Deck 16: Fundamentals of Variance Analysis

Question 1

A favorable variance is not necessarily good, and an unfavorable variance is not necessarily bad.

Answer 1

True

Question 2

The production volume variance is the difference between fixed costs on the flexible budget and the fixed costs on the master budget.

Answer 2

False

Question 3

The sales price variance is the actual selling price per unit times the difference between budgeted number of units and the actual number of units sold.

Answer 3

False

Question 4

The flexible and master budget amounts are the same for fixed marketing and administrative costs.

Question 5

An unfavorable direct labor efficiency variance could be the result of poor supervision or poor scheduling by divisional managers.

Question 6

If the budgeted activity level is greater than the actual activity level, then the total budgeted costs of the master budget will be greater than the total budgeted costs of the flexible budget.

Question 7

Both the actual material used and the standard quantity allowed for material are based on the actual output attained.

Question 8

The sales activity variance is the result of a difference between budgeted units sold and actual units sold.

Question 9

The standard cost for a unit of output is the standard price per unit of input times the standard number of inputs per one unit of output.

Question 10

The terms "master budget" and "flexible budget" mean the same thing and can be used interchangeably.

Question 11

Production cost variances are input variances, while sales activity variances are output variances.

Question 12

Variance analysis for fixed production costs is virtually the same as for variable production costs.

Question 13

A flexible budget adjusts the static budget to reflect the actual activity level achieved during the period.

Question 14

In general, and holding all other things constant, an unfavorable variance decreases operating profits.

Question 15

The budget (or spending) variance for fixed production costs is the difference between the actual fixed costs and the budgeted fixed costs.

Question 16

The difference between operating profits in the master budget and operating profits in the flexible budget is called a sales price variance.

Question 17

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production.

Question 18

It is possible to have a favorable direct material price variance and an unfavorable direct material efficiency variance.

Question 19

In essence, the terms "master budget" and "operating budget" mean the same thing and can be used interchangeably.

Question 20

Variances are the difference between actual results and budgeted results.

Question 21

The basic difference between a master budget and a flexible budget is that a:

A) flexible budget considers only variable costs but a master budget considers all costs.
B) flexible budget allows management latitude in meeting goals whereas a master budget is based upon a fixed standard.
C) master budget is for an entire production facility but a flexible budget is applicable to single departments only.
D) master budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range.

Question 22

Which of the following variances will always be favorable when actual sales exceed budgeted sales?

A) Variable cost
B) Fixed cost
C) Sales activity
D) Operating profit

Question 23

The intercept of the flexible budget line is:

A) sales.
B) variable costs.
C) fixed costs.
D) contribution margin.

Question 24

When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon the level of productivity, an accountant should normally recommend: (CPA adapted)
$\begin{array} { l l l } & \text { Flexible Budgeting } & \text { Standard Costing } \\\end{array}$
A. $\begin{array} { l l l } &&& \text { Yes } &&&&&&& \text { No } \\\end{array}$
B. $\begin{array} { l l l } &&& \text { Yes } &&&&&&& \text { Yes } \\\end{array}$
C. $\begin{array} { l l l } &&& \text { No } &&&&&&& \text { Yes } \\\end{array}$
D. $\begin{array} { l l l } &&& \text { No } &&&&&&& \text { No } \\\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 25

Which of the following statements regarding variances is(are) false?
(A) In general and holding all other things constant, an unfavorable variance decreases operating profits.
(B) A favorable variance is not always good, and an unfavorable variance is not always bad.

A) Only A is false.
B) Only B is false.
C) Both of these are false.
D) Neither of these is false.

Question 26

The simplest measure of performance is the variance that compares:

A) standard material prices with actual material prices.
B) standard direct labor rates with actual direct labor rates.
C) budgeted sales revenue with actual sales revenue.
D) budgeted operating income with actual operating income.

Question 27

The purpose of the flexible budget is to:

A) allow management some latitude in meeting goals.
B) eliminate cyclical fluctuations in production reports by ignoring variable costs.
C) compare actual and budgeted results at virtually any level of production.
D) reduce the total time in preparing the annual budget.

Question 28

Based on past experience, Moss Company has developed the following budget formula for estimating its shipping expenses:
Shipping costs = $16,000 + ($0.50 × lbs. shipped). The company's shipments average 12 lbs. per shipment.
The planned activity and actual activity regarding orders and shipments for the current month are given in the following schedule:
$$\begin{array} { l r r } & \text { Plan } & { \text { Actual } } \\\text { Sales orders } & 800 & 780 \\\text { Shipments } & 800 & 820 \\\text { Units shipped } & 8,000 & 9,000 \\\text { Sales } & \$ 120,000 & \$ 144,000 \\\text { Total pounds shipped } & 9,600 & 12,300\end{array}$$
The actual shipping costs for the month amounted to $21,000. The appropriate monthly flexible budget allowance for shipping costs for the purpose of performance evaluation would be: (CMA adapted)

A) $20,680.
B) $20,920.
C) $20,800.
D) $22,150.

Question 29

When using standard costing, costs are transferred through the production process at their standard costs.

Question 30

When using a flexible budget, what will happen to variable costs on a per-unit basis as production increases within the relevant range?

A) Decrease
B) Increase
C) Remain unchanged
D) Fixed costs are not considered in flexible budgeting

Question 31

James Manufacturing has the following information available for July:


-
What was James's actual sales revenue for July?

A) $156,000
B) $169,000
C) $180,000
D) $191,000

Question 32

In general, the terms favorable and unfavorable are used to describe the effect of a variance on:

A) operating profits.
B) sales revenue.
C) production costs.
D) operating expenses.

Question 33

Which of the following organizational policies is most likely to result in undesirable managerial behavior? (CMA adapted)

A) Raj Chemicals sponsors television coverage of cricket matches between national teams representing India and Pakistan. The expenses of such media sponsorship are not allocated to its various divisions.
B) Felix Eagle, the chief executive officer of Eagle Rock Brewery, wrote a memorandum to his executives stating, "Operating plans are contracts and they should be met without fail."
C) The budgeting process at Lawrence Manufacturing starts with operating managers providing goals for their respective departments.
D) Gallen Lighting holds quarterly meetings of departmental managers to consider possible changes in the budgeted targets due to changing conditions.

Question 34

The Valenti Company uses flexible budgeting for cost control. Valenti produced 10,800 units of product during October, incurring indirect material costs of $13,000. Valenti's master budget reflected indirect material costs of $180,000 at a production volume of 144,000 units. What was the indirect material cost variance for October?

A) $1,100 favorable
B) $1,100 unfavorable
C) $2,000 favorable
D) $500 favorable

Question 35

An operating budget would not include a:

A) cash budget.
B) sales budget.
C) labor budget.
D) production budget.

Question 36

Standards and budgets are the same thing.

Question 37

Which of the following statements is(are) true?
(A) A favorable variance is not necessarily good, and an unfavorable variance is not necessarily bad.
(B) The master budget includes operating budgets (e.g., production budget) and financial budgets (e.g., cash budget).

A) Only A is true.
B) Only B is true.
C) Both of these are true.
D) Neither of these is true.

Question 38

A variance can best be described as:

A) benchmarks common to other firms in the same industry.
B) differences between planned results and actual results.
C) useful for performance evaluations but not making decisions.
D) generally accepted accounting principles when standards are used.

Question 39

The slope of the flexible budget line is the:

A) selling price per unit.
B) variable cost per unit.
C) fixed cost per unit.
D) contribution margin per unit.

Question 40

A standard cost system may be used in: (CPA adapted)

A) job-order costing but not process costing.
B) either job-order costing or process costing.
C) process costing but not job-order costing.
D) neither process costing nor job-order costing.

Question 41

James Manufacturing has the following information available for July:


-
What was James's master budget sales revenue?

A) $124,000.
B) $148,000.
C) $156,000.
D) $180,000.

Question 42

Which of the following direct labor variances uses the standard hours allowed for the actual number of units produced?

$\begin{array} { l l l } & { \text { Price } } & { \text { Efficiency } } \\\end{array}$
A. $\begin{array} { l l l } & \text { Yes } && \text { Yes } \\\end{array}$
B. $\begin{array} { l l l } & \text { No } && \text { No } \\\end{array}$
C. $\begin{array} { l l l } & \text { Yes } && \text { No } \\\end{array}$
D. $\begin{array} { l l l } & \text { No } && \text { Yes } \\\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 43

James Manufacturing has the following information available for July:


-
What was James's master budget contribution margin?

A) $52,000.
B) $47,500.
C) $45,000.
D) $39,000.

Question 44

Which of the following statements is(are) true regarding the sales activity variance?
(A) The sales activity variance is the actual selling price per unit times the difference between the budgeted units and actual units.
(B) If the sales activity variance for sales revenue is unfavorable, then the contribution margin sales activity variance will be unfavorable.

A) Only A is true.
B) Only B is true.
C) Neither of these is true.
D) Both of these are true.

Question 45

The sales price variance is the difference between the actual sales revenues and the:

A) budgeted selling price multiplied by the budgeted number of units sold.
B) budgeted selling price multiplied by the actual number of units sold.
C) actual selling price multiplied by the budgeted number of units sold.
D) actual selling price multiplied by the actual number of units sold.

Question 46

James Manufacturing has the following information available for July:


-
What was James's flexible budget contribution margin for July?

A) $39,000.
B) $45,000.
C) $52,000.
D) $58,000.

Question 47

If the total materials variance for a given operation is favorable, why must this variance be further evaluated as to price and usage?

A) There is no need to further evaluate the total materials variance if it is favorable.
B) Generally accepted accounting principles require that all variances be analyzed in three stages.
C) All variances must appear in the annual report to equity owners for proper disclosure.
D) A further evaluation lets management evaluate the activities of the purchasing and production functions.

Question 48

In the general model, a price variance is calculated as:

A) (AP × AQ) - (AP × SQ)
B) (AP × SQ) - (SP × SQ)
C) (AP × AQ) - (SP × AQ)
D) (AP × AQ) - (SP × SQ)

Question 49

Which department is customarily held responsible for an unfavorable materials quantity variance?

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

Question 50

James Manufacturing has the following information available for July:


-
Was James's activity variance for variable manufacturing costs favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 51

James Manufacturing has the following information available for July:


-
What was James's flexible budget sales revenue for July?

A) $139,000.
B) $156,000.
C) $169,000.
D) $180,000.

Question 52

Which of the following statements is not true regarding the fixed production cost variance?

A) The fixed production cost variance is the difference between actual and budgeted costs.
B) With respect to this variance, fixed costs are affected by activity levels within a relevant range.
C) The flexible budget's fixed costs equal the master budget's fixed costs.
D) Fixed costs are treated as period costs for purposes of this variance.

Question 53

In the general model, an efficiency variance is calculated as:

A) (SP × AQ) - (SP × SQ)
B) (AP × SQ) - (SP × SQ)
C) (AP × AQ) - (SP × SQ)
D) (AP × AQ) - (SP × AQ)

Question 54

Which of the following is the name of a form providing standard quantities of inputs required to produce a unit of output and the standard prices for the inputs?

A) Static budget
B) Standard cost sheet
C) Variance account
D) Master budget

Question 55

Which variance will be unfavorable due to employees working more hours than allowed for the actual number of units produced?

A) Price (rate)
B) Efficiency
C) Sales activity
D) Production volume

Question 56

The difference between operating profits in the master budget and operating profits in the flexible budget is called the:

A) sales activity variance.
B) flexible budget variance.
C) production volume variance.
D) total operating profit variance.

Question 57

James Manufacturing has the following information available for July:


-
What was James's activity variance for variable manufacturing costs?

A) $4,000.
B) $14,000.
C) $24,000.
D) $34,000.

Question 58

In analyzing company operations, the controller of the Carson Corporation found a $250,000 favorable flexible budget revenue variance. The variance was calculated by comparing the actual results with the flexible budget. This variance can be wholly explained by: (CMA adapted)

A) the total flexible budget variance.
B) the total static budget variance.
C) changes in unit selling prices.
D) changes in the number of units sold.

Question 59

Which of the following is the most probable reason a company would experience an unfavorable labor rate variance and a favorable labor efficiency variance?

A) The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid experienced individuals.
B) The mix of workers assigned to the particular job was heavily weighted towards the use of new relatively low paid unskilled workers.
C) Because of the production schedule, workers from other production areas were assigned to assist this particular process.
D) Defective materials caused more labor to be used in order to produce a standard unit.

Question 60

When are the following direct materials variances ideally reported?
$\begin{array} { l l l } && { \text { Quantity } } &&& { \text { Price } } \\\end{array}$
A. $\begin{array} { l l l } & \text { Purchase Date } & \text { Purchase Date } \\\end{array}$
B. $\begin{array} { l l l } & \text { Time of Use } && \text { Time of Use } \\\end{array}$
C. $\begin{array} { l l l } & \text { Purchase Date } & \text { Time of Use } \\\end{array}$
D. $\begin{array} { l l l } & \text { Time of Use } && \text { Purchase Date } \\\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D

Question 61

If overhead is applied to production using direct labor hours and the direct labor efficiency variance is favorable, then the variable overhead efficiency variance is:

A) favorable.
B) unfavorable.
C) either favorable or unfavorable.
D) neither favorable nor unfavorable.

Question 62

The variable overhead price variance is due to:

A) price items only.
B) efficiency items only.
C) both price and efficiency items.
D) neither price or efficiency items.

Question 63

The following data pertains to the direct materials cost for the month of October:
$$\begin{array} { l l } \text { Standard costs } & 5,000 \text { units allowed at } \$ 20 \text { each } \\\text { Actual costs } & 5,050 \text { units input at } \$ 19 \text { each }\end{array}$$ What is the direct materials efficiency variance?

A) $950 favorable
B) $950 unfavorable
C) $1,000 favorable
D) $1,000 unfavorable

Question 64

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
What is the direct labor efficiency variance for November?

A) $1,800
B) $1,900
C) $2,000
D) $2,090

Question 65

Information on Kimble Company's direct labor costs for the month of January is as follows:
$$\begin{array} { l r r } \text { Actual direct labor hours } & 34,500 \\\text { Standard direct labor hours } & 35,000 \\\text { Total direct labor payroll } & \$ 241,500 \\\text { Direct labor efficiency variarice-favorable } & \$ 3,200\end{array}$$

-
Is the direct labor rate variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 66

Information on Kimble Company's direct labor costs for the month of January is as follows:
$$\begin{array} { l r r } \text { Actual direct labor hours } & 34,500 \\\text { Standard direct labor hours } & 35,000 \\\text { Total direct labor payroll } & \$ 241,500 \\\text { Direct labor efficiency variarice-favorable } & \$ 3,200\end{array}$$

-
What is Kimble's direct labor rate variance?

A) $17,250
B) $20,700
C) $18,750
D) $21,000

Question 67

Data on Gantry Company's direct labor costs are given below:
$\begin{array}{lrr} \text { Standard direct-labor hours } &30,000\\ \text {Actual direct-labor hour's } &29,000\\ \text { Direct-labor efficiency variance-favorable } &\$4,000\\ \text { Direct-labor rate variance-favorable } &\$5,800\\ \text { Total direct labor payroll } &\$110,200\\\end{array}$


-
What was Gantry's standard direct labor rate?

A) $3.54
B) $3.80
C) $4.00
D) $5.80

Question 68

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
Is the direct labor efficiency variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 69

The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month.
$\begin{array}{lcc}&\text { Standard Cost Per }&\text {Standard Monthly }\\&\text { Uunit}&\text { Costs}\\\text { Materials } & \$ 4.00 & \$ 8,400 \\\text { Direct Labor 2 hrs @ \$2.60 } & 5.20 & 10,920\\\text { Factory Overhead: } & & \\\text { Variable } & 1.80 & 3,780 \\\text { Fixed } & \underline{5.00} & \underline{10,500}\\& \underline{\$16.00}& \underline{\$33,600}\end{array}$

$\begin{array}{llrl}\text { Variances: }\\\text { Material price } & \$ 244.75 & \text { unfavorable } \\\text { Material quantity } & \$ 500.00 & \text { unfavorable } \\\text { Labor rate } & \$ 520.00 & \text { favorable } \\\text { Labor efficiency } & \$ 2,080.00 & \text { unfavorable }\end{array}$

-
What were the actual direct labor hours worked during the month?

A) 5,000
B) 4,800
C) 4,200
D) 4,000

Question 70

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
Is the direct materials price variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 71

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
What is the direct labor rate variance for November?

A) $1,800
B) $1,900
C) $2,000
D) $2,200

Question 72

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
What is the direct materials efficiency variance for November?

A) $14,250
B) $14,400
C) $16,000
D) $17,100

Question 73

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$

During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
What is the direct materials price variance for November?

A) $14,250
B) $14,400
C) $16,000
D) $17,100

Question 74

The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month.
$\begin{array}{lcc}&\text { Standard Cost Per }&\text {Standard Monthly }\\&\text { Uunit}&\text { Costs}\\\text { Materials } & \$ 4.00 & \$ 8,400 \\\text { Direct Labor 2 hrs @ \$2.60 } & 5.20 & 10,920\\\text { Factory Overhead: } & & \\\text { Variable } & 1.80 & 3,780 \\\text { Fixed } & \underline{5.00} & \underline{10,500}\\& \underline{\$16.00}& \underline{\$33,600}\end{array}$
$\begin{array}{llrl}\text { Variances: }\\\text { Material price } & \$ 244.75 & \text { unfavorable } \\\text { Material quantity } & \$ 500.00 & \text { unfavorable } \\\text { Labor rate } & \$ 520.00 & \text { favorable } \\\text { Labor efficiency } & \$ 2,080.00 & \text { unfavorable }\end{array}$


-
What was the actual quantity of materials used during the month?

A) 2,156
B) 2,100
C) 2,225
D) 1,975

Question 75

The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month.
$\begin{array}{lcc}&\text { Standard Cost Per }&\text {Standard Monthly }\\&\text { Uunit}&\text { Costs}\\\text { Materials } & \$ 4.00 & \$ 8,400 \\\text { Direct Labor 2 hrs @ \$2.60 } & 5.20 & 10,920\\\text { Factory Overhead: } & & \\\text { Variable } & 1.80 & 3,780 \\\text { Fixed } & \underline{5.00} & \underline{10,500}\\& \underline{\$16.00}& \underline{\$33,600}\end{array}$

$\begin{array}{llrl}\text { Variances: }\\\text { Material price } & \$ 244.75 & \text { unfavorable } \\\text { Material quantity } & \$ 500.00 & \text { unfavorable } \\\text { Labor rate } & \$ 520.00 & \text { favorable } \\\text { Labor efficiency } & \$ 2,080.00 & \text { unfavorable }\end{array}$



-
What was the actual price per unit paid for the direct material during the month, assuming all materials purchased were put into production?

A) $4.34
B) $4.22
C) $4.11
D) $4.00

Question 76

In general, the direct labor efficiency variance is the responsibility of the:

A) purchasing agent.
B) company president.
C) production manager.
D) industrial engineering.

Question 77

Data on Gantry Company's direct labor costs are given below:
$\begin{array}{lrr}\text { Standard direct-labor hours } & & 30,000 \\\text { Actual direct-labor hours } & & 29,000 \\\text { Direct-labor efficiency variance-favorable } & \$ & 4,000 \\\text { Direct-labor rate variance-favorable } & \$ & 5,800 \\\text { Total direct labor payroll } & \$ & 110,200\end{array}$


-
What was Gantry's actual direct labor rate?

A) $3.60
B) $3.80
C) $4.00
D) $5.80

Question 78

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

-
Is the direct materials efficiency variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 79

TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product.
$\begin{array}{lclr}&\text { Standard } & \text { Standard } & \text { Standard } \\&\text { Quantity } & \text { Price } & \text { Cost }\\\text { Direct Materials } & \text { 8pounds } & \$ 1.80 \text { per pound } & \$ 14.40 \\\text { Direct Labor } & 0.25 \text { hour } & \$ 8.00 \text { per hour } & \underline{2.00}\\&&& \underline{\$16.40}\end{array}$


During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $304,000. The total factory wages for November were $42,000, 90% of which were for direct labor. TaskMaster manufactured 19,000 units of product during November using 142,500 pounds of direct materials and 5,000 direct labor hours.

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Is the direct labor rate variance favorable or unfavorable?

A) Favorable
B) Unfavorable

Question 80

Batson Company produces Trivets. Based on its master budget, the company should produce 1,000 Trivets each month, working 2,500 direct labor hours. During May, only 900 Trivets were produced. The company worked 2,400 direct labor hours. The standard hours allowed for May production would be:

A) 2,500 hours.
B) 2,400 hours.
C) 2,250 hours.
D) 1,800 hours.