Deck 11: Standard Costs and Variance Analysis

Question 1

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six grams of materials at
$0.30 per gram. Actual production in November was 3,100 units of Titactium. There was a favourable materials price variance of $380 and an unfavourable materials quantity variance of $120. Based on these variances, one could conclude that:

A)the actual cost per gram for materials was less than the standard cost per gram.
B)the actual usage of materials was less than the standard allowed.
C)more materials were used than were purchased.
D)more materials were purchased than were used.

Answer 1

the actual cost per gram for materials was less than the standard cost per gram.

Question 2

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-To measure controllable production inefficiencies, which of the following is the bes? basis for a company to use in establishing the standard hours allowed for the output of one unit of product?

A)The hours per unit that would be required for the present workforce to satisfy expected demand over the long run.
B)Average historical performance for the last several years.
C)Engineering estimates based on attainable performance.
D)Engineering estimates based on ideal performance.

Answer 2

Engineering estimates based on attainable performance.

Question 3

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-What does a credit balance in a direct labour efficiency variance account indicate

A)The average wage rate paid to direct labour employees was less than the standard rate.
B)Actual total direct labour costs incurred were less than standard direct labour costs allowed for the units produced.
C)The standard hours allowed for the units produced were greater than actual direct labour hours used.
D)The number of units produced was less than the number of units budgeted for the period.

Answer 3

The standard hours allowed for the units produced were greater than actual direct labour hours used.

Question 4

Reference: 11-07
The following materials standards have been established for a particular product:
Standard quantity per unit of output: 4.4 grams
Standard price: $13.20 per gram
The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams
Actual cost of materials purchased: $62,880
Actual materials used in production: 4,300 grams
Actual output: 700 units
What is the materials price variance for the month?

A)$480 F.
B)$430 F.
C)$480 U.
D)$430 U.

Question 5

Reference: 11-10
The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 7.5 \text { hours } \\\hline \text { Standard labour rate } & \$ 15.25 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 9,600 \text { hours } \\\hline \text { Actual total labour cost } & \$ 144,480 \\\hline \text { Actual units of output } & 1,200 \\\hline\end{array}\end{array}$$

-Under a standard cost system, the material price variances are usually the responsibility of the:

A)purchasing manager.
B)engineering manager.
C)production manager.
D)sales manager.

Question 6

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The Porter Company has a standard cost system. used 22,500 grams of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 unfavourable; and the standard quantity of materials allowed for July production was 21,750 grams. The materials price variance for July was?

A)$2,725 U.
B)$2,725 F.
C)$3,250 F.
D)$3,250 U.

Question 7

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Which of the following variances would be useful in calling attention to possibl? problems in the control of spending on overhead items?
$$\begin{array} { | l | l | l | } \hline &\begin{array} {l } \text {vartable }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}&\begin{array} {l } \text {fixed }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}\\\hline \text { A } & \text { No } & \text { No } \\\hline \text { B } & \text { No } & \text { Yes } \\\hline \text { C } & \text { Yes } & \text { No } \\\hline \text { D } & \text { Yes } & \text { Yes } \\\hline\end{array}$$

A)Choice A.
B)Choice B.
C)Choice C.
D)Choice D.

Question 8

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-What is the materials quantity variance for the month?

A)$1,260 U.
B)$1,309 U.
C)$11,220 U.
D)$10,800 U.

Question 9

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The material price variance for November was?

A)$2,310 F.
B)$810 U.
C)$2,310 U.
D)$810 F.

Question 10

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \text { hrs. } ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The labour rate variance is:

A)$480 F.
B)$480 U.
C)$440 F.
D)$440 U.

Question 11

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \text { hrs. } ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Information on Kennedy Company's direct material costs follows: $$\begin{array} { | l | l | l | } \hline \text { Standard price per gram of raw materials } & \$ 3.60 & \\\hline \text { Actual quantity of raw materials purchased } & 1,600 & \text { grams } \\\hline \text { Standard quantity allowed for actual production } & 1,450 & \text { grams } \\\hline \text { Materials purchase price variance-favourable } & \$ 240 & \\\hline\end{array}$$ What was the actual purchase price per unit, rounded to the nearest penny?

A)$3.75.
B)$3.06.
C)$3.11.
D)$3.45.

Question 12

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Paul Co. direct labour-hours. For April, total fixed overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour-hours for the month. The following data are available for April's activity: $$\begin{array} { | l | l | } \hline \text { Number of units produced } & 9,500 \\\hline \text { Direct labour-hours worked } & 19,500 \\\hline \text { Actual total fixed overhead cost incurred } & \$ 79,500 \\\hline\end{array}$$ What amount of total fixed overhead cost would have been applied to production for the month of April?

A)$80,000.
B)$79,500.
C)$78,000.
D)$76,000.

Question 13

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$

-The standards for direct labour for a product are 2.5 hours at $8 per hour. 9,000 units of the product were made and the labour efficiency variance was $8,000 F. The actual number of hours worked during the past period was:

A)23,500.
B)22,500.
C)20,500.
D)21,500.

Question 14

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$

-The standard hours allowed to make one unit of finished product are:

A)1.5.
B)1.0.
C)1.2.
D)2.0.

Question 15

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$

-The actual direct labour rate for May in dollars per hour was:

A)$11.75.
B)$12.00.
C)$12.50.
D)$11.50.

Question 16

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \text { hrs. } ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-A favourable material price variance coupled with an unfavourable material usage variance would most likely result from:

A)the purchase of low quality materials.
B)problems with labour efficiency.
C)changes in the product mix.
D)problems with processing machines.

Question 17

Reference: 11-10
The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 7.5 \text { hours } \\\hline \text { Standard labour rate } & \$ 15.25 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 9,600 \text { hours } \\\hline \text { Actual total labour cost } & \$ 144,480 \\\hline \text { Actual units of output } & 1,200 \\\hline\end{array}\end{array}$$

-What is the labour rate variance for the month?

A)$1,920 U.
B)$240 F.
C)$1,920 F.
D)$240 U.

Question 18

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-To record the purchase of direct materials, the general ledger would include what entry to the materials price variance account?

A)$1,500 credit.
B)$1,500 debit.
C)$6,000 debit.
D)$6,000 credit.

Question 19

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The direct labour efficiency variance for March is:

A)$5,500 favourable.
B)$5,500 unfavourable.
C)$5,625 unfavourable.
D)$5,625 favourable.

Question 20

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-If the actual labour hours worked exceed the standard labour hours allowed, what type of variance will occur?

A)Unfavourable labour rate variance.
B)Favourable labour rate variance.
C)Unfavourable labour efficiency variance.
D)Favourable labour efficiency variance.

Question 21

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-What is the materials quantity variance for the month?

A)$5,916 U.
B)$8,550 U.
C)$8,700 U.
D)$5,814 U.

Question 22

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-The fixed overhead volume variance is due to:

A)a shift in the amount of hours required to produce the actual output.
B)inefficient or efficient use of overhead resources.
C)a difference between the denominator activity and the standard hours allowed for the actual output of the period.
D)inefficient or efficient use of whatever the denominator activity is.

Question 23

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
The variable overhead efficiency variance is?

A)$740 F.
B)$1,120 F.
C)$950 U.
D)$430 U.

Question 24

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-To record the incurrence of direct labour cost and its use in production, the general ledger would include what entry to the labour rate variance account?

A)$340 debit.
B)$340 credit.
C)$240 debit.
D)$240 credit.

Question 25

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard quantity per unit of output } & 8.3 \text { grams } \\\hline \text { Standard price } & \$ 19.15 \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual materials purchased } & 7,500 \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 141,375 \\\hline \text { Actual materials used in production } & 7,100 \text { grams } \\\hline \text { Actual output } & 700 \text { units } \\\hline\end{array}\end{array}$$ What is the materials price variance for the month?

A)$7,540 U.
B)$24,317 U.
C)$7,660U.
D)$2,250 F.

Question 26

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams

-The labour rate variance for January is?

A)$475 F.
B)$585 U.
C)$585 F.
D)$475 U.

Question 27

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-Borden Enterprises uses standard costing. For the month of April, the company reported the following data: Standard direct labour rate: $10 per hour
Standard hours allowed for actual production: 8,000
Actual direct labour rate: $9.50 per hour
Labour efficiency variance: $4,800 F
The labour rate variance for April is:

A)$2,850 F.
B)$3,760 U.
C)$3,760 F.
D)$2,850 U.

Question 28

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-What is the materials price variance for the month?

A)$2,550 F.
B)$2,700 U.
C)$2,700 F.
D)$2,550 U.

Question 29

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The following standards for variable manufacturing overhead have been established for a company that makes only one product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard hours per unit of output } & 7.8 \text { hours } \\\hline \text { Standard variable overbead rate } & \$ 12.55 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours } & 2,900 \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 31,330 \\\hline \text { Actual output } & 200 \text { units } \\\hline\end{array}\end{array}$$ What is the variable overhead efficiency variance for the month?

A)$130 F.
B)$4,320 U.
C)$130 U.
D)$4,320 F.

Question 30

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-Which of the following statements concerning practical standards is incorrect

A)Practical standards can be used for product costing and cash budgeting.
B)When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine.
C)Practical standards can be attained by the average worker.
D)Under practical standards, large variances are less likely than under ideal standards.

Question 31

Reference: 11-06
The Alpha Company produces toys for national distribution. Standards for a particular toy are:
Materials: 12 grams per unit at 56 per gram. Labour: 2 hours per unit at $12.75 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $33,000.
The materials quantity variance is?

A)$1,820 F.
B)$1,120 F.
C)$1,120 U.
D)$1,820 U.

Question 32

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

A)Variable overhead efficiency variance.
B)Fixed overhead volume variance.
C)Fixed overhead budget variance.
D)Variable overhead spending variance.

Question 33

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The total variable overhead variance for November was:

A)$225 F.
B)$225 U.
C)$400 U.
D)$175 U.

Question 34

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-A favourable labour rate variance indicates that:

A)actual hours exceed standard hours.
B)the actual rate exceeds the standard rate.
C)standard hours exceed actual hours.
D)the standard rate exceeds the actual rate.

Question 35

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-To record the incurrence of direct labour costs and its use in production, the general ledger would include what entry to the labour efficiency variance account?

A)$240 debit.
B)$1,200 credit.
C)$480 credit.
D)$1,200 debit.

Question 36

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | l | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:

A)ideal standards.
B)practical standards.
C)normal standards.
D)budgeted standards.

Question 37

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-A labour efficiency variance resulting from the use of poor quality materials should be charged to:

A)the production manager.
B)manufacturing overhead.
C)the engineering department.
D)the purchasing agent.

Question 38

Reference: 11-06
The Alpha Company produces toys for national distribution. Standards for a particular toy are:
Materials: 12 grams per unit at 56 per gram. Labour: 2 hours per unit at $12.75 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $33,000.
Web Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of machine-hours. During February, the company used a denominator activity of 80,000 machine-hours in computing its predetermined fixed overhead rate. However, only 75,000 standard machine-hours were allowed for the month's actual production. If the fixed overhead volume variance for February was
$6,400 unfavourable, then the total budgeted fixed overhead cost for the month was:

A)$96,000.
B)$98,600.
C)$102,400.
D)$100,000.

Question 39

Reference: 11-06
The Alpha Company produces toys for national distribution. Standards for a particular toy are:
Materials: 12 grams per unit at 56 per gram. Labour: 2 hours per unit at $12.75 per hour.
During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $33,000.
The labour rate variance is?

A)$2,500 U.
B)$2,500 F.
C)$1,125 F.
D)$1,125 U.

Question 40

Reference: 11-09
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 6.8 & \text { metres } \\\hline \text { Standard price } & \$ 17.10 & \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 9,000 & \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 156,600 & \\\hline \text { Actual materials used in production } & 8,500 & \text { metres } \\\hline \text { Actual output } & 1,200 & \text { units } \\\hline\end{array}\end{array}$$

-The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard quantity per unit of output } & 1.7 \text { metres } \\\hline \text { Standard price } & \$ 19.80 \text { per metre } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual materials purchased } & 5,800 \text { metres } \\\hline \text { Actual cost of materials purchased } & \$ 113,680 \\\hline \text { Actual materials used in production } & 5,100 \text { metres } \\\hline \text { Actual output } & 3,200 \text { units } \\\hline\end{array}\end{array}$$ What is the materials quantity variance for the month?

A)$6,732 F.
B)$13,860 U.
C)$6,664 F.
D)$13,720U.

Question 41

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams

-Dahl Company, a clothing manufacturer, uses a standard costing system. Each unit of a finished product contains 2 metres of cloth. However, there is unavoidable waste of 20%, calculated on input quantities, when the cloth is cut for assembly. The cost of the cloth is
$3 per metre. The standard direct material cost for cloth per unit of finished product is:

A)$7.20.
B)$7.50.
C)$4.80.
D)$6.00.

Question 42

Reference: 11-07
The following materials standards have been established for a particular product:
Standard quantity per unit of output: 4.4 grams
Standard price: $13.20 per gram
The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams
Actual cost of materials purchased: $62,880
Actual materials used in production: 4,300 grams
Actual output: 700 units

- $$\begin{array} { | l | l | l | } \hline &\begin{array} {l } \text {vartable }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}&\begin{array} {l } \text {fixed }\\\text { overhead}\\ \text {spending }\\ \text {vortance }\\\end{array}\\\hline \text { A } & \text { No } & \text { No } \\\hline B & \text { No } & \text { Yes } \\\hline \text { C } & \text { Yes } & \text { No } \\\hline \text { D } & \text { Yes } & \text { Yes } \\\hline\end{array}$$

A)Choice A.
B)Choice B.
C)Choice C.
D)Choice D.

Question 43

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
The standard variable overhead rate per direct labour hour is:

A)$6.91.
B)$7.00.
C)$7.12.
D)$6.95.

Question 44

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Andy Inc. is a business using a standard costing system and applying overhead cost based on direct labour-hours. For April, total fixed overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour-hours for the month. The standard cost card indicates that each unit of finished product requires 2 direct labour-hours. The following data are available for April's activity: $$\begin{array} { | l | l | } \hline \text { Number of units produced } & 9,500 \\\hline \text { Direct labour-hours worked } & 19,500 \\\hline \text { Actual total overhead cost incurred } & \$ 79,500 \\\hline\end{array}$$ What amount of total overhead cost would have been applied to production for the month of April?

A)$78,000.
B)$76,000.
C)$80,000.
D)$79,500.

Question 45

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-Lab Corp. uses a standard cost system. Direct labour information for Product CER for the month of October follows: $$\begin{array} { | l | l | l | } \hline \text { Standard direct labeuf rate } & \$ 6.00 & \text { per hour } \\\hline \text { Actual direct labour rate paid } & \$ 6.10 & \text { per hour } \\\hline \text { Standard hours allowed for actual productaon } & 1,500 & \text { hours } \\\hline \text { Laboua efficiency variance-unfavourable } & 5600 & \\\hline\end{array}$$ What are the actual hours worked?

A)1,598.
B)1,402.
C)1,600.
D)1,400.

Question 46

Reference: 11-12
The following standards for variable manufacturing overhead have been established for a company that makes only one product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard hours per unit of output } & 1.6 & \text { hours } \\\hline \text { Standard variable overhead rate } & \$ 11.55 & \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual hours } & 4,900 & \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 58,310 & \\\hline \text { Actual output } & 3,000 & \text { units } \\\hline\end{array}\end{array}$$

-What is the variable overhead spending variance for the month?

A)$2,870 F.
B)$1,715 U.
C)$1,715 F.
D)$2,870 U.

Question 47

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
An unfavourable labour efficiency variance indicates that:

A)the actual labour rate was higher than the standard labour rate.
B)actual labour hours worked exceeded standard labour hours for the production level achieved.
C)the labour rate variance must also be unfavourable.
D)overtime labour was used during the period.

Question 48

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | c | l | c | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The direct material quantity variance for March is:

A)$3,550 unfavourable.
B)$3,550 favourable.
C)$3,500 favourable.
D)$3,500 unfavourable.

Question 49

Reference: 11-10
The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 7.5 \text { hours } \\\hline \text { Standard labour rate } & \$ 15.25 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 9,600 \text { hours } \\\hline \text { Actual total labour cost } & \$ 144,480 \\\hline \text { Actual units of output } & 1,200 \\\hline\end{array}\end{array}$$

-What is the labour efficiency variance for the month?

A)$7,230 F.
B)$7,230 U.
C)$9,150 F.
D)$9,150 U.

Question 50

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-The variable overhead spending variance is?

A)$220 F.
B)$240 U.
C)$240 F.
D)$220 U.

Question 51

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-Last month 75,000 grams of direct material were purchased and 70,000 grams were used. If the actual purchase price per gram was $0.25 more than the standard purchase price per gram, then the material price variance was?

A)$17,500 F
B)$18,750 U
C)$17,500 U
D)$18,750 F

Question 52

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-If a company follows a practice of isolating variances at the earliest point in time, what would be the appropriate time to isolate and recognize a direct material price variance?

A)When production is completed.
B)When material is issued.
C)When material is purchased.
D)When material is used in production.

Question 53

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased (3,000 kg) } & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The materials price variance is?

A)$400 F.
B)$400 U.
C)$600 F.
D)$600 U.

Question 54

Reference: 11-07
The following materials standards have been established for a particular product:
Standard quantity per unit of output: 4.4 grams
Standard price: $13.20 per gram
The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams
Actual cost of materials purchased: $62,880
Actual materials used in production: 4,300 grams
Actual output: 700 units
What is the materials quantity variance for the month?

A)$6,600 U.
B)$6,550 U.
C)$15,982 U.
D)$16,104 U.

Question 55

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840

-For the month of April, Thorp Co.'s records disclosed the following data relating to direct labour: $$\begin{array} { | l | l | l | } \hline \text { Actual cost } & \$ 10,000 & \\\hline \text { Rate variance } & \$ 1,000 & \text { favourable } \\\hline \text { Efficiency variance } & \$ 1,500 & \text { unfavourable } \\\hline\end{array}$$ For the month of April, actual direct labour hours amounted to 2,000. In April, Thorp's standard direct labour rate per hour was:

A)$4.50.
B)$5.50.
C)$4.75.
D)$5.00.

Question 56

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | l | l | c | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The direct labour rate variance for March is:

A)$8,000 unfavourable.
B)$8,000 favourable.
C)$48,000 favourable.
D)$48,000 unfavourable.

Question 57

Reference: 11-08
The following materials standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard quantity per unit of output } & 1.9 & \text { grams } \\\hline \text { Standard price } & \$ 18.00 & \text { per gram } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual materials purchased } & 5,800 & \text { grams } \\\hline \text { Actual cost of materials purchased } & \$ 108,460 & \\\hline \text { Actual materials used in production } & 5,200 & \text { grams } \\\hline \text { Actual output } & 2,700 & \text { units } \\\hline\end{array}\end{array}$$

-What is the materials price variance for the month?

A)$4,060 U.
B)$3,640 U.
C)$3,640 F.
D)$4,060 F.

Question 58

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The labour rate variance for November was?

A)$2,150 U.
B)$550 U.
C)$1,050 U.
D)$2,150 F.

Question 59

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams

-The total variance for variable overhead for January is:

A)$40 F.
B)$85 F.
C)$125 F.
D)$100 U.

Question 60

Reference: 11-10
The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 7.5 \text { hours } \\\hline \text { Standard labour rate } & \$ 15.25 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 9,600 \text { hours } \\\hline \text { Actual total labour cost } & \$ 144,480 \\\hline \text { Actual units of output } & 1,200 \\\hline\end{array}\end{array}$$

-The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 1.7 \text { hours } \\\hline \text { Standard labour rate } & \$ 14.05 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 3,700 \text { hours } \\\hline \text { Actual total labour cost } & \$ 50,690 \\\hline \text { Actual output } & 2,300 \text { units } \\\hline\end{array}\end{array}$$ What is the labour rate variance for the month?

A)$1,295 F.
B)$4,246 F.
C)$2,877 F.
D)$4,246 U.

Question 61

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-To record the use of direct materials in production, the general ledger would include what entry to the materials quantity variance account?

A)$900 debit.
B)$900 credit.
C)$3,600 credit.
D)$3,600 debit.

Question 62

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \mathrm { hrs } . ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The variable overhead efficiency variance is?

A)$520 U.
B)$520 F.
C)$500 U.
D)$500 F.

Question 63

Reference: 11-12
The following standards for variable manufacturing overhead have been established for a company that makes only one product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard hours per unit of output } & 1.6 & \text { hours } \\\hline \text { Standard variable overhead rate } & \$ 11.55 & \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual hours } & 4,900 & \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 58,310 & \\\hline \text { Actual output } & 3,000 & \text { units } \\\hline\end{array}\end{array}$$

-The Fletcher Company uses standard costing. The following data are available for October: $$\begin{array} { | l | l | l | } \hline \text { Actual quantity of direct materials used } & 23,500 & \text { grams } \\\hline \text { Standard price of direct materials } & \$ 2 & \text { per gram } \\\hline \text { Material quantity variance } & \$ 1,000 & \text { favourable } \\\hline\end{array}$$ The standard quantity of material allowed for October production is:

A)24,500 lbs.
B)23,000 lbs.
C)25,000 lbs.
D)24,000 lbs.

Question 64

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | c | l | c | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-In which of the following situations would the use of a standard cost system to control labour costs not necessarily yield useful results?

A)A business is employing responsibility accounting.
B)The bookkeeping systems charges materials, labour and overhead costs to work-in process inventory using standard costs.
C)In addition to the full monthly standard cost reports the business uses a system where variances are estimated on weekly basis.
D)The pace of production is constrained by machine processing speeds.

Question 65

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
$\begin{array} { | l | l | l | } \hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\end{array}$
Units produced 600
Direct material used 2,000 kg
Direct material purchased (3,000 kg) $11,400
Direct labour cost (1,100 hrs.) $ 9,240
Variable manuf. overhead cost incurred $ 5,720
The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-In a certain standard costing system the following results occurred last period: labour rate variance, $1,000 U; labour efficiency variance, $2,800 F; and the actual labour rate was $0.20 more per hour than the standard labour rate. The number of actual direct labour hours used last period was:

A)4,800.
B)5,400.
C)5,000.
D)9,000.

Question 66

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | c | l | c | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-The price variance for the direct material acquired by the company during March is:

A)$7,550 favourable.
B)$8,250 favourable.
C)$7,550 unfavourable.
D)$8,250 unfavourable.

Question 67

Reference: 11-04
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity } & \begin{array} { l } \text { Standard Cost per } \\\text { Bag }\end{array} \\\hline \text { Direct material } & 20 \text { grams } & \$ 8.00 \\\hline \text { Direct labour } & 0.1 \text { hours } & \$ 1.10 \\\hline \text { Variable manuf. overhead } & 0.1 \text { hours } & \$ 0.40 \\\hline\end{array}$$ The company had no beginning inventories of any kind on Jan. 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. During January, the following activity was recorded by the company:
Production of Fastgro: 4,000 bags
Direct materials purchased: 85,000 grams at a cost of $32,300
Direct labour worked: 390 hours at a cost of $4,875
Variable manufacturing overhead incurred: $1,475
Inventory of direct materials on Jan. 31: 3,000 grams

-The materials price variance for January is?

A)$1,700 F.
B)$1,640 U.
C)$1,300 U.
D)$1,640 F.

Question 68

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$

-The variable overhead spending variance for May was:

A)$1,710 F.
B)$2,290 U.
C)$2,290 F.
D)$1,710 U.

Question 69

Reference: 11-12
The following standards for variable manufacturing overhead have been established for a company that makes only one product: $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \text { Standard hours per unit of output } & 1.6 & \text { hours } \\\hline \text { Standard variable overhead rate } & \$ 11.55 & \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations for the last month: }\\\begin{array} { | l | l | l | } \hline \text { Actual hours } & 4,900 & \text { hours } \\\hline \text { Actual total variable overhead cost } & \$ 58,310 & \\\hline \text { Actual output } & 3,000 & \text { units } \\\hline\end{array}\end{array}$$

-What is the variable overhead efficiency variance for the month?

A)$1,190 F.
B)$1,190 U.
C)$1,155 U.
D)$1,680 U.

Question 70

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost } ( 1,100 \mathrm { hrs } . ) & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The following labour standards have been established for a particular product: $$\begin{array}{l}\begin{array} { | l | l | } \hline \text { Standard labour hours per unit of output } & 8.3 \text { hours } \\\hline \text { Standard labour rate } & \$ 12.10 \text { per hour } \\\hline\end{array}\\\text { The following data pertain to operations concerning the product for the last month: }\\\begin{array} { | l | l | } \hline \text { Actual hours worked } & 6,100 \text { hours } \\\hline \text { Actual total labour cost } & \$ 71,370 \\\hline \text { Actual output } & 900 \text { units } \\\hline\end{array}\end{array}$$ What is the labour efficiency variance for the month?

A)$16,029 F.
B)$19,017 F.
C)$16,577 F.
D)$19,017 U.

Question 71

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The materials quantity variance is?

A)$760F.
B)$4,000F.
C)$800U.
D)$760U.

Question 72

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.

-Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per gram from a supplier at $1.60 per gram would include a:

A)credit to raw materials inventory.
B)debit to materials price variance.
C)credit to materials price variance.
D)debit to work in process.

Question 73

Reference: 11-11
The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: $$\begin{array} { | l | l | l | } \hline \text { Labour rate variance: } & \$ 7,000 & \mathrm {~F} \\\hline \text { Labour efficiency variance: } & \$ 12,000 & \mathrm {~F} \\\hline \text { Variable overhead efficiency variance: } & \$ 4,000 & \mathrm {~F} \\\hline \text { Number of units produced: } & 10,000 & \\\hline \text { Standard labour rate per direct labour hour: } & \$ 12 & \\\hline \text { Standard variable overhead rate per direct labour hour: } & \$ 4 & \\\hline \text { Actual labour hours used: } & 14,000 & \\\hline \text { Actual variable manufacturing overhead costs: } & \$ 58,290 & \\\hline\end{array}$$

-Which department is usually held responsible for an unfavourable materials quantity variance?

A)Purchasing.
B)Marketing.
C)Production.
D)Engineering.

Question 74

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Agatha Company produced 4,000 units of Red Apple products.. The direct labour efficiency variance is:

A)$2,400 U.
B)$8,100 F.
C)$8,000 F.
D)$2,000 U.

Question 75

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased.
$\begin{array} { | l | l | l | } \hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\quad\quad\quad&\quad\quad\quad&\quad\quad\\\hline\end{array}$
Units produced 600
Direct material used 2,000 kg
Direct material purchased (3,000 kg) $11,400
Direct labour cost (1,100 hrs.) $ 9,240
Variable manuf. overhead cost incurred $ 5,720
The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The labour efficiency variance is?

A)$840 F.
B)$840 U.
C)$800 U.
D)$800 F.

Question 76

Reference: 11-01
Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: $$\begin{array} { | l | c | l | c | } \hline & \text { Standard Quantity } & \text { Standard Price } & \text { Standard Cost } \\\hline \text { Direct materials } & 6.0 \text { grams } & \$ 3.50 / \text { gram } & \$ 21.00 \\\hline \text { Direct labour } & 1.3 \text { hours } & \$ 11.00 / \text { hour } & 14.30 \\\hline & & & \$ 35.30 \\\hline\end{array}$$ During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours.

-Cox Company's direct material costs for the month of January were as follows: 78 $$\begin{array} { | l | l | l | } \hline \text { Actual quantity purchased } & 18,000 & \text { kilograms } \\\hline \text { Actual unit purchase price } & \$ 3,60 & \text { per kilogram } \\\hline \begin{array} { l } \text { Materials price variance-unfavourable (based on } \\\text { purchases) }\end{array} & \$ 3,600 & \\\hline \text { Standard quantity allowed for actual production } & 16,000 & \\\hline \text { Actual quantity used } & 15,000 & \text { kilograms } \\\hline\end{array}$$ For January there was a favourable direct material quantity variance of?

A)$3,400.
B)$3,375.
C)$3,800.
D)$3,360.

Question 77

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-Henley Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labour-hours. For the month of January, the fixed manufacturing overhead volume variance was $2,220 favourable. The company uses a fixed manufacturing overhead rate of $1.85 per direct labour-hour. During January, the standard direct labour-hours allowed for the month's output:

A)exceeded denominator hours by 1,200.
B)fell short of denominator hours by 1,200.
C)fell short of denominator hours by 1,000.
D)exceeded denominator hours by 1,000.

Question 78

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased (3,000 kg) } & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The fixed overhead budget variance is measured by:

A)the difference between actual fixed overhead cost and applied fixed overhead cost.
B)the difference between budgeted fixed overhead cost and applied fixed overhead cost.
C)the difference between budgeted fixed overhead cost and standard fixed overhead cost.
D)the difference between budgeted fixed overhead cost and actual fixed overhead cost.

Question 79

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

-The material quantity variance for November was:

A)$1,200 F.
B)$1,200 U.
C)$1,500 F.
D)$300 U.

Question 80

Reference: 11-02
The Litton Company has established standards as follows:
Direct material 3 kg @ $4/kg = $12 per unit
Direct labour 2 hrs. @ $8/hr. = $16 per unit
Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit
Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. $$\begin{array} { | l | l | l | } \hline \text { Units produced } & 600 & \\\hline \text { Direct material used } & 2,000 & \mathrm {~kg} \\\hline \text { Direct material purchased } ( 3,000 \mathrm {~kg} ) & \$ 11,400 & \\\hline \text { Direct labour cost (1,100 hrs.) } & \$ 9,240 & \\\hline \text { Variable manuf. overhead cost incurred } & \$ 5,720 & \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.

- $$\begin{array} { | l | l | l | } \hline & \text { Food Costs } & \text { Supervisory Salaries } \\\hline \text { A } & \text { Yes } & \text { Yes } \\\hline \text { B } & \text { Yes } & \text { No } \\\hline \text { C } & \text { No } & \text { Yes } \\\hline \text { D } & \text { No } & \text { No } \\\hline\end{array}$$

A)Choice A.
B)Choice B.
C)Choice C.
D)Choice D.