Deck 10: Standard Costs and Overhead Analysis

Question 1

Tower Company planned to produce 3,000 units of its single product,Titactium,during November.The standards for one unit of Titactium specify six kilograms of materials at $0.30 per kilogram.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,what could one assume?

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

Answer 1

C

Question 2

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

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

Answer 2

D

Question 3

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.What is the standard direct material cost for cloth per unit of finished product?

A) $4.80.
B) $6.00.
C) $7.00.
D) $7.50.

Answer 3

D

Question 4

The Porter Company has a standard cost system.In July,the company purchased and used 22,500 kilograms 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 kilograms.What was the materials price variance for July?

A) $2,725 favourable.
B) $2,725 unfavourable.
C) $3,250 favourable.
D) $3,250 unfavourable.Variance = 22,500 * 2.50 - 53,000 = $3,250 favourable.

Question 5

(Appendix 10B)Which of the following entries would correctly record the charging of direct labour costs to Work in Process given an unfavourable labour efficiency variance and a favourable labour rate variance?

A) A debit to Work in Process,and credits to Labour Efficiency Variance,Labour Rate Variance,and Wages Payable.
B) A debit to Work in Process and an equal credit to Wages Payable.
C) Debits to Work in Process and Labour Efficiency Variance,and credits to Labour Rate Variance and Wages Payable.
D) Debits to Work in Process and Labour Rate Variance,and credits to Labour Efficiency Variance and Wages Payable.

Question 6

What does a favourable labour rate variance indicate?

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

Question 7

(Appendix 10B)Drake Company purchased materials on account.The entry to record the purchase of materials having a standard cost of $1.50 per kilogram from a supplier at $1.60 per kilogram would include which of the following?

A) A credit to Raw Materials Inventory.
B) A debit to Work in Process.
C) A credit to Materials Price Variance.
D) A debit to Materials Price Variance.

Question 8

Which of the following statements concerning practical standards is NOT correct?

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

Question 9

What does an unfavourable labour efficiency variance indicate?

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

Question 10

(Appendix 10B)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) The standard hours allowed for the units produced were greater than actual direct labour hours used.
C) The actual total direct labour costs incurred were less than standard direct labour costs allowed for the units produced.
D) The number of units produced was less than the number of units budgeted for the perioD.

Question 11

Which of the following refers to standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times?

A) Normal standards.
B) Practical standards.
C) Ideal standards.
D) Budgeted standards.

Question 12

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

Question 13

Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance?

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

Question 14

Cox Company's direct material costs for the month of January were as follows:
What was the favourable direct materials quantity variance for January?

A) $3,360.
B) $3,375.
C) $3,400.
D) $3,800.Material quantity variance = $3.40 * (15,000 - 16,000)=$3,400.

Question 15

Under a standard cost system,who is usually held responsible for the materials price variances?

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

Question 16

A favourable materials price variance coupled with an unfavourable materials quantity variance would MOST likely result from which of the following?

A) Problems with processing machines.
B) Purchase of low quality materials.
C) Problems with labour efficiency.
D) Changes in the product mix.

Question 17

What do the terms "standard quantity allowed" or "standard hours allowed" mean?

A) The actual output in units multiplied by the standard output allowed.
B) The actual input in units multiplied by the standard output allowed.
C) The actual output in units multiplied by the standard input allowed.
D) The standard output in units multiplied by the standard input alloweD.

Question 18

A labour efficiency variance resulting from the use of poor quality materials should be charged to which/whom?

A) The production manager.
B) The purchasing agent.
C) Manufacturing overhead.
D) The engineering department.

Question 19

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

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

Question 20

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

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

Question 21

The Fletcher Company uses standard costing.The following data are available for October:
What was the standard quantity of material allowed for October production?

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

Question 22

During March,Younger Company's direct material costs for product T were as follows:
What was Younger's material quantity variance for March?

A) $1,250 unfavourable.
B) $1,250 favourable.
C) $1,300 unfavourable.
D) $1,300 favourable.

Question 23

Lab Corp.uses a standard cost system.Direct labour information for Product CER for the month of October follows:
What were the actual hours worked?

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

Question 24

The following labour standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What was the labour efficiency variance for the month?

A) $16,029 favourable.
B) $16,577 favourable.
C) $19,017 favourable.
D) $19,017 unfavourable.

Question 25

The Reedy Company uses a standard costing system.The following data are available for November:
What was the actual direct labour rate for November?

A) $8.80.
B) $8.90.
C) $9.00
D) $9.20.

Question 26

Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour.During June,1,000 units were produced using 4,100 hours at $12.20 per hour.What was the direct labour efficiency variance?

A) $1,200 favourable.
B) $1,200 unfavourable.
C) $2,020 favourable.
D) $2,020 unfavourable.

Question 27

The following standards for variable manufacturing overhead have been established for a company that makes only one product:
The following data pertain to operations for the last month:
What was the variable overhead spending variance for the month?

A) $130 favourable.
B) $130 unfavourable.
C) $4,338 unfavourable.
D) $4,450 unfavourable.

Question 28

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

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

Question 29

For the month of April,Thorp Co.'s records disclosed the following data relating to direct labour:
For the month of April,actual direct labour hours amounted to 2,000.In April,what was Thorp's standard direct labour rate per hour?

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

Question 30

Information on Kennedy Company's direct material costs follows:
What was the actual purchase price per unit,rounded to the nearest cent?

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

Question 31

The following labour standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What was the labour rate variance for the month?

A) $1,295 favourable.
B) $1,295 unfavourable.
C) $2,950 favourable.
D) $2950 unfavourable.

Question 32

Last month,75,000 kilograms of direct materials were purchased,and 71,000 kilograms were used.If the actual purchase price per kilogram was $0.50 more than the standard purchase price per kilogram,what was the materials price variance?

A) $2,000 favourable.
B) $35,500 unfavourable.
C) $37,500 favourable.
D) $37,500 unfavourable.

Question 33

The following standards for variable manufacturing overhead have been established for a company that makes only one product:
The following data pertain to operations for the last month:
What was the variable overhead efficiency variance for the month?

A) $0.
B) $16,817 unfavourable.
C) $580 unfavourable.
D) $17,397 unfavourable.

Question 34

What was the direct materials quantity variance for March?

A) $3,500 favourable.
B) $3,500 unfavourable.
C) $52,500 favourable.
D) $52,500 unfavourable.

Question 35

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

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

Question 36

What was the price variance for the direct materials acquired by the company during March?

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

Question 37

The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What was the materials quantity variance for the month?

A) $6,664 favourable.
B) $6,732 favourable.
C) $13,720 unfavourable.
D) $13,860 unfavourable.

Question 38

The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What was the materials price variance for the month?

A) $2,250 favourable.
B) $7,540 unfavourable.
C) $7,660 unfavourable.
D) $24,317 unfavourable.

Question 39

Information on Fleming Company's direct material costs follows:
What was the company's direct material price variance?

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

Question 40

Borden Enterprises uses standard costing.For the month of April,the company reported the following data:
What was the labour rate variance for April?

A) $2,850 favourable.
B) $2,850 unfavourable.
C) $3,760 favourable.
D) $3,760 unfavourable.

Question 41

What was the labour efficiency variance for January? Do not round intermediate calculations.

A) $110 favourable.
B) $130 unfavourable.
C) $350 unfavourable.
D) $475 favourable.

Question 42

What was the variable overhead efficiency variance?

A) $500 favourable.
B) $500 unfavourable.
C) $520 favourable.
D) $520 unfavourable.

Question 43

What was the total variable overhead variance for November?

A) $175 unfavourable.
B) $225 favourable.
C) $225 unfavourable.
D) $400 unfavourable.

Question 44

What was the materials price variance for November?

A) $810 favourable.
B) $810 unfavourable.
C) $2,310 favourable.
D) $2,310 unfavourable.

Question 45

What was the direct labour rate variance for March?

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

Question 46

What was the materials quantity variance for November?

A) $300 unfavourable.
B) $1,200 favourable.
C) $1,200 unfavourable.
D) $1,500 favourable.

Question 47

What was the materials quantity variance?

A) $760 favourable.
B) $760 unfavourable.
C) $800 unfavourable.
D) $4,000 unfavourable.

Question 48

(Appendix 10B)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 debit.
D) $3,600 credit.

Question 49

(Appendix 10B)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 credit.
D) $6,000 debit.15,000 * 1.50 - 24,000 = $1,500 debit.

Question 50

What was the labour efficiency variance?

A) $800 favourable.
B) $800 unfavourable.
C) $840 favourable.
D) $840 unfavourable.

Question 51

What was the labour rate variance?

A) $480 favourable.
B) $480 unfavourable.
C) $440 favourable.
D) $440 unfavourable.

Question 52

What was the variable overhead spending variance?

A) $220 favourable.
B) $220 unfavourable.
C) $240 favourable.
D) $240 unfavourable.

Question 53

What was the labour rate variance for November?

A) $550 unfavourable.
B) $1,050 unfavourable.
C) $2,150 favourable.
D) $2,150 unfavourable.

Question 54

What was the materials quantity variance for January?

A) $300 favourable.
B) $300 unfavourable.
C) $750 favourable.
D) $800 unfavourable.

Question 55

What was the direct labour efficiency variance for March?

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

Question 56

What was the labour rate variance for January?

A) $475 favourable.
B) $475 unfavourable.
C) $585 favourable.
D) $585 unfavourable.

Question 57

What was the labour efficiency variance for November?

A) $550 unfavourable.
B) $1,050 unfavourable.
C) $1,600 favourable.
D) $1,600 unfavourable.

Question 58

What was the materials price variance for January?

A) $1,300 unfavourable.
B) $1,640 favourable.
C) $1,640 unfavourable.
D) $1,700 favourable.

Question 59

What was the total variance for variable overhead for January?

A) $40 favourable.
B) $85 favourable.
C) $100 unfavourable.
D) $125 favourable.

Question 60

What was the materials price variance?

A) $400 favourable.
B) $400 unfavourable.
C) $600 favourable.
D) $600 unfavourable.

Question 61

What was the materials price variance for the month?

A) $2,550 favourable.
B) $2,550 unfavourable.
C) $2,700 favourable.
D) $2,700 unfavourable.

Question 62

What was the labour rate variance?

A) $1,125 favourable.
B) $1,125 unfavourable.
C) $2,500 favourable.
D) $2,500 unfavourable.

Question 63

What was the materials quantity variance for the month?

A) $1,260 unfavourable.
B) $1,309 unfavourable.
C) $10,880 unfavourable.
D) $11,220 unfavourable.

Question 64

What was the materials price variance?

A) $420 favourable.
B) $420 unfavourable.
C) $700 favourable.
D) $700 unfavourable.

Question 65

What was the variable overhead spending variance for May?

A) $1,710 favourable.
B) $1,710 unfavourable.
C) $2,290 favourable.
D) $2,290 unfavourable.

Question 66

What was the materials quantity variance?

A) $1,120 favourable.
B) $1,120 unfavourable.
C) $1,820 favourable.
D) $1,820 unfavourable.

Question 67

What was the materials quantity variance for the month?

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

Question 68

What was the materials quantity variance for the month?

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

Question 69

What was the materials price variance for the month?

A) $3,640 favourable.
B) $3,640 unfavourable.
C) $4,060 favourable.
D) $4,060 unfavourable.

Question 70

(Appendix 10B)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) $240 credit.
B) $240 debit.
C) $340 debit.
D) $340 credit.

Question 71

What was the labour efficiency variance for the month?

A) $7,230 favourable.
B) $7,230 unfavourable.
C) $9,030 unfavourable.
D) $9,150 unfavourable.

Question 72

(Appendix 10B)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) $480 credit.
C) $1,200 debit.
D) $1,200 credit.

Question 73

What was the total standard cost for direct labour for May?

A) $120,000.
B) $161,000.
C) $168,000.
D) $180,000.

Question 74

What was the labour efficiency variance?

A) $1,375 favourable.
B) $1,375 unfavourable.
C) $1,600 favourable.
D) $1,600 unfavourable.

Question 75

What was the actual direct labour rate for May in dollars per hour?

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

Question 76

What was the variable overhead spending variance for the month?

A) $1,715 favourable.
B) $1,715 unfavourable.
C) $2,870 favourable.
D) $2,870 unfavourable.

Question 77

What was the materials price variance for the month?

A) $430 favourable.
B) $430 unfavourable.
C) $480 favourable.
D) $480 unfavourable.

Question 78

What are the standard hours allowed to make one unit of finished product?

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

Question 79

What was the total standard cost for variable overhead for May?

A) $40,000.
B) $50,000.
C) $56,000.
D) $60,000.

Question 80

What was the labour rate variance for the month?

A) $240 favourable.
B) $240 unfavourable.
C) $1,920 favourable.
D) $1,920 unfavourable.