Deck 9: Standard Costing: a Functional-Based Control Approach

Question 1

During June,12,000 kilograms of materials were purchased at a cost of $8 per kilogram.If there was an unfavourable direct materials price variance of $6,000 for June,what would be the standard cost per kilogram?

A)$7.00
B)$7.50
C)$8.00
D)$8.50

Answer 1

B

Question 2

Mover Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials: } & 7.5 \text { kilograms } \times \$ 8 \text { per kilogram } \\\text { Direct labour: } & 2 \text { hours } \times \$ 12 \text { per hour } \\\text { Variable manufacturing overhead: } & 2 \text { hours } \times \$ 7 \text { per hour }\end{array}$


$\text { The following activity occurred during the month of March: }$

$\begin{array}{ll}\text { Materials purchased: } & 5,000 \text { kilograms costing } \$ 42,500 \\\text { Materials used: } & 3,600 \text { kilograms } \\\text { Units produced: } & 500 \text { units } \\\text { Direct labour: } & 1,150 \text { hours at } \$ 11.80 / \text { hour } \\\text { Actual variable manufacturing overhead: } & \$ 7,500\end{array}$ The company records materials price variances at the time of purchase.
What is the variable standard cost per unit?

A)$38
B)$74
C)$84
D)$98

Answer 2

$98

Question 3

Which of the following is included in the standard cost sheet?

A)the total standard cost
B)the standard quantity allowed for actual production
C)the total standard price
D)the standard quantity per unit

Answer 3

D

Question 4

What do variances indicate?

A)the cause of the variance
B)who is responsible for the variance
C)that actual performance is not going according to plan
D)when the variance should be investigated

Question 5

During September,40,000 units were produced.The standard quantity of material allowed per unit was 5 kilograms at a standard cost of $2.50 per kilogram.If there was a favourable usage variance of $25,000 for September,what would have been the actual quantity of materials used?

A)95,000 kilograms
B)105,000 kilograms
C)190,000 kilograms
D)210,000 kilograms

Question 6

Bender Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labour for the 100 units of Product AA are as follows:
$\begin{array}{lll}\text { Materials: }&&\text {Standard}&\text { Actual}\\\text { Standard: } & 200 \text { kilograms at } \$ 3.00 \text { per kilogram } & \$ 600 \\\text { Actual: } & 220 \text { kilograms at } \$ 2.85 \text { per kilogram }&&\$627\\\\\text { Direct labour: }\\\text {Standard:}&\text { 400 hours at }\$ 15.00 \text {per hour}& 6,000\\\text { Actual:}&\text { 368 hours at }\$ 16.50 \text { per hour}&&6,072 \end{array}$

-Refer to the figure.What is the material usage variance for Bender Corporation?

A)$33 (F)
B)$33 (U)
C)$60 (F)
D)$60 (U)

Question 7

Which of the following is a characteristic of ideal standards?

A)They are based on an efficiently operating work force.
B)They are based on maximum efficiency conditions.
C)They allow for downtime and rest periods.
D)They are based on present production processes and technology.

Question 8

What differences do the usage variances focus on?

A)the difference between actual quantity used and standard quantity allowed for actual production
B)the difference between actual costs of inputs and standard costs of inputs
C)the difference between actual quantity used and standard quantity allowed for budgeted production
D)the difference between actual price and standard quantity allowed in budgeted production

Question 9

During August,10,000 units were produced.The standard quantity of material allowed per unit was 10 kilograms at a standard cost of $3 per kilogram.If there was an unfavourable usage variance of $18,750 for August,what would be the actual quantity of materials used?

A)23,438 kilograms
B)31,875 kilograms
C)93,750 kilograms
D)106,250 kilograms

Question 10

What do quantity price standards specify?

A)They specify how much standard price that should be paid for a unit.
B)They specify how much of the quantity of input should be used for the standard price.
C)They specify how much should be paid for the quantity of input to be used.
D)They specify how much of the quantity of input should be used for the actual price.

Question 11

Which departments are responsible for quantity standards?

A)accounting
B)purchasing
C)personnel
D)production

Question 12

What differences do price/rate variances focus on?

A)the differences between actual and standard inputs multiplied by actual prices
B)the differences between actual and standard unit prices of an input multiplied by the actual quantity of inputs
C)the differences between actual and standard inputs multiplied by standard prices.
D)the differences between actual and standard unit prices of an input multiplied by the budgeted quantity of inputs

Question 13

What are currently attainable standards?

A)They are used for continuous improvement.
B)They reflect planned improvement.
C)They are constantly changing.
D)They include normal breakdowns and interruptions.

Question 14

Which of the following equations measures a price variance?

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

Question 15

In setting quantity standards,what factor(s)must the purchasing manager consider?

A)freight
B)quality
C)discounts
D)kilograms

Question 16

Which of the following standards demand maximum efficiency and can be achieved only if everything operates perfectly?

A)currently attainable standards
B)ideal standards
C)budget standards
D)personnel standards

Question 17

Which of the following equations measures the total budget variance?

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

Question 18

What is standard costing?

A)It establishes price and quantity standards for inputs.
B)It provides journal entry support.
C)It is not used in unit costing.
D)It is standard quantity/standard price

Question 19

What is the unit standard cost?

A)the product of the standard price times the standard quantity for each unit
B)the price standard for each unit
C)the actual cost for a standard product
D)the amount of actual cost to produce a unit in a standardized process

Question 20

Bender Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labour for the 100 units of Product AA are as follows:
$\begin{array}{lll}\text { Materials: }&&\text {Standard}&\text { Actual}\\\text { Standard: } & 200 \text { kilograms at } \$ 3.00 \text { per kilogram } & \$ 600 \\\text { Actual: } & 220 \text { kilograms at } \$ 2.85 \text { per kilogram }&&\$627\\\\\text { Direct labour: }\\\text {Standard:}&\text { 400 hours at }\$ 15.00 \text {per hour}& 6,000\\\text { Actual:}&\text { 368 hours at }\$ 16.50 \text { per hour}&&6,072 \end{array}$

-Refer to the figure.What is the material price variance for Bender Corporation?

A)$27 (U)
B)$33 (F)
C)$33 (U)
D)$60 (F)

Question 21

Which of the following is an acceptable method of disposing of variances?

A)closing them to cost of goods sold only
B)closing them to raw materials,work in process,and finished goods
C)closing them to raw materials,finished goods,and cost of goods sold
D)closing them to raw materials

Question 22

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: $\begin{array}{lr}\text { Standard price per kg } & \$ 18.00 \\\text { Actual purchase price per kg } & \$ 16.50 \\\text { Quantity purchased } & 3,100 \mathrm{~kg} \\\text { Quantity used } & 2,950 \mathrm{~kg} \\\text { Standard quantity allowed for actual output } & 3,000 \mathrm{~kg} \\\text { Actual output } & 1,000 \text { units }\end{array}$ Roberts Company reports its material price variances at the time of purchase.
What is the material usage variance for Roberts Company?

A)$900 (F)
B)$900 (U)
C)$1,950 (F)
D)$2,850 (F)

Question 23

Which of the following factors would cause an unfavourable material quantity variance?

A)using poorly maintained machinery
B)using higher quality materials
C)using more highly skilled workers
D)receiving discounts for purchasing larger than normal quantities

Question 24

As a general rule,under what circumstances should an investigation of a variance be undertaken?

A)only if the anticipated benefits are greater than zero
B)only if the anticipated benefits are greater than the expected costs
C)only if the variance is negative
D)only if the variance is positive

Question 25

Using more highly skilled direct labourers might affect which of the following variances?

A)direct materials price variance
B)direct labour efficiency variance
C)variable manufacturing overhead price variance
D)fixed manufacturing overhead variance

Question 26

During October,10,000 direct labour hours were worked at a standard cost of $10 per hour.If the direct labour rate variance for October was $4,000 unfavourable,what would be the actual cost per direct labour hour?

A)$9.20
B)$9.60
C)$10.00
D)$10.40

Question 27

Which of the following equations measures the direct labour rate variance?

A)(SR * AH)- (SR * SH)
B)(AR * SH)- (SR * AH)
C)(AR * AH)- (SR * AH)
D)(SR * AH)+ (SR * SH)

Question 28

Max Company has developed the following standards for one of its products. $\begin{array}{ll}\text { Direct materials: } & 15 \text { kilograms } \times \$ 16 \text { per kilogram } \\\text { Direct labour: } & 4 \text { hours } \times \$ 24 \text { per hour } \\\text { Variable manufacturing overhead: } & 4 \text { hours } \times \$ 14 \text { per hour }\end{array}$

$\begin{array}{ll}\text { The following activity occurred during the month of October: }\\\text { Materials purchased: } & 10,000 \text { kilograms costing } \$ 170,000 \\\text { Materials used: } & 7,200 \text { kilograms } \\\text { Units produced: } & 500 \text { units } \\\text { Direct labour: } & 2,300 \text { hours at } \$ 23.60 / \text { hour } \\\text { Actual variable manufacturing overhead: } & \$ 30,000\end{array}$ The company records materials price variances at the time of purchase.
What is the direct materials price variance?

A)$10,000 favourable
B)$10,000 unfavourable
C)$50,000 favourable
D)$50,000 unfavourable

Question 29

Which of the following factors would cause an unfavourable labour rate variance?

A)using higher quality materials
B)using low-efficiency workers
C)using more unskilled workers
D)using more highly skilled workers

Question 30

Which of the following factors would cause a labour quantity variance?

A)ordering the wrong quality of materials
B)ordering from the wrong supplier
C)not taking a quantity discount
D)requiring labourers to work overtime

Question 31

During January,7,000 direct labour hours were worked at a standard cost of $20 per hour.If the direct labour rate variance for January was $17,500 favourable,what would be the actual cost per direct labour hour?

A)$17.50
B)$20.00
C)$22.50
D)$25.00

Question 32

Claire Company uses a standard costing system.The following information pertains to direct labour costs for the month of February: $\begin{array}{ll}\text { Standard direct labour rate per hour } & \$ 15.00 \\\text { Actual direct labour rate per hour } & \$ 13.50 \\\text { Labour rate variance } & \$ 18,000 \text { favourable } \\\text { Actual output } & 1,000 \text { units } \\\text { Standard hours allowed for actual production } & 10,000 \text { hours }\end{array}$

-How many actual labour hours were worked during February for Claire Company?

A)1,200
B)2,000
C)10,000
D)12,000

Question 33

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: $\begin{array}{lr}\text { Standard price per kg } & \$ 18.00 \\\text { Actual purchase price per kg } & \$ 16.50 \\\text { Quantity purchased } & 3,100 \mathrm{~kg} \\\text { Quantity used } & 2,950 \mathrm{~kg} \\\text { Standard quantity allowed for actual output } & 3,000 \mathrm{~kg} \\\text { Actual output } & 1,000 \text { units }\end{array}$
Roberts Company reports its material price variances at the time of purchase.
What is the journal entry to record material purchases?
a.
$\begin{array}{lr}\text { Materials } & 55,800 \\\quad \text { Accounts Payable } &&55,800 \\\end{array}$
b.
$\begin{array}{lr}\text { Accounts Payable } & 55,800 \\\quad \text { Materials } &&55,800 \\\end{array}$
c.
$\begin{array}{lr}\text { Materials } & 55,800 \\\quad \text { Materials Price Variance } &&4,650 \\\quad \text { Accounts Payable } &&51,150 \\\end{array}$
d.
$\begin{array}{lr}\text { Materials } & 51,150 \\\text { Materials Price Variance } & &4,650\\\quad \text { Accounts Payable }&&55,800\end{array}$

Question 34

Bender Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labour for the 100 units of Product AA are as follows:
$\begin{array}{lll}\text { Materials: }&&\text { Standard } &\text { Actual }\\\text { Standard: } & 200 \text { kilograms at } \$ 3.00 \text { per kilogram } & \$ 600 \\\text { Actual: } & 220 \text { kilograms at } \$ 2.85 \text { per kilogram } &&\$627\\& & \\\text { Direct labour: } & & \\\text { Standard: } & 400 \text { hours at } \$ 15.00 \text { per hour }&6,000 \\\text { Actual: } & 368 \text { hours at } \$ 16.50 \text { per hour } &&6,072\end{array}$


-Refer to the figure.What is the journal entry to record labour variances?
a. $\begin{array}{llr} \text {Work in Process } &6,072\\ \text { Payroll } &&6,072\\\end{array}$

b.
$\begin{array}{llr} \text { Payroll } &6,072\\ \text { Work in Process } &&6,072\\\end{array}$

c.
$\begin{array}{llr} \text { Work in Process } &6,000\\ \text { Labour Efficiency Variance } &552\\ \text { Labour Rate Variance} &&480\\\text { Payroll } &&&&6,072\end{array}$

d.
$\begin{array}{llr} \text { Work in Process } &6,000\\ \text { Labour Rate Variance} &552\\ \text { Labour Efficiency Variance } &&480\\\text { Payroll} &&&6,072\end{array}$

Question 35

A 5 percent wage increase for all factory employees would affect which of the following variances?

A)direct materials price variance
B)direct labour rate variance
C)direct labour efficiency variance
D)variable manufacturing overhead efficiency variance

Question 36

In terms of variances,what is the term for the standard plus the allowable deviation?

A)upper control limit
B)standard price
C)standard quantity
D)total budget variance

Question 37

Roberts Company uses a standard costing system.The following information pertains to direct materials for the month of July: $\begin{array}{lr}\text { Standard price per kg } & \$ 18.00 \\\text { Actual purchase price per kg } & \$ 16.50 \\\text { Quantity purchased } & 3,100 \mathrm{~kg} \\\text { Quantity used } & 2,950 \mathrm{~kg} \\\text { Standard quantity allowed for actual output } & 3,000 \mathrm{~kg} \\\text { Actual output } & 1,000 \text { units }\end{array}$ Roberts Company reports its material price variances at the time of purchase.
What is the standard quantity of direct materials per unit for Roberts Company?

A)3.00 kg
B)3.10 kg
C)3.25 kg
D)3.50 kg

Question 38

Claire Company uses a standard costing system.The following information pertains to direct labour costs for the month of February: $\begin{array}{ll}\text { Standard direct labour rate per hour } & \$ 15.00 \\\text { Actual direct labour rate per hour } & \$ 13.50 \\\text { Labour rate variance } & \$ 18,000 \text { favourable } \\\text { Actual output } & 1,000 \text { units } \\\text { Standard hours allowed for actual production } & 10,000 \text { hours }\end{array}$

- What is the total labour budget variance for Claire Company?

A)$12,000 (F)
B)$12,000 (U)
C)$18,000 (F)
D)$18,000 (U)

Question 39

Bender Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labour for the 100 units of Product AA are as follows:
$\begin{array}{lll}\text { Materials: }&&\text { Standard } &\text { Actual }\\\text { Standard: } & 200 \text { kilograms at } \$ 3.00 \text { per kilogram } & \$ 600 \\\text { Actual: } & 220 \text { kilograms at } \$ 2.85 \text { per kilogram } &&\$627\\& & \\\text { Direct labour: } & & \\\text { Standard: } & 400 \text { hours at } \$ 15.00 \text { per hour }&6,000 \\\text { Actual: } & 368 \text { hours at } \$ 16.50 \text { per hour } &&6,072\end{array}$


-Refer to the figure.What is the labour efficiency variance for Bender Corporation?

A)$480 (F)
B)$480 (U)
C)$552 (F)
D)$552 (U)

Question 40

If the actual labour rate exceeds the standard labour rate and the actual labour hours exceed the number of hours allowed,what will be the labour rate variance and labour efficiency variance?
$\underline{\text { Labour Rate Variance }} \quad \underline{\text { Labour Efficiency Variance }}$

A) $\begin{array}{lll}&\text { Favourable } &&&&& \text { Favourable } \\\end{array}$
B) $\begin{array}{lll}&\text { Favourable } &&&&& \text { Unfavourable } \\\end{array}$
C) $\begin{array}{lll}&\text { Unfavourable } &&&& \text { Favourable } \\\end{array}$
D) $\begin{array}{lll} &\text { Unfavourable } &&&& \text { Unfavourable }\end{array}$

Question 41

Which of the following people is most likely responsible for an unfavourable variable overhead efficiency variance?

A)production supervisor
B)accountant
C)personnel director
D)supplier

Question 42

Crawford Company's standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000.The standard allows one direct labour hour per unit.During 2006,Crawford produced 110,000 units of product,incurred $630,000 of fixed overhead costs,and recorded 212,000 actual hours of direct labour. What is Crawford's fixed overhead spending variance?

A)$24,000 (F)
B)$30,000 (U)
C)$36,000 (U)
D)$60,000 (F)

Question 43

Bread Company has developed the following standards for one of its products. $\begin{array}{ll}\text { Direct materials: } & 10 \text { kilograms } \times \$ 3 \text { per kilogram } \\\text { Direct labour: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$


$\begin{array}{ll}\text { The following activity occurred during the month of June }\\\text { Materials purchased: } & 125,000 \text { kilograms at } \$ 2.60 \text { per } \\& \text { kilogram } \\\text { Materials used: } & 110,000 \text { kilograms } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labour: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.
What is the direct labour rate variance?

A)$8,000 unfavourable
B)$8,000 favourable
C)$12,000 unfavourable
D)$12,000 favourable

Question 44

Which of the following might cause a variable overhead efficiency variance?

A)using a poor quality material that needs more labour time to meet production standards
B)not taking a quantity discount
C)paying more than the standard rate for labour
D)increasing the pricing of the materials

Question 45

If a company produces fewer units than expected,what will be the result?

A)a favourable budget variance
B)an unfavourable spending variance
C)a favourable volume variance
D)an unfavourable volume variance

Question 46

Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.

-Refer to the figure. What is the fixed overhead spending variance for Griffen?

A)$2,000 (U)
B)$4,000 (U)
C)$8,000 (U)
D)$20,000 (U)

Question 47

What will the result be if variable manufacturing overhead is applied based on direct labour hours and there is an unfavourable direct labour efficiency variance?

A)The direct materials usage variance will be unfavourable.
B)The direct labour rate variance will be favourable.
C)The variable manufacturing overhead efficiency variance will be unfavourable.
D)The variable manufacturing overhead spending variance will be unfavourable.

Question 48

Harry Company's standard variable overhead rate is $6 per direct labour hour,and each unit requires 2 standard direct labour hours.During March,Harry recorded 6,000 actual direct labour hours,$37,000 actual variable overhead costs,and 2,900 units of product manufactured.
What is the total variable overhead variance for March for Harry?

A)$600 (U)
B)$1,000 (U)
C)$1,200 (U)
D)$2,200 (U)

Question 49

Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.

-Refer to the figure.What is the standard activity level on which Crawford based its fixed overhead rate?

A)50,000 direct labour hours
B)100,000 direct labour hours
C)105,000 direct labour hours
D)110,000 direct labour hours

Question 50

What is the term for the standard overhead cost assigned to each unit of product manufactured?

A)total manufacturing cost
B)predetermined overhead cost
C)applied overhead cost
D)estimated overhead cost

Question 51

Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units. Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labour hour are:
$\begin{array}{ll}\text { Fixed } & \$ 6.00 \\\text { Variable } & 10.00&\$16.00 \\\\\text {Units actually produced in current month}&&\text {9,000 units}\\\\\text {Actual factory overhead costs incurred}\\\text {(includes \( \$ 70,000 \) fixed)}&& \$ 156,000 \\\\\text {Actual direct labour hours}&&\text {9000 hours}\end{array}$

-Refer to the figure.What is the fixed overhead spending variance for Reynolds?

A)$0
B)$4,000 (F)
C)$6,000 (U)
D)$10,000 (U)

Question 52

Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units. Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labour hour are:
$\begin{array}{ll}\text { Fixed } & \$ 6.00 \\\text { Variable } & 10.00&\$16.00 \\\\\text {Units actually produced in current month}&&\text {9,000 units}\\\\\text {Actual factory overhead costs incurred}\\\text {(includes \( \$ 70,000 \) fixed)}&& \$ 156,000 \\\\\text {Actual direct labour hours}&&\text {9000 hours}\end{array}$

-Refer to the figure.What is the fixed overhead volume variance for Reynolds?

A)$0
B)$4,000 (F)
C)$6,000 (U)
D)$10,000 (F)

Question 53

Reynolds Manufacturing Company has the following information pertaining to a normal monthly 10,000 units. Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit.
Standard factory overhead rates per direct labour hour are:
$\begin{array}{ll}\text { Fixed } & \$ 6.00 \\\text { Variable } & 10.00&\$16.00 \\\\\text {Units actually produced in current month}&&\text {9,000 units}\\\\\text {Actual factory overhead costs incurred}\\\text {(includes \( \$ 70,000 \) fixed)}&& \$ 156,000 \\\\\text {Actual direct labour hours}&&\text {9000 hours}\end{array}$

-Refer to the figure.What is the variable overhead spending variance for Reynolds?

A)$0
B)$4,000 (F)
C)$10,000 (F)
D)$86,000 (U)

Question 54

Gina Production Company uses a standard costing system.The following information pertains to the current year. $\begin{array}{llr} \text { Actual factory overhead costs \( (\$ 16,500 \) is fixed) } &\$10,125\\ \text { Actual direct labour costs (11,250 hours) } &\$131,625\\ \text { Standard direct labour for 5,500 units: } &\\ \text {Standard hours allowed } &11,000 \text {hours}\\ \text { Labour rate } &\$12.00\\\end{array}$
The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & \underline{13,500} \\\text { Total factory overhead } & \underline{\$ 36,000} \\\end{array}$ What is the variable overhead efficiency variance for Gina Production Company?

A)$562.50 (F)
B)$562.50 (U)
C)$1,687.50 (F)
D)$3,000.00 (U)

Question 55

What is total fixed overhead budget variance always equal to?

A)fixed overhead volume variance
B)fixed overhead volume variance plus fixed overhead spending variance
C)total variable overhead budget variance plus fixed overhead spending variance
D)total variable overhead budget variance

Question 56

Bread Company has developed the following standards for one of its products.
$\begin{array}{ll}\text { Direct materials: } & 10 \text { kilograms } \times \$ 3 \text { per kilogram } \\\text { Direct labour: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$


$\begin{array}{ll}\text { The following activity occurred during the month of June }\\\text { Materials purchased: } & 125,000 \text { kilograms at } \$ 2.60 \text { per } \\& \text { kilogram } \\\text { Materials used: } & 110,000 \text { kilograms } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labour: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to the figure. What is the direct labour efficiency variance?

A)$8,000 favourable
B)$8,000 unfavourable
C)$20,000 unfavourable
D)$20,000 favourable

Question 57

Harry Company's standard variable overhead rate is $6 per direct labour hour,and each unit requires 2 standard direct labour hours.During March,Harry recorded 6,000 actual direct labour hours,$37,000 actual variable overhead costs,and 2,900 units of product manufactured. What is the variable overhead efficiency variance for March for Harry?

A)$600 (U)
B)$1,200 (U)
C)$2,200 (U)
D)$2,200 (F)

Question 58

Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.

-Refer to the figure.What is the variable overhead efficiency variance for Griffen?

A)$2,000 (U)
B)$4,000 (U)
C)$8,000 (U)
D)$20,000 (U)

Question 59

Bread Company has developed the following standards for one of its products.
$\begin{array}{ll}\text { Direct materials: } & 10 \text { kilograms } \times \$ 3 \text { per kilogram } \\\text { Direct labour: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$


$\begin{array}{ll}\text { The following activity occurred during the month of June }\\\text { Materials purchased: } & 125,000 \text { kilograms at } \$ 2.60 \text { per } \\& \text { kilogram } \\\text { Materials used: } & 110,000 \text { kilograms } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labour: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.

-Refer to the figure.What is the variable manufacturing overhead efficiency variance?

A)$1,000 favourable
B)$1,000 unfavourable
C)$2,000 favourable
D)$3,000 unfavourable

Question 60

What may cause an unfavourable variable overhead spending variance?

A)the use of excessive quantities of variable overhead items
B)the payment of lower prices for variable overhead items used
C)the use of excessive quantities of the variable overhead allocation base
D)the payment of higher direct materials purchases

Question 61

Gina Production Company uses a standard costing system.The following information pertains to the current year:
$\begin{array}{llr} \text {Actual factory overhead costs \( (\$ 16,500 \) is fixed) } &\$40,125\\ \text { Actual direct labour costs (11,250 hours) } &\$131,625\\ \text { Standard direct labour for 5,500 units: } &\\ \text {Standard hours allowed } &\text { 11,000 hours} \\ \text {Labour rate } &\$12.00\\\end{array}$
The factory overhead rate is based on an activity level of 10,000 units.Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}\text { Variable factory overhead } & \$ 22,500 \\\text { Fixed factory overhead } & \underline{13,500} \\\text { Total factory overhead } & \underline{\$ 36,000} \\\end{array}$ What is the fixed overhead volume variance for Gina Production Company?

A)$1,350 (F)
B)$1,350 (U)
C)$3,600 (F)
D)$4,125 (U)

Question 62

What is the formula for the fixed overhead spending variance?

A)Standard fixed overhead rate * Standard hours
B)AFOH - BFOH
C)Applied fixed overhead - Budgeted fixed overhead
D)(AH - SH) * SVOR

Question 63

Fixed manufacturing overhead was budgeted at $105,000,and 25,000 direct labour hours were budgeted.If the fixed overhead volume variance was $4,000 unfavourable and the fixed overhead spending variance was $1,500 favourable,what would be the fixed manufacturing overhead applied?

A)$101,000
B)$106,500
C)$107,500
D)$109,000

Question 64

Fixed manufacturing overhead was budgeted at $200,000,and 25,000 direct labour hours were budgeted.If the fixed overhead volume variance was $8,000 favourable and the fixed overhead spending variance was $6,000 unfavourable,what would be the fixed manufacturing overhead applied?

A)$194,000
B)$202,000
C)$206,000
D)$208,000

Question 65

Frekko Company collected the following information:
$\begin{array}{lr}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours @\$6 per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\end{array}$


$\begin{array}{l}\text { Actual output }&20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\end{array}$

-Refer to the figure.Using the three variance method,what is the spending variance?

A)$30,000 (F)
B)$30,000 (U)
C)$36,000 (F)
D)$36,000 (U)

Question 66

Frekko Company collected the following information:
$\begin{array}{lr}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours @\$6 per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\end{array}$


$\begin{array}{l}\text { Actual output }&20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\end{array}$

-Refer to the figure.Using the three variance method,what is the budget variance?

A)$6,000 (F)
B)$6,000 (U)
C)$24,000 (F)
D)$24,000 (U)

Question 67

If actual fixed manufacturing overhead was $54,000 and there was a $1,300 unfavourable spending variance and a $1,000 unfavourable volume variance,what would budgeted fixed manufacturing overhead have been?

A)$50,300
B)$52,700
C)$53,000
D)$56,300

Question 68

Regis Corporation uses two materials in the production of its product. The materials, $\mathrm{X}$ and $\mathrm{Y}$ , have the following standards:

$\begin{array}{llll}\text { Material }& \text { Standard Mix } &\text { Standard Unit Price } & \text { Standard Cost }\\\mathrm{X} & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \\\mathrm{Y} & 1.500 \text { units } & 3.00 \text { per unit } & \$ 4.500\\\\\text { Yield }& 4,000 \text { units }\end{array}$


$\text { During April, the following actual production information was provided: }$
$\begin{array}{cl}\text { Material } & \text { Actual Mix } \\ \mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\\\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to the figure.What is the materials usage variance?

A)$8,000 (F)
B)$8,000 (U)
C)$10,000 (U)
D)$18,000 (U)

Question 69

Regis Corporation uses two materials in the production of its product. The materials, $\mathrm{X}$ and $\mathrm{Y}$ , have the following standards:

$\begin{array}{llll}\text { Material }& \text { Standard Mix } &\text { Standard Unit Price } & \text { Standard Cost }\\\mathrm{X} & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \\\mathrm{Y} & 1.500 \text { units } & 3.00 \text { per unit } & \$ 4.500\\\\\text { Yield }& 4,000 \text { units }\end{array}$


$\text { During April, the following actual production information was provided: }$
$\begin{array}{cl}\text { Material } & \text { Actual Mix } \\ \mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\\\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to the figure.What is the labour mix variance?

A)$2,500 (F)
B)$2,500 (U)
C)$5,000 (F)
D)$5,000 (U)

Question 70

How are standards developed? What is the difference between ideal and currently attainable standards?

Question 71

Frekko Company collected the following information:
$\begin{array}{lr}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours @\$6 per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\end{array}$


$\begin{array}{l}\text { Actual output }&20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\end{array}$

-Refer to the figure.Using the two variance method,what is the volume variance?

A)$6,000 (F)
B)$6,000 (U)
C)$40,000 (F)
D)$40,000 (U)

Question 72

Regis Corporation uses two materials in the production of its product. The materials, $\mathrm{X}$ and $\mathrm{Y}$ , have the following standards:

$\begin{array}{llll}\text { Material }& \text { Standard Mix } &\text { Standard Unit Price } & \text { Standard Cost }\\\mathrm{X} & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \\\mathrm{Y} & 1.500 \text { units } & 3.00 \text { per unit } & \$ 4.500\\\\\text { Yield }& 4,000 \text { units }\end{array}$


$\text { During April, the following actual production information was provided: }$
$\begin{array}{cl}\text { Material } & \text { Actual Mix } \\ \mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\\\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to the figure.What is the materials mix variance?

A)$5,000 (F)
B)$10,000 (F)
C)$10,000 (U)
D)$15,000 (F)

Question 73

Crawford Company’s standard fixed overhead cost is $6 per direct labour hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labour hour per unit. During 2006, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labour.

-Refer to the figure. What is Crawford's fixed overhead volume variance for the current year?

A)$24,000 (F)
B)$36,000 (U)
C)$60,000 (F)
D)$60,000 (U)

Question 74

Frekko Company collected the following information:
$\begin{array}{lr}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours @\$6 per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\end{array}$


$\begin{array}{l}\text { Actual output }&20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\end{array}$

-Refer to the figure.Using the two variance method,what is the budget variance?

A)$30,000 (F)
B)$30,000 (U)
C)$70,000 (F)
D)$70,000 (U)

Question 75

The following standard costs were developed for one of the John Miller Company's products:
STANDARD COST CARD PER UNIT
$\begin{array}{lr}\text { Materials: } 10 \text { kilograms } \times \$ 8 \text { per kilogram } & \$ 80.00 \\\text { Direct labour: } 3 \text { hours } \times \$ 32 \text { per hour } & 96.00 \\\text { Variable manufacturing overhead: } \$ 20 \text { per hour } & ? \\\text { Fixed manufacturing overhead } & ? \\\text { Total standard cost per unit } &?\end{array}$ The following information is available regarding the company's operations for the period:
$\begin{array}{ll}\text { Units produced: } & 15,000 \\\text { Materials purchased: } & 180,000 \text { kilograms } @ \$ 7.20 \text { per } \\& \text { kilogram } \\\text { Materials used: } & 160,000 \text { kilograms } \\\text { Direct labour: } & 18,000 \text { hours } @, \$ 37.00 \text { per hour }\end{array}$


$\begin{array}{ll}\text { Manufacturing overhead incurred: }\\\text { Variable } & \$ 880,000 \\\text { Fixed } & \$ 2.560 .000\end{array}$ Budgeted fixed manufacturing overhead for the period is $2,400,000,and expected capacity for the period is 40,000 direct labour hours.
a.Calculate the standard fixed manufacturing overhead rate.
b.Complete the standard cost card for the product.

Question 76

Regis Corporation uses two materials in the production of its product. The materials, $\mathrm{X}$ and $\mathrm{Y}$ , have the following standards:

$\begin{array}{llll}\text { Material }& \text { Standard Mix } &\text { Standard Unit Price } & \text { Standard Cost }\\\mathrm{X} & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \\\mathrm{Y} & 1.500 \text { units } & 3.00 \text { per unit } & \$ 4.500\\\\\text { Yield }& 4,000 \text { units }\end{array}$


$\text { During April, the following actual production information was provided: }$
$\begin{array}{cl}\text { Material } & \text { Actual Mix } \\ \mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\\\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to the figure.What is the labour yield variance?

A)$4,000 (F)
B)$4,000 (U)
C)$6,250 (F)
D)$6,250 (U)

Question 77

Starling Manufacturing has developed the following standards for one of its products.
$\begin{array}{lr}\text {SIANDARD VARIABLE COSI CARD}\\ \text {One Unit of Product}\\\text { Materials: } 5 \text { metres } \times \$ 6 \text { per metre } & \$ 30.00 \\\text { Direct labour: } 2 \text { hours } \times \$ 8 \text { per hour } & 16.00 \\\text { Variable manufacturing overhead: } 2 \text { hours } \times \$ 5 \text { per hour } & 10.00 \\\text { Total standard variable cost per unit } & \$ 56.00\end{array}$

The company records materials price variances at the time of purchase.

The following activity accured during the month of December:

$\begin{array} { l l } \text { Materials purchased: } & 5,200 \text { metres costing } \$ 29,900 \\ \text { Materials used: } & 4,750 \text { metres } \\ \text { Units produced: } & 1,000 \text { urits } \\ \text { Direct labour: } & 2,100 \text { hours costing } \$ 17,850 \end{array}$
a.Calculate the direct materials price variance.
b.Calculate the direct materials usage variance.
c.Calculate the direct labour rate variance.
d.Calculate the direct labour efficiency variance.

Question 78

Frekko Company collected the following information:
$\begin{array}{lr}\text { Standard costs per unit: }\\\text { Variable overhead } & 4 \text { machine hours @\$6 per machine hour } \\\text { Fixed overhead } & 4 \text { machine hours } @ \$ 10 \text { per machine hour }\end{array}$


$\begin{array}{l}\text { Actual output }&20,000 \text { units } \\\text { Denominator (normal capacity) output } & 21,000 \text { units } \\\text { Actual machine hours } & 79,000 \text { machine hours } \\\text { Actual variable overhead cost } & \$ 540,000 \\\text { Actual fixed overhead cost } & \$ 810,000\end{array}$

-Refer to the figure.Using the two variance method,what is the total variance?

A)$30,000 (F)
B)$30,000 (U)
C)$70,000 (F)
D)$70,000 (U)

Question 79

Regis Corporation uses two materials in the production of its product. The materials, $\mathrm{X}$ and $\mathrm{Y}$ , have the following standards:

$\begin{array}{llll}\text { Material }& \text { Standard Mix } &\text { Standard Unit Price } & \text { Standard Cost }\\\mathrm{X} & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \\\mathrm{Y} & 1.500 \text { units } & 3.00 \text { per unit } & \$ 4.500\\\\\text { Yield }& 4,000 \text { units }\end{array}$


$\text { During April, the following actual production information was provided: }$
$\begin{array}{cl}\text { Material } & \text { Actual Mix } \\ \mathrm{X} & 30,000 \text { units } \\\mathrm{Y} & 20,000 \text { units } \\\\\text { Yield } & 36,000 \text { units }\end{array}$

-Refer to the figure.What is the labour efficiency variance?

A)$2,500 (F)
B)$3,750 (F)
C)$3,750 (U)
D)$6,250 (U)

Question 80

When does a mix variance occur?

A)when the actual mix of inputs differs from the standard mix
B)when the actual output differs from the standard output
C)when actual materials used are greater than standard materials
D)when actual labour spending is greater than standard labour spending