Diff: 1

LO: 11-6

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) The two fixed overhead variances are the

A) budget and volume variances.

B) rate and efficiency variances.

C) price and usage variances.

D) rate and volume variances.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) Which of the following statements may be true if actual units produced exceed the budgeted units to be produced?

A) Production volume variance is expected to be unfavorable.

B) Overhead flexible budget variance is expected to be favorable.

C) Fixed overhead volume variance is expected to be favorable.

D) Overhead flexible budget variance is expected to be unfavorable.

Diff: 1

LO: 11-6

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) What type of variance results when the actual fixed overhead costs incurred are greater than the budgeted fixed overhead costs?

A) Favorable fixed overhead budget variance

B) Unfavorable fixed overhead budget variance

C) Favorable fixed overhead volume variance

D) Unfavorable fixed overhead volume variance

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) How is the fixed overhead budget variance calculated?

A) The difference between the standard fixed overhead rate and the actual fixed overhead rate multiplied by the actual hours used

B) The difference between the standard fixed overhead costs allocated and the budgeted fixed overhead costs

C) The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs

D) The difference between the actual fixed overhead costs incurred and the standard fixed overhead costs allocated

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) How is the fixed overhead volume variance calculated?

A) The difference between the standard fixed overhead rate and the actual fixed overhead rate multiplied by the actual hours used

B) The difference between the standard fixed overhead costs allocated to production and the budgeted fixed overhead costs

C) The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs

D) The difference between the actual fixed overhead costs incurred and the standard fixed overhead costs allocated

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) Which of the following examples may lead directly to a favorable fixed overhead volume variance?

A) A decrease in county property taxes for the factory

B) Producing more units than anticipated

C) A decrease in wages paid to factory maintenance workers

D) Receiving a volume discount on indirect materials purchased

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) What may cause a sales volume variance for fixed expenses?

A) Insurance costs on the factory rise unexpectedly during the year due to a crisis in the insurance industry.

B) The union calls for a strike of factory workers and temporary workers are hired to fill in for the striking employees.

C) The lease on the manufacturing facility is renegotiated and the lease payments increase during the year.

D) The number of units actually sold falls within a different relevant range than the static budget sales volume.

Diff: 1

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) The fixed overhead volume variance is the difference between the budgeted fixed overhead and

A) the standard fixed overhead cost allocated to production.

B) the budgeted fixed overhead in the static budget.

C) the actual overhead.

D) the budgeted variable overhead.

Diff: 1

LO: 11-6

AACSB: Reflective thinking

15) Moon Manufacturing budgeted fixed overhead costs of $2.25 per unit at an anticipated production level of 1,350 units. In July the company incurred actual fixed overhead costs of $4,300 and actually produced 1,200 units.

What is Moon's fixed overhead budget variance for July?

A) $1,262.50 favorable

B) $1,262.50 unfavorable

C) $1,600.00 favorable

D) $1,600.00 unfavorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) Moon Manufacturing budgeted fixed overhead costs of $2.00 per unit at an anticipated production level of 1,400 units. In July the company incurred actual fixed overhead costs of $4,300 and actually produced 1,100 units.

What is Moon's fixed overhead volume variance in July?

A) $1,500.00 favorable

B) $1,500.00 unfavorable

C) $600.00 favorable

D) $600.00 unfavorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) The Imperrial Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products:

What is Imperrial's fixed manufacturing overhead budget variance?

A) $5,300.00 unfavorable

B) $1,300.00 unfavorable

C) $5,300.00 favorable

D) $1,300.00 favorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) The Imperrial Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products:

What is Imperrial's fixed manufacturing overhead volume variance?

A) $10,775.00 unfavorable

B) $3,825.00 unfavorable

C) $10,775.00 favorable

D) $3,825.00 favorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) Manson Manufacturing builds playground equipment that it sells to elementary schools and municipalities. The company's management has contracted you to perform a variance analysis on the fixed manufacturing overhead for its line of slides. Manson's cost accounting team informs you that it allocates fixed overhead based on machine hours. This period production was budgeted at 35 slides. Budgeted and actual production data follows:

What is the fixed manufacturing overhead budget variance in this period?

A) $20,450 unfavorable

B) $9,600 unfavorable

C) $20,450 favorable

D) $9,600 favorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

20) Manson Manufacturing builds playground equipment that it sells to elementary schools and municipalities. The company's management has contracted you to perform a variance analysis on the fixed manufacturing overhead for its line of slides. Manson's cost accounting team informs you that it allocates fixed overhead based on machine hours. This period production was budgeted at 45 slides. Budgeted and actual production data follows:

What is the fixed manufacturing overhead volume variance in this period?

A) $15,960 unfavorable

B) $44,240 unfavorable

C) $15,960 favorable

D) $44,240 favorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

21) Upscale Enterprises incurred actual fixed manufacturing overhead costs of $20,400 for the month of September. If the fixed manufacturing overhead budget variance was a favorable $5,900 what were the budgeted fixed overhead costs?

A) $5,900

B) $26,300

C) $14,500

D) $20,400

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

22) Refurb Enterprises manufactures reproduction antique furniture using historic manufacturing methods. The company often uses waterpower, which is not only historically accurate, but also saves energy costs. Although Refurb Enterprises uses old-fashioned manufacturing techniques it is still a modern company that performs modern business analysis. The company incurred actual fixed manufacturing overhead costs of $281,000. Using standard costing, it allocated $285,000 in fixed manufacturing overhead costs. If Refurb Enterprises observed a $3,000 unfavorable fixed manufacturing overhead volume variance, what amount had management budgeted for fixed manufacturing overhead?

A) $282,000

B) $284,000

C) $278,000

D) $288,000

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

23) Nova Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Nova anticipated producing 2,350 units with fixed manufacturing overhead costs allocated at $6.80 per direct labor hour with a standard of 1.5 direct labor hours per unit. In May, actual production was 3,100 units and actual fixed manufacturing overhead costs were $18,000.

What was Nova's fixed manufacturing overhead volume variance in May?

A) $5,970 favorable

B) $5,970 unfavorable

C) $7,650 favorable

D) $7,650 unfavorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

24) Nova Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Nova anticipated producing 2,450 units with fixed manufacturing overhead costs allocated at $6.8 per direct labor hour with a standard of 1.5 direct labor hours per unit. In May, actual production was 2,800 units and actual fixed manufacturing overhead costs were $24,000.

What was Nova's fixed manufacturing overhead budget variance in May?

A) $990 favorable

B) $990 unfavorable

C) $3,570 favorable

D) $3,570 unfavorable

Diff: 1

LO: 11-6

EOC: S11-9

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

25) The managerial accountant at Twisted Tree Inc assessed a fixed overhead budget variance of $3,700 U in the month of April. The standard hours in April were 2,000 hours and the standard rate was projected at $10 per machine-hour. There were unforeseen complications that involved raw materials and the standard rate projected per machine-hour was inaccurate. What was the standard rate per machine-hour if the standard fixed overhead cost of production is $44,300? What is the budgeted fixed overhead amount if the actual fixed overhead is $44,700?

A) $22.15/machine hour; $41,000

B) $20.50/machine hour; $48,000

C) $22.35/machine hour; $48,400

D) $11.97/machine hour; $42,700

Diff: 3

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

26) The managerial accountant at Radiohead Speakers & Sound calculates fixed overhead variances to complete the August report. The actual fixed overhead cost in the month of August was $42,000 and the budgeted fixed overhead cost was $43,800. The standard hours in August were 2,700 and the standard rate per machine-hour was $16. Calculate the standard fixed overhead cost allocated to production, the fixed overhead budget variance, and the fixed overhead volume variance.

A) $43,800; $2,400 F; $1,200 U

B) $42,000; $2,738 F; $1,800 U

C) $43,200; $1,800 F; $600 U

D) $39,300; $1,200 F; $1,800 U

Diff: 3

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

27) The Techwood Company managerial accountant computes the May total variance report. The budgeted fixed overhead was $46,880 and the standard fixed overhead cost allocated to production was $46,600. The actual fixed overhead totaled $46,230. Compute the fixed overhead budget variance and the fixed overhead volume variance.

A) $930 U; $370 F

B) $650 F; $280 U

C) $370 U; $930 F

D) $280 F; $650 U

Diff: 3

LO: 11-6

EOC: S11-7

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

28) The standard variable overhead cost rate for the Dennis Company is $12.50 per unit. Budgeted fixed overhead cost is $72,000. The company budgeted 9,000 units for the current period and actually produced 4,200 finished units. What is the fixed overhead volume variance?

Assume the allocation base for fixed overhead costs is the number of units expected to be produced.

A) $38,400 favorable

B) $19,500 unfavorable

C) $19,500 favorable

D) $38,400 unfavorable

Diff: 3

LO: 11-6

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

29) The standard variable overhead cost rate for Birch Manufacturing is $28.00 per unit. Budgeted fixed overhead cost is $55,800. Birch Manufacturing budgeted 3,600 units for the current period and actually produced 3,700 finished units. What is the fixed overhead volume variance?

Assume the allocation base for fixed overhead costs is the number of units expected to be produced.

A) $2,800 favorable

B) $1,550 favorable

C) $2,800 unfavorable

D) $1,550 unfavorable

Diff: 3

LO: 11-6

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

30) Loon Industries gathered the following information for the month ended June 30:

The static budget volume is 2,000 units.

Overhead flexible budget:

Actual production was 7,000 units. Actual overhead costs were $21,000 for variable costs and $32,000 for fixed costs. Actual machine hours worked were 20,000 hours.

What is the fixed overhead volume variance? (Assume the allocation base for fixed overhead costs is machine hours.)

A) $54,000 unfavorable

B) $54,000 favorable

C) $16,800 unfavorable

D) $16,800 favorable

Diff: 3

LO: 11-6

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

31) The managerial accountant at Tacklebox Company is compiling a fixed overhead volume variance report. According to the data, 4,200 standard hours were tallied at $8 per machine hour, the fixed overhead volume variance was calculated at $2,860 U. Compute the budgeted fixed overhead cost at $2,860 U and compare the budgeted fixed overhead cost if the fixed overhead volume variance was $2,860 F.

Diff: 3

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

32) The managerial accountant at Sweet Syrup Company compiles a monthly overhead variance report. The company produced 30,584 jars of syrup in the past month at 0.28 machine hours per unit. The budgeted fixed overhead cost was $95,000 whereas actual fixed overhead cost was $96,400. Calculate the standard fixed overhead cost allocated to production at $11 per machine-hour. Compute the fixed overhead volume variance and the fixed overhead budget variance.

Diff: 3

LO: 11-6

EOC: S11-8

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

33) Creekside Industries gathered the following information for the month of July:

Overhead flexible budget:

The company actually produced 14,000 units in 17,500 machine hours. Total actual overhead cost of $85,500 consisted of $35,000 variable costs and $50,500 fixed costs. The standard variable and fixed overhead rates are based on a master (static) budget of 15,000 units. Assume the allocation base for fixed overhead costs is the number of units.

A. Compute the total manufacturing overhead cost variance.

B. Compute the overhead flexible budget variance.

C. Compute the production volume variance.

Diff: 3

LO: 11-6

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

34) The Ludwink Company established a master budget volume of 35,000 units for April. Actual overhead costs incurred amounted to $98,500. Actual production for the month was 34,000 units. The standard variable overhead rate was $1.75 per direct labor hour. The standard fixed overhead rate was $1.50 per direct labor hour. One direct labor hour is the standard quantity per finished unit. Assume the allocation base for fixed overhead costs is the number of direct labor hours.

A. Compute the total manufacturing overhead cost variance.

B. Compute the overhead flexible budget variance.

C. Compute the production volume variance.

Diff: 3

LO: 11-6

EOC: E11-26A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

11.7 Analyze manufacturing variances using data analytics tools

1) The IFS function differs from the IF function by allowing only one true/false outcome.

Diff: 1

LO: 11-7

AACSB: Reflective thinking

2) The IFS function differs from the IF function by allowing more than one logic outcome.

Diff: 1

LO: 11-7

AACSB: Reflective thinking

3) The IFS function is found under the Data tab in Excel.

Diff: 1

LO: 11-7

AACSB: Reflective thinking

4) The IFS function is found under which tab in Excel?

A) Data

B) Insert

C) Review

D) Formulas

Diff: 1

LO: 11-7

AACSB: Reflective thinking

5) In Excel, under the Formulas tab, which drop down box will a user find the IFS function?

A) Financial

B) Logical

C) Lookup & Reference

D) Math & Trig

Diff: 1

LO: 11-7

AACSB: Reflective thinking

6) Conditional Formatting in Excel is found under what tab in Excel?

A) Home

B) Data

C) Formulas

D) Insert

Diff: 1

LO: 11-7

AACSB: Reflective thinking

7) Sort and Filter tool in Excel is found under what tab in Excel?

A) Home

B) Data

C) Formulas

D) Insert

Diff: 1

LO: 11-7

AACSB: Reflective thinking

8) Describe how to use the IFS function to test multiple conditions.

Diff: 2

LO: 11-7

AACSB: Reflective thinking

9) The Baseball Cap Company produces baseball hats to sell at their stores located in shopping malls. Management is analyzing the direct material price variance and has the following investigation rules for the variance:

• Variances greater than 15% are a high priority for investigation.

• Variances between 5% and 15% should still be investigated.

• Variances less than 5% will not be investigated.

The manager prepared the following report in Excel for the direct materials price variances:

Describe how the cells in column F could be visually highlighted to show High Priority, Investigate, and No Action with separate colors automatically using Conditional Formatting.

Diff: 3

LO: 11-7

AACSB: Reflective thinking

10) Describe how to filter a column of data in Excel by values "Greater Than".

Diff: 2

LO: 11-7

AACSB: Reflective thinking

11.8 (Appendix) Record standard costing journal entries

1) If a company recognizes variances at the earliest point possible, raw materials inventory will be debited for the Actual Quantity (AQ) of raw materials purchased and costed at the Actual Price (AP) paid per unit.

Diff: 1

LO: 11-8

EOC: S11-12

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

2) A debit balance in the direct materials price variance indicates the standard cost of materials was less than the actual cost of materials.

Diff: 1

LO: 11-8

EOC: S11-12

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

3) A credit balance means that a variance is unfavorable since it decreases income (just like a revenue).

Diff: 1

LO: 11-8

EOC: S11-13

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

4) A debit balance means that a variance is unfavorable since it decreases income (just like an expense).

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

5) A credit balance means that a variance is favorable since it increases income (just like a revenue).

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

6) A debit balance means that a variance is favorable since it decreases income (just like an expense).

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

7) Just as in job costing, the manufacturing costs flow through the inventory accounts in the following order: raw materials → work in process → cost of goods sold → finished goods.

Diff: 1

LO: 11-8

EOC: S11-13

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

8) A standard cost income statement shows cost of goods sold at standard and then actual cost.

Diff: 1

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

9) When a company uses direct materials, the amount of the debit to Work in Process Inventory is based on the standard quantity of the materials that should have been used times the Standard price (SP) per unit of the materials.

Diff: 1

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

10) Closing the variances to Cost of Goods Sold corrects the account balance.

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

11) The entry to allocate manufacturing overhead costs to production involves which of the following?

A) Debit to work in process inventory for the actual cost of overhead

B) Credit to work in process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

C) Credit to work in process inventory for the actual cost of overhead

D) Debit to work in process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

12) Work in process inventory is debited for which of the following when recording the use of direct materials in the production process?

A) Standard quantity of Direct Materials Used (AQU) for actual production output times actual cost per pound

B) Standard quantity of Direct Materials Used (AQU) for actual production output times standard cost per pound

C) Actual quantity (AQ) of Direct Materials Used (AQU) times standard cost per pound

D) Actual quantity (AQ) of Direct Materials Used (AQU) times actual cost per pound

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

13) Raw materials inventory is credited for which of the following when recording the use of direct materials in the production process?

A) Standard quantity of Direct Materials Used (AQU) for actual production multiplied by the actual cost per pound

B) Standard quantity of Direct Materials Used (AQU) for actual production multiplied by the standard cost per pound

C) Actual Quantity (AQ) of direct materials put into production multiplied by the actual cost per pound

D) Actual Quantity (AQ) of direct materials put into production multiplied by the standard cost per pound

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

14) Which of the following shows the effect on work in process inventory when assigning direct labor costs to the production process?

A) Debited for standard quantity of direct labor used for actual production multiplied by the standard cost per hour

B) Debited for actual quantity (AQ) of direct labor multiplied by the standard cost per hour

C) Credited for standard quantity of direct labor used for actual production multiplied by the standard cost per hour

D) Credited for standard quantity usage of direct labor for actual production multiplied by the actual cost per hour

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

15) Raw Materials Inventory 120,000

Accounts Payable 118,000

DM Price Variance 2,000

The credit to DM Price Variance in the journal entry above indicates

A) that the variance is favorable since it is a credit balance.

B) that the variance is unfavorable since it is a credit balance.

C) that actual price exceeds the standard price for direct materials.

D) that the actual quantity used was exactly what they budgeted to use.

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

16) Raw Materials Inventory 120,000

DM Price Variance 5,000

Accounts Payable 125,000

The debit to DM Price Variance in the journal entry above indicates

A) that the variance is favorable since it is a debit balance.

B) that the variance is unfavorable since it is a debit balance.

C) that standard price exceeds the actual price for direct materials.

D) that the actual quantity used was exactly what they budgeted to use.

Diff: 1

LO: 11-8

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

17) Cost of goods sold is shown at which of the following on a standard cost income statement?

A) Standard cost

B) Actual cost

C) Neither A nor B

D) Both A and B

Diff: 2

LO: 11-8

EOC: E11-31

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

18) Regarding a standard cost income statement, which of the following is true?

A) Operating income is shown at standard cost.

B) Variances are listed separately.

C) Cost of goods sold is shown only at standard cost.

D) Sales revenue is shown only at standard revenue.

Diff: 2

LO: 11-8

EOC: E11-31

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

19) The ________ department is most likely responsible to incur a "direct material price variance."

A) production

B) marketing

C) personnel

D) purchasing

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

20) The ________ department may be responsible to incur a "direct labor rate variance."

A) finance

B) marketing

C) personnel

D) purchasing

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

21) The ________ department may be responsible to incur a "direct labor efficiency variance."

A) marketing

B) production

C) purchasing

D) personnel

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

22) The ________ department may be responsible to incur a "sales volume variance."

A) marketing

B) production

C) purchasing

D) personnel

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

23) Which term below is best paired with "a summarized budget that can easily be computed for several volume levels"?

A) Flexible budget

B) Sales volume variance

C) Benchmarking

D) Overhead flexible budget variance

Diff: 3

LO: 11-8

EOC: S11-12

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

24) Which term below is best paired with "the difference between the actual overhead cost incurred and the flexible budget amount of overhead cost for actual number of output"?

A) Sales volume variance

B) Flexible budget

C) Overhead flexible budget variance

D) Benchmarking

Diff: 3

LO: 11-8

EOC: E11-31

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

25) A(n) ________ "arises because the number of units actually sold differs from the static budget units."

A) flexible budget

B) sales volume variance

C) benchmarking

D) overhead flexible budget variance

Diff: 2

LO: 11-8

EOC: E11-31

AACSB: Reflective thinking

Learning Outcome: Discuss standard costing and variance analysis.

26) Murphy Manufacturing gathered the following information for the year ended December 31:

Prepare a standard cost income statement for Murphy Manufacturing for the year ended December 31.

Diff: 2

LO: 11-8

EOC: E11-31

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

27) Premium Pumps Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units.

Direct Materials Direct Labor

Standard quantity/unit 6.00 lbs. 2.5 hrs.

Standard price (SP)/lb. or hr. $8.10/lb. $8.00/hr.

Actual quantity (AQ)/unit 6.25 lbs. 2.8 hrs.

Actual price (AP)/lb. or hr. $8.00/lb. $7.50/hr

Price variance $562.50 F $1,260.00 F

Quantity/Efficiency variance $1,822.50 U $2,160.00 U

Static budget volume 800 units

Actual volume 900 units

Actual overhead cost $11,000

Standard variable overhead cost $5/unit

Standard fixed overhead cost $5,600

Overhead flexible budget variance $900 U

Production volume variance $700 F

Journalize the purchase and usage of direct materials including the related variances.

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

28) Premium Pumps Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units.

Direct Materials Direct Labor

Standard quantity/unit 6.00 lbs. 2.5 hrs.

Standard price (SP)/lb. or hr. $8.10 /lb. $8.00 /hr.

Actual quantity (AQ)/unit 6.25 lbs. 2.8 hrs.

Actual price (AP)/lb. or hr. $8.00 /lb. $7.50 /hr

Price variance $562.50 F $1,260.00 F

Quantity/Efficiency variance $1,822.50 U $2,160.00 U

Static budget volume 800 units

Actual volume 900 units

Actual overhead cost $11,000

Standard variable overhead cost $5 /unit

Standard fixed overhead cost $5,600

Overhead flexible budget variance $900 U

Production volume variance $700 F

Journalize the direct labor costs incurred and the assignment of direct labor to Work in Process Inventory, including the related variances.

Diff: 3

LO: 11-8

EOC: E11-23A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.

29) Premium Pumps Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units.

Direct Materials Direct Labor

Standard quantity/unit 6.00 lbs. 2.5 hrs.

Standard price (SP)/lb. or hr. $8.10/lb. $8.00/hr.

Actual quantity (AQ)/unit 6.25 lbs. 2.8 hrs.

Actual price (AP)/lb. or hr. $8.00/lb. $7.50/hr

Price variance $562.50 F $1,260.00 F

Quantity/Efficiency variance $1,822.50 U $2,160.00 U

Static budget volume 800 units

Actual volume 900 units

Actual overhead cost $11,000

Standard variable overhead cost $5/unit

Standard fixed overhead cost $5,600

Overhead flexible budget variance $900 U

Production volume variance $700 F

Journalize the allocation of overhead costs to Work in Process Inventory and closing manufacturing overhead costs to overhead variances.

Diff: 2

LO: 11-8

EOC: E11-23A

AACSB: Analytical thinking

Learning Outcome: Discuss standard costing and variance analysis.