Question 1

If the materials price variance is $3600 F and the materials quantity and labor variances are each $2700 U what is the total materials variance?
A)$3600 F
B)$2700 U
C)$900 F
D)$4050 U

Accepted Answer

Total materials variance = materials price variance + materials quantity variance
Given that materials price variance = $3600 F and materials quantity variance = $2700 U
So, Total materials variance = $3600 F + (-$2700 U) = $900 F.
Therefore, the correct option is C.

Question 2

The total materials variance is equal to the
A)materials price variance.
B)difference between the materials price variance and materials quantity variance.
C)product of the materials price variance and the materials quantity variance.
D)sum of the materials price variance and the materials quantity variance.

Accepted Answer

The total materials variance is the combination of both the materials price variance and the materials quantity variance. Therefore, the correct answer is the sum of the materials price variance and the materials quantity variance, which is option D. Option A only covers the materials price variance, option B is the difference between the two variances, and option C is the product of the two variances, which is incorrect.

Question 3

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s materials price variance is
A)$120 U.
B)$1200 U.
C)$1080 U.
D)$1200 F.

Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity = ($2.20 - $2.00) x 6000 = $0.20 x 6000 = $1200 Unfavorable (U).

Question 4

The matrix approach to variance analysis
A)will yield slightly different variances than the formula approach.
B)is more accurate than the formula approach.
C)does not separate the price and quantity variance calculations.
D)provides a convenient structure for determining each variance.

Accepted Answer

The matrix approach provides a convenient structure for determining each variance, making it easier for managers to understand the sources of variances and take corrective actions. While it may result in slightly different variances than the formula approach, it is still an accurate method that separates the price and quantity variance calculations.

Question 5

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s materials quantity variance is
A)$1200 U.
B)$1200 F.
C)$1320 F.
D)$1320 U.

Accepted Answer

The answer of Edgar Inc.has a materials price standard of...

Question 6

The standard rate of pay is $20 per direct labor hour.If the actual direct labor payroll was $117600 for 6000 direct labor hours worked the direct labor price (rate) variance is
A)$2400 unfavorable.
B)$2400 favorable.
C)$3000 unfavorable.
D)$3000 favorable.

Accepted Answer

The direct labor price (rate) variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The actual rate is $117600 / 6000 hours = $19.6 per hour. The variance is ($19.6 - $20) x 6000 = -$0.4 x 6000 = -$2400, which is favorable because the actual rate is less than the standard rate.

Question 7

Information on Jayhawk's direct labor costs for the month of August is as follows: $\begin{array}{lr}
\text { Actual rate } & \$ 10 \
\text { Standard hours } & 11,000 \
\text { Actual hours } & 10,000 \
\text { Direct labor price variance-unfavorable } & \$ 4,000
\end{array}$
 What was the standard rate for August?
A)$9.96
B)$9.60
C)$10.40
D)$10.04

Accepted Answer

The answer of Information on Jayhawk's direct labor costs for...

Question 8

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour.If in producing 1800 units the actual direct labor cost was $48000 for 3000 direct labor hours worked the total direct labor variance is
A)$1800 unfavorable.
B)$6000 favorable.
C)$3750 unfavorable.
D)$6000 unfavorable.

Accepted Answer

The answer of The per-unit standards for direct labor are...

Question 9

Variances from standards are
A)expressed in total dollars.
B)expressed on a per-unit basis.
C)expressed on a percentage basis.
D)All of these answers are correct.

Accepted Answer

The answer of Variances from standards are
A)expressed in total dollars.
B)expressed...

Question 10

The formula for the materials price variance is
A)(AQ × SP) - (SQ × SP).
B)(AQ × AP) - (AQ × SP).
C)(AQ × AP) - (SQ × SP).
D)(AQ × SP) - (SQ × AP).

Accepted Answer

The materials price variance formula is (Actual Quantity (AQ) × Actual Price (AP)) - (Actual Quantity (AQ) × Standard Price (SP)), which identifies the difference between what the materials actually cost and what they should have cost at the standard price.

Question 11

The standard quantity allowed for the units produced was 4500 pounds the standard price was $2.50 per pound and the materials quantity variance was $375 favorable.Each unit uses 1 pound of materials.How many units were actually produced?
A)4350
B)4500
C)11625
D)4650

Accepted Answer

The answer of The standard quantity allowed for the units...

Question 12

A company uses 8400 pounds of materials and exceeds the standard by 300 pounds.The quantity variance is $1800 unfavorable.What is the standard price?
A)$2
B)$4
C)$6
D)Cannot be determined from the data provided.

Accepted Answer

Quantity variance = (actual quantity - standard quantity) x standard price
-1800 = (8400 + 300 - standard quantity) x standard price
-1800 = (8700 - standard quantity) x standard price
-1800 = (8700 - standard quantity) x P
-1800/P = 8700 - standard quantity
Standard quantity = 8700 - (-1800/P)
Standard quantity = 8700 + 1800/P

We are not given the actual price, so we cannot solve for standard price directly. However, we do know that the company used 8400 pounds of materials and exceeded the standard by 300 pounds, so:

Actual quantity = standard quantity + 300
8400 = (8700 + 1800/P) + 300
7800 = 1800/P
P = 6

Therefore, the standard price is $6.

Question 13

A company uses 20000 pounds of materials for which it paid $6.00 a pound.The materials price variance was $15000 unfavorable.What is the standard price per pound?
A)$0.75
B)$5.25
C)$6.00
D)$6.75

Accepted Answer

Material price variance = (Actual price - Standard price) x Actual quantity

$15000 = (Actual price - Standard price) x 20000 pounds

Actual price = $6.75 per pound (given)

$15000 = ($6.75 - Standard price) x 20000 pounds

Standard price = $5.25 per pound.

Question 14

The standard number of hours that should have been worked for the output attained is 6000 direct labor hours and the actual number of direct labor hours worked was 6300.If the direct labor price variance was $3150 unfavorable and the standard rate of pay was $9 per direct labor hour what was the actual rate of pay for direct labor?
A)$8.50 per direct labor hour
B)$7.50 per direct labor hour
C)$9.50 per direct labor hour
D)$9.00 per direct labor hour

Accepted Answer

First, we need to calculate the standard labor rate per hour:
Standard rate = Total standard cost for direct labor ÷ Standard number of direct labor hours
Standard rate = (Direct labor rate variance + Actual direct labor cost) ÷ Standard number of direct labor hours
Standard rate = ($3,150 unfavorable + (6000 hours × $9/hour)) ÷ 6000 hours
Standard rate = $54,150 ÷ 6000 hours
Standard rate = $9.025/hour (rounded to $9.03/hour)

Next, we can calculate the actual labor rate per hour using the same formula, but with the actual number of direct labor hours worked:
Actual rate = Total actual cost for direct labor ÷ Actual number of direct labor hours
Actual rate = Actual direct labor cost ÷ Actual number of direct labor hours
Actual rate = ($54,150 - $3,150 unfavorable) ÷ 6,300 hours
Actual rate = $51,000 ÷ 6,300 hours
Actual rate = $8.10/hour (rounded to $8.11/hour)

Therefore, the actual rate of pay for direct labor was $8.11 per direct labor hour, which is $0.92 lower than the standard rate. This is because the direct labor price variance was unfavorable, meaning that the actual rate paid was higher than the standard rate. To find out how much higher, we can subtract the standard rate from the actual rate:
Actual rate - Standard rate = $8.11/hour - $9.03/hour
Actual rate - Standard rate = -$0.92/hour
So the actual rate was $0.92/hour lower than the standard rate. To find the actual rate paid, we subtract this amount from the standard rate:
Actual rate paid = Standard rate - (Actual rate - Standard rate)
Actual rate paid = $9.03/hour - (-$0.92/hour)
Actual rate paid = $9.03/hour + $0.92/hour
Actual rate paid = $9.95/hour
Therefore, the best choice is C, $9.50 per direct labor hour, since it is closest to our calculated actual rate of $9.95/hour. However, it is important to note that the actual rate could vary depending on the rounding method used.

Question 15

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s total materials variance is
A)$2400 U.
B)$2400 F.
C)$2520 U.
D)$2520 F.

Accepted Answer

The answer of Edgar Inc.has a materials price standard of...

Question 16

The formula for the materials quantity variance is
A)(SQ × AP) - (SQ × SP).
B)(AQ × AP) - (AQ × SP).
C)(AQ × SP) - (SQ × SP).
D)(AQ × AP) - (SQ × SP).

Accepted Answer

The answer of The formula for the materials quantity variance...

Question 17

A company purchases 20000 pounds of materials.The materials price variance is $4000 favorable.What is the difference between the standard and actual price paid for the materials?
A)$1.00
B)$0.20
C)$5.00
D)Cannot be determined from the data provided.

Accepted Answer

We can use the formula for materials price variance to calculate the difference between the standard and actual price paid: 
MPV = (SP-AP)AQ 
Given: MPV = $4000 F 
AQ = 20000 lbs 
Solving for SP-AP: 
$4000 = (SP-AP)20000 
SP-AP = $0.20 
Therefore, the actual price paid was $0.20 less than the standard price.

Question 18

Which one of the following statements is true?
A)If the materials price variance is unfavorable then the materials quantity variance must also be unfavorable.
B)If the materials price variance is unfavorable then the materials quantity variance must be favorable.
C)Price and quantity variances move in the same direction.If one is favorable the others will be as well.
D)There is no correlation of favorable or unfavorable for price and quantity variances.

Accepted Answer

Price and quantity variances are independent of each other. An unfavorable price variance does not dictate the direction of the quantity variance, and vice versa. They are calculated separately and can each be favorable, unfavorable, or neutral regardless of the other's outcome.

Question 19

A favorable variance
A)is an indication that the company is not operating in an optimal manner.
B)implies a positive result if quality control standards are met.
C)implies a positive result if standards are flexible.
D)means that standards are too loosely specified.

Accepted Answer

A favorable variance means that actual results are better than expected results. If quality control standards are met, it implies a positive result, as it means that the company is producing goods or services of good quality. Flexible standards may also result in a favorable variance, as they allow for some variation in actual results while still meeting the overall goal. However, it does not necessarily mean that standards are too loosely specified, as they may still be strict enough to ensure good performance.

Question 20

The total variance is $35000.The total materials variance is $14000.The total labor variance is twice the total overhead variance.What is the total overhead variance?
A)$3500
B)$7000
C)$10500
D)$14000

Accepted Answer

Let OHV be the total overhead variance.

Total Variance = Materials Variance + Labor Variance + OHV 
$35000 = $14000 + Labor Variance + OHV

Given that Labor Variance = 2 OHV

Substituting, 
$35000 = $14000 + (2 OHV) + OHV 
$21000 = 3 OHV 
OHV = $7000

Therefore, the answer is B, $7000.

Quiz 16: Activity Based Costing

If the materials price variance is $3600 F and the materials quantity and labor variances are each $2700 U what is the total materials variance?

The total materials variance is equal to the

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s materials price variance is

The matrix approach to variance analysis

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s materials quantity variance is

The standard rate of pay is $20 per direct labor hour.If the actual direct labor payroll was $117600 for 6000 direct labor hours worked the direct labor price (rate) variance is

The per-unit standards for direct labor are 2 direct labor hours at $15 per hour.If in producing 1800 units the actual direct labor cost was $48000 for 3000 direct labor hours worked the total direct labor variance is

Variances from standards are

The formula for the materials price variance is

The standard quantity allowed for the units produced was 4500 pounds the standard price was $2.50 per pound and the materials quantity variance was $375 favorable.Each unit uses 1 pound of materials.How many units were actually produced?

A company uses 8400 pounds of materials and exceeds the standard by 300 pounds.The quantity variance is $1800 unfavorable.What is the standard price?

A company uses 20000 pounds of materials for which it paid $6.00 a pound.The materials price variance was $15000 unfavorable.What is the standard price per pound?

Edgar Inc.has a materials price standard of $2.00 per pound.Six thousand pounds of materials were purchased at $2.20 a pound.The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s total materials variance is

The formula for the materials quantity variance is

A company purchases 20000 pounds of materials.The materials price variance is $4000 favorable.What is the difference between the standard and actual price paid for the materials?

Which one of the following statements is true?

A favorable variance

The total variance is $35000.The total materials variance is $14000.The total labor variance is twice the total overhead variance.What is the total overhead variance?