Question 1

The following data relate to direct labor costs for the current period:  What is the direct labor time variance?

Accepted Answer

A)   $ 4,500 favorable
B)   $18,000 unfavorable
C)   $ 3,600 favorable
D)   $17,100 favorableE) All of the above
F) A) and D)

Question 2

A favorable cost variance occurs when

Accepted Answer

A)   Actual costs are more than standard costs.
B)   Standard costs are more than actual costs.
C)   Standard costs are less than actual costs.
D)   None of the above.E) None of the above
F) B) and C)

Question 3

The following data relate to direct materials costs for November:  What is the direct materials quantity variance?

Accepted Answer

A)   $3,600 favorable
B)   $1,240 favorable
C)   $3,600 unfavorable
D)   $1,240 unfavorableE) All of the above
F) C) and D)

Question 4

The following data is given for the Stringer Company:  Overhead is applied on standard labor hours.
The direct material quantity variance is:

Accepted Answer

A)   22,800F
B)   22,800U
C)   52,000F
D)   52,000UE) A) and D)
F) A) and C)

Question 5

The principle of exceptions allows managers to

Accepted Answer

A)   focus on correcting variances between standard costs and actual costs.
B)   focus on correcting variances between variable costs and actual costs.
C)   focus on correcting variances between competitor's costs and actual costs.
D)   focus on correcting variances between competitor's costs and standard costs.E) B) and C)
F) A) and D)

Question 6

Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a reason standard costs are separated in two components?

Accepted Answer

A)   the price and quantity variances need to be identified separately to correct the actual major differences.
B)   identifying variances determines which manager must find a solution to major discrepancies.
C)   if a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections.
D)   variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual.E) B) and D)
F) B) and C)

Question 8

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material price variance.

Accepted Answer

A)   0
B)   59,400U
C)   59,400F
D)   6,000UE) B) and C)
F) B) and D)

Question 9

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

Accepted Answer

(a) Price variance = ($7.50 - ...

Question 10

If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of 6,000 widgets that were bought at $8.00 and have a standard cost of $8.15.

Accepted Answer

The answer of If a company records inventory purchases at...

Question 11

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following conditions normally would not indicate that standard costs should be revised?

Accepted Answer

A)   The engineering department has revised product specifications in responding to customer suggestions.
B)   The company has signed a new union contract which increases the factory wages on average by $5.00 an hour.
C)   Actual costs differed from standard costs for the preceding week.
D)   The world price of raw materials increased.E) A) and D)
F) A) and C)

Question 13

The total manufacturing cost variance consists of:

Accepted Answer

A)   Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance
B)   Direct materials cost variance, direct labor rate variance, and factory overhead cost variance
C)   Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance
D)   Direct materials cost variance, direct labor cost variance, factory overhead cost varianceE) C) and D)
F) B) and D)

Question 14

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Accepted Answer

A) True 
 B)False

Question 15

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

Accepted Answer

(a) Rate variance = ($15.00 - $14.90) x ...

Question 16

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material quantity variance.

Accepted Answer

A)   63,000F
B)   63,000U
C)   59,400F
D)   59,400UE) All of the above
F) A) and B)

Question 17

In most businesses, cost standards are established principally by accountants.

Accepted Answer

A) True 
 B)False

Question 18

Using the following information, prepare a factory overhead flexible budget for Andover Company where the total factory overhead cost is $75,500 at normal capacity (100%). Include capacity at 75%, 90%, 100%, and 110%. Total variable cost is $6.25 per unit and total fixed costs are $38,000. The information is for month ended August 31, 2012. (Hint: Determine units produced at normal capacity.)

Accepted Answer

The answer of Using the following information, prepare a factory...

Question 19

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

Accepted Answer

The answer of Oak Company produces a chair that requires...

Question 20

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows:
  Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

Accepted Answer

The answer of Standard and actual costs for direct materials...

Exam 22: Performance Evaluation Using Variances From Standard Costs

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

Correct Answer
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Correct Answer
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(a) Price variance = ($7.50 - ...
View Answer

Correct Answer
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If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of 6,000 widgets that were bought at $8.00 and have a standard cost of $8.15.

Correct Answer
verified

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

Correct Answer
verified

Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.

Correct Answer
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The following data relate to direct materials costs for November: What is the direct materials quantity variance?

Correct Answer
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The following data relate to direct labor costs for the current period: What is the direct labor time variance?

Correct Answer
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The total manufacturing cost variance consists of:

Correct Answer
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In most businesses, cost standards are established principally by accountants.

Correct Answer
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The principle of exceptions allows managers to

Correct Answer
verified

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material quantity variance is:

Correct Answer
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Which of the following is not a reason standard costs are separated in two components?

Correct Answer
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A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

Correct Answer
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If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Correct Answer
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A favorable cost variance occurs when

Correct Answer
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Which of the following conditions normally would not indicate that standard costs should be revised?

Correct Answer
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Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

Correct Answer
verified
(a) Rate variance = ($15.00 - $14.90) x ...
View Answer

Exam 22: Performance Evaluation Using Variances From Standard Costs

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

Correct AnswerverifiedShow Answer

Correct Answerverified(a) Price variance = ($7.50 - ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of 6,000 widgets that were bought at $8.00 and have a standard cost of $8.15.

Correct AnswerverifiedShow Answer

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

Correct AnswerverifiedShow Answer

Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.

Correct AnswerverifiedShow Answer

The following data relate to direct materials costs for November: What is the direct materials quantity variance?

Correct AnswerverifiedShow Answer

The following data relate to direct labor costs for the current period: What is the direct labor time variance?

Correct AnswerverifiedShow Answer

The total manufacturing cost variance consists of:

Correct AnswerverifiedShow Answer

In most businesses, cost standards are established principally by accountants.

Correct AnswerverifiedShow Answer

The principle of exceptions allows managers to

Correct AnswerverifiedShow Answer

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material quantity variance is:

Correct AnswerverifiedShow Answer

Which of the following is not a reason standard costs are separated in two components?

Correct AnswerverifiedShow Answer

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

Correct AnswerverifiedShow Answer

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Correct AnswerverifiedShow Answer

A favorable cost variance occurs when

Correct AnswerverifiedShow Answer

Which of the following conditions normally would not indicate that standard costs should be revised?

Correct AnswerverifiedShow Answer

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

Correct Answerverified(a) Rate variance = ($15.00 - $14.90) x ...View AnswerShow Answer

Correct Answer
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Correct Answer
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(a) Price variance = ($7.50 - ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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(a) Rate variance = ($15.00 - $14.90) x ...
View Answer