Deck 10: Standard Costing: a Managerial Control Tool

Question 1

What are price standards based on?

A)the amount that should be used per unit of output
B)the amount that should be paid for the total quantity of input to be used
C)the amount that should be paid per unit of output
D)the amount that should be paid per unit of input purchased

Answer 1

B

Question 2

Which formula is used to compute standard hours allowed?

A)unit labour standard × actual output
B)unit labour standard × standard output
C)unit labour standard × actual input
D)unit labour standard × standard input

Answer 2

A

Question 3

Which of the following is NOT characteristic of engineering studies?

A)They can determine the most efficient way to operate.
B)They are often achievable by operating personnel.
C)They provide very rigorous guidelines.
D)They are ideal standards.

Answer 3

B

Question 4

Which formula is used to compute the standard quantity of materials allowed?

A)unit quantity standard × standard output
B)unit quantity standard × actual input
C)unit quantity standard × standard input
D)unit quantity standard × actual output

Question 5

How are costs assigned in a standard cost system?

A)actual direct materials, actual direct labour, and budgeted manufacturing overhead
B)actual direct materials, actual direct labour, and actual manufacturing overhead
C)standard direct materials, standard direct labour, and standard manufacturing overhead
D)budgeted direct materials, standard direct labour, and standard manufacturing overhead

Question 6

Which of the following is NOT characteristic of normal costing systems?

A)A normal costing system predetermines overhead costs.
B)A normal costing system assigns direct materials and direct labour to products using a predetermined rate.
C)In a normal costing system, overhead is assigned using a budgeted rate and actual activity.
D)A normal costing system has less capacity for control than a standard costing system.

Question 7

What do variances indicate?

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

Question 8

How are costs assigned in a normal cost system?

A)actual direct materials, actual direct labour, and budgeted manufacturing overhead
B)actual direct materials, actual direct labour, and actual manufacturing overhead
C)budgeted direct materials, standard direct labour, and standard manufacturing overhead
D)budgeted direct materials, actual direct labour, and standard manufacturing overhead

Question 9

Why are standard cost systems adopted?

A)to collect additional information
B)to increase efficiency in a just-in-time environment
C)to improve planning and control, and to facilitate product costing
D)to enhance the operational control of firms that emphasize continuous improvement

Question 10

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?

A)The standard cost system enhances the operational control.
B)The materials price variance may encourage the purchasing department to buy in smaller quantities to reduce inventories.
C)Variances can be computed and presented in reports to higher-level managers.
D)The operational level will benefit from the detailed computation of variances.

Question 11

Which of the following are sources of quantity standards?

A)historical experience
B)budget studies
C)input from interested personnel
D)benchmarks

Question 12

Which of the following statements is characteristic of currently attainable standards?

A)They can be achieved under efficient operating conditions.
B)No allowance is made for normal breakdowns, interruptions, etc.
C)They are challenging and not achievable.
D)They tend to achieve lower performance levels from personnel.

Question 13

Which of the following provides both the production data needed to calculate the standard unit cost and the underlying details for the standard cost per unit?

A)the standard cost sheet
B)the standard production budget
C)the balance sheet
D)the standard work-in-process account

Question 14

Which of the following standards are based on the amount of input that should be used per unit of output?

A)quantity standards
B)price standards
C)ideal standards
D)kaizen standards

Question 15

During November,10,000 units were produced.The standard quantity of material allowed per unit was 10 kg at a standard cost of $3 per kilogram.Suppose the company had an unfavourable usage variance of $18,750 for November.What would have been the actual quantity of materials used?

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

Question 16

Which of the following is NOT an advantage of standard costing over normal costing and actual costing?

A)provides a greater capacity for control
B)makes it easy to distinguish the FIFO and weighted average methods of accounting for beginning inventory costs
C)makes it unnecessary to compute a unit cost for each equivalent unit cost category
D)provides for readily available unit cost information

Question 17

How do standard cost systems enhance operational control?

A)through efficiency variances, which indicate the need for corrective action
B)through price variances, which indicate the need for better spending control
C)through standard costs, which indicate the desired cost of a unit of input
D)through actual costs, which indicate the price received for units sold

Question 18

Which statement applies to ideal standards?

A)Allow for machine breakdowns, slack, or lack of momentary skill.
B)Demand minimum efficiency.
C)Can be achieved only if everything operates perfectly.
D)Can be achieved under efficient operations.

Question 19

Which department is responsible for setting price standards for materials and labour?

A)Personnel must consider discounts, freight, and quality.
B)Purchasing must consider payroll taxes, fringe benefits, and qualifications.
C)It is the joint responsibility of operations, purchasing, personnel, and accounting.
D)Purchasing must consider the quantity of materials.

Question 20

Why should historical experience be used with caution in a standard setting?

A)Historical experience provides very rigorous guidelines.
B)Operating personnel may not be able to achieve operating standards based on historical experience.
C)Historical experience can perpetuate inefficiencies.
D)Standards based on historical experience are better than standards based on engineering studies.

Question 21

Royal Company uses a standard costing system.The following information pertains to direct materials for the month of September: Royal Company reports its material price variances at the time of purchase.What is the material usage variance for Royal Company?
$\begin{array}{lr}\text { Standard price per kilogram } & \$ 17.00 \\\text { Actual purchase price per kilogram } & \$ 16.50 \\\text { Quantity purchased } & 3,100 \mathrm{~kg} \\\text { Quantity used } & 3,950 \mathrm{~kg} \\\text { Standard quantity allowed for actual output } & 4,000 \mathrm{~kg} \\\text { Actual output } & 1,000 \text { units }\end{array}$

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

Question 22

Which variance is the difference between the actual cost of the input and its planned cost?

A)the total budget variance
B)the usage variance
C)the price variance
D)the efficiency variance

Question 23

During the month of December, Cakers Express purchased 20,000 kg of flour at $2 per kilogram.
Refer to the Figure.At the end of December,Cakers Express found that it had an unfavourable materials price variance of $1,000.What is the flour's standard cost per kilogram?

A)$0.95
B)$1.00
C)$1.05
D)$1.95

Question 24

During the month of December, Cakers Express purchased 20,000 kg of flour at $2 per kilogram.
Refer to the Figure.At the end of December,Cakers Express found that it had a favourable materials price variance of $1,000.What is the flour's standard cost per kilogram?

A)$0.95
B)$1.00
C)$1.05
D)$1.95

Question 25

RJB Builders makes mouldings.Its standard quantity of material allowed is 1 m of wood per 1 m of moulding at a standard price of $2.00 per metre.During September,RJB Builders purchased 500,000 m of wood at a cost of $1.90 per metre,which produced only 499,000 m of moulding.What was the materials price variance and the materials usage variance,respectively?

A)$49,900 U and $2,000 F
B)$49,900 F and $1,900 U
C)$50,000 F and $1,900 U
D)$50,000 F and $2,000 U

Question 26

Which of the following is NOT characteristic of the use of materials variance information?

A)The production manager has the responsibility for controlling the materials price variance.
B)The production manager is generally responsible for materials usage.
C)The production manager is concerned with minimizing scrap, waste, and rework.
D)The purchasing department is responsible for acquiring quality materials.

Question 27

During April, Risco Company produced 13,00012,000 chainsaw blades. The standard quantity of material allowed per unit was 21.5 kg of steel per blade at a standard cost of $98 per kilogram.
Refer to the Figure.Suppose the actual cost was $87 per kilogram and Risco purchased 27,500 kg of steel.All materials purchased were used.What was Risco's materials usage variance?

A)$10,500 U
B)$10,500 F
C)$13,500 U
D)$13,500 F

Question 28

Which of the following is NOT characteristic of variance investigation?

A)The investigation should be undertaken only if the anticipated benefits are greater than the expected costs.
B)It is difficult to assess the costs and benefits of variance analysis on a case-by-case basis.
C)Variances are not investigated unless they are large enough to be of concern.
D)Every variance is investigated.

Question 29

Action Company's standard cost is $600,000.The allowable deviation is ±10%.Its actual costs for three months are as follows: What are the upper and lower control limits,respectively?
$$\begin{array} { l l } \text { April } & \$ 520,000 \\\text { May } & \$ 550,000 \\\text { June } & \$ 575,000\end{array}$$

A)$660,000 and $600,000
B)$660,000 and $540,000
C)$640,000 and $500,000
D)$575,000 and $520,000

Question 30

Which of the following statements is characteristic of variances?

A)Unfavourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
B)Favourable variances occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.
C)Unfavourable variances are always credits.
D)Favourable variances are always debits.

Question 31

What formula is used to determine the usage variance?

A)(AQ − SQ)SP
B)(SQ − AQ)SP
C)(AQ − AQ)SP
D)(SQ + AQ)SP

Question 32

Which formula is used to calculate the materials usage variance?

A)(standard price × actual quantity) − (standard price × standard quantity)
B)(standard price × standard quality) − (standard price × actual quantity)
C)(actual price × actual quantity) − (standard price × actual quantity)
D)(actual price × standard quantity) − (actual quantity × standard price)

Question 33

During April, Risco Company produced 13,00012,000 chainsaw blades. The standard quantity of material allowed per unit was 21.5 kg of steel per blade at a standard cost of $98 per kilogram.
Refer to the Figure.Risco determined that it had a favourable materials usage variance of $2,0001,000 for April.What was the actual quantity of materials Risco used?

A)11,875 kg
B)12,125 kg
C)25,778 kg
D)27,778 kg

Question 34

What is the material price variance?

A)It is the difference between the actual and standard unit price of an input multiplied by the number of inputs used.
B)It is the difference between the actual and standard unit price of an output multiplied by the number of inputs used.
C)It is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased.
D)It is the difference between the actual and standard unit price of an output multiplied by the number of inputs purchased.

Question 35

Which formula is used to calculate the materials price variance?

A)(actual price × actual quantity) − (standard price × standard quantity)
B)(standard price × actual quantity) − (actual price × actual quality)
C)(standard price × standard quantity) − (actual price × actual quantity)
D)(actual price × actual quantity) − (standard price × actual quantity)

Question 36

Which of the following is characteristic of the disposition of materials and labour variances?

A)The variances for materials and labour are closed directly to cost of goods sold regardless of materiality.
B)If the materials price variance is material, it is prorated among materials inventory, materials usage variance, work in process, and finished goods.
C)The materials usage variance and the labour variances, if material, are prorated among work in process, finished goods, and cost of goods sold.
D)The materials usage variance and the labour variances are prorated among work in process, finished goods, and cost of goods sold.

Question 37

During August,40,000 units were produced.The standard quantity of material allowed per unit was 5 kg at a standard cost of $2.50 per kilogram.Suppose the company had a favourable usage variance of $25,000 for August.What would have been the actual quantity of materials used?

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

Question 38

Niven Company has developed the following standards for one of its products: The following activity occurred during the month of April:
$\begin{array}{ll}\text { Direct materials: } & 8 \mathrm{~kg} \times \$ 8.5 \text { per kilogram } \\\text { Direct labour: } & 3 \text { hours } \times \$ 13 \text { per hour }\end{array}$ The company records materials price variances at the time of purchase.What is the variable standard cost per unit for materials and labour?
$$\begin{array} { l l } \text { Materials purchased: } & 5,000 \mathrm {~kg} \text { costing } \$ 42,500 \\\text { Materials used: } & 3,600 \mathrm {~kg} \\\text { Units produced: } & 500 \text { units } \\\text { Direct labour: } & 1,150 \text { hours at } \$ 11.80 \text { per hour }\end{array}$$

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

Question 39

Which of the following statements is characteristic of control limits?

A)Control limits are the top and bottom measures of the allowable range.
B)The upper control limit is the standard plus the allowable deviation.
C)The lower control limit is the standard minus the allowable deviation.
D)Control limits are set objectively using standard formulas.

Question 40

Which of the following is NOT characteristic of direct materials variances?

A)The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.
B)The materials price variance uses the actual quantity of materials purchased rather than the actual quantity of materials used.
C)The materials price variance always uses the actual quantity of materials used rather than the actual quantity of materials purchased.
D)The materials usage variance uses the actual quantity of materials used.

Question 41

Which of the following is characteristic of variances?

A)An unfavourable labour efficiency variance could result from using higher quality materials that result in fewer inspections.
B)A favourable labour rate variance could result from lower wage workers quitting.
C)A favourable materials price variance could result from purchasing identical materials from another supplier at a lower price.
D)A favourable materials usage variance could result from not efficiently utilizing raw materials, thus causing waste.

Question 42

In general,who controls the use of labour in an organization?

A)CEO
B)Human resources
C)Controller
D)Production manager

Question 43

Which of the following cost reduction methods is NOT typically used to move the actual cost to target cost?

A)reverse engineering
B)value analysis
C)process improvement
D)forward engineering

Question 44

During September,a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle,$5 less than the standard price.The company's standard quantity of this type of shingles is 550 bundles.What is the journal entry to record the purchase of materials?

A)Materials 20,000Materials price variance 2,500Accounts payable 17,500
B)Materials 20,000Materials price variance 2,500Accounts payable 22,500
C)Materials 17,500Materials price variance 2,500Accounts payable 15,000
D)Materials 20,000Materials price variance 2,750Accounts payable 17,250

Question 45

Fender Corporation produced 100 units of Product XX.The total standard and actual costs for materials and direct labour for the 100 units of Product XX are as follows: What is the labour efficiency variance for Fender Corporation?
$\begin{array}{ll}\text { Materials: }&&&\text { Standard}&\text { Actual }\\&\text { Standard: } & 200 \mathrm{~kg} \text { at } \$ 3.00 \text { per kilogram }&\$600 \\&\text { Actual: } & 220 \mathrm{~kg} \text { at } \$ 2.85 \text { per kilogram } &&\$627\\\text { Direct labour: }& \\&\text { Standard: } & 400 \text { hours at } \$ 15.00 \text { per hour }&6,000 \\&\text { Actual: } & 368 \text { hours at } \$ 16.50 \text { per hour }&&6,072\end{array}$

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

Question 46

During November,10,000 direct labour hours were worked at a standard cost of $10 per hour.Suppose the direct labour rate variance for November was $4,000 unfavourable.What was the actual cost per direct labour hour?

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

Question 47

Which of the following is NOT characteristic of the use of labour variance information?

A)The actual wage rate is almost always different from the standard rate.
B)Unexpected overtime can cause variation in the labour rate.
C)An average wage rate is chosen as the labour rate standard.
D)The production manager controls the use of labour.

Question 48

Which formula is used to calculate the labour rate variance?

A)(actual rate × actual hours) − (standard rate × standard hours)
B)(standard rate × actual rate) − (actual rate × actual hours)
C)(actual rate × standard hours) − (standard rate × actual hours)
D)(actual rate × actual hours) − (standard rate × actual hours)

Question 49

During March,6,000 direct labour hours were worked at a standard cost of $22 per hour.Suppose the direct labour rate variance for March was $16,500 favourable.What was the actual cost per direct labour hour?

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

Question 50

What is target cost?

A)Expected sales per unit - desired profit per unit
B)Expected costs per unit - desired profit per unit
C)Desired profit per unit - expected costs per unit
D)Desired costs per unit - expected costs per unit

Question 51

Which formula is used to calculate the labour efficiency variance?

A)(standard hours × actual hours) − (actual hours × standard rate)
B)(actual rate × actual hours) − (standard rate × actual hours)
C)(actual hours × standard rate) − (standard hours × standard rate)
D)(standard hours × actual rate) − (actual hours × actual rate)

Question 52

Assume that SQ = Standard Quantity,SP = Standard Price,AQ = Actual Quantity,and AP = Actual Price.Also assume a favourable materials usage variance.Which of the following would be the journal entry and the equation to record the issuance and usage of materials?

A)Work in Process SQ × SPMaterials Usage Variance (AQ − SQ)SPMaterials AQ × SP
B)Work in Process AQ × SPMaterials Usage Variance (AQ − SQ)SPMaterials AQ × SP
C)Work in Process AQ × APMaterials Usage Variance (AQ − SQ)SPMaterials AQ × SP
D)Work in Process SQ × APMaterials Usage Variance (AQ − SQ)SPMaterials AQ × SP

Question 53

A company using kaizen costing emphasizes which of the following?

A)reducing non-value-added cost
B)reducing quality of inputs
C)increasing overhead costs
D)reducing the number of employees

Question 54

Which of the following statements is characteristic of target costing?

A)It is a useful tool for establishing cost reduction goals for products in the design stage.
B)It is the difference between the sales price needed to capture a predetermined market share and the desired per-unit gross profit.
C)Target costs are internally driven.
D)The principal challenge of target costing is finding the cause of the costs.

Question 55

Min Company has developed the following standards for one of its products. The following activity occurred during the month of November:
$\begin{array}{ll}\text { Direct materials: } & 15 \mathrm{~kg} \times \$ 17.50 \text { per kilogram } \\\text { Direct labour: } & 4 \text { hours } \times \$ 24 \text { per hour } \\\text { Variable manufacturing overhead: } & 4 \text { hours } \times \$ 14 \text { per hour }\end{array}$ The company records materials price variances at the time of purchase.What is the direct materials price variance?
$\begin{array}{ll}\text { Materials purchased: } & 20,000 \mathrm{~kg} \text { costing } \$ 340,000 \\\text { Materials used: } & 7,200 \mathrm{~kg} \\\text { Units produced: } & 500 \text { units } \\\text { Direct labour: } & 2,300 \text { hours at } \$ 23.60 \text { per hour }\end{array}$

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

Question 56

Suppose the actual labour rate exceeds the standard labour rate,and the actual labour hours exceed the number of hours allowed.What would be the labour rate variance and labour efficiency variance? Labour Rate Labour Efficiency
Variance Variance

A)favourable favourable
B)favourable unfavourable
C)unfavourable favourable
D)unfavourable unfavourable

Question 57

Kaizen costing involves which of the following?

A)changing the standards frequently
B)changing management
C)outsourcing processes
D)creating major ad campaigns

Question 58

Which of the following does NOT describe kaizen costing?

A)It is concerned with reducing the costs of existing products and processes.
B)It tries to reduce both value-added and non-value-added costs.
C)The cost reduction process is accomplished through the repetitive use of the kaizen cycle and the maintenance cycle.
D)The kaizen standard reflects the planned improvement for the upcoming period.

Question 59

Which of the following is characteristic of direct labour variances?

A)The labour efficiency variance measures the difference between what was paid to direct labourers and what should have been paid.
B)The labour rate and labour efficiency variances will always add up to the total labour variance.
C)The labour rate variance measures the difference between the labour hours that were actually used and the labour hours that should have been used.
D)The labour rate variance measures the difference between the labour hours that were originally budgeted and the labour hours that should have been used.

Question 60

Setting a new minimum standard is which step in the kaizen cycle of kaizen costing?

A)plan
B)do
C)check
D)act

Question 61

Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
$\begin{array}{lll}\text {Direct materials ( 2 sheets of glass @\( \$ 2 \) per sheet) }&\$ 4\\\text { Direct labour (3 hours \( @ \$ 8 \) per hour)}&24\\\end{array}$


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

A)$15,000 U
B)$20,000 U
C)$135,000 U
D)$170,000 U

Question 62

High Fly Company manufactures model airplanes. During the month, it manufactured 10,000 airplanes. Each airplane used an average of 6.5 direct labour hours and an average of 1.5 sheets of aluminum. High Fly normally manufactures 7,500 airplanes each month. Materials and labour standards for making the airplanes are as follows:
$\begin{array}{lr}\text { Direct materials ( } 1 \text { sheet of aluminum } @ \$ 10.00 \text { per sheet) } & \$ 10.00 \\\text { Direct materials (other accessories }(\$ 8.75) & 8.75 \\\text { Direct labour (6 hours }(07.00 \text { per hour) } & 42.00\end{array}$

-Refer to the Figure.How many standard hours are allowed for a volume of 10,000 airplanes?

A)60,000 hours
B)65,000 hours
C)70,000 hours
D)420,000 hours

Question 63

Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
$\begin{array}{lll}\text {Direct materials ( 2 sheets of glass @\( \$ 2 \) per sheet) }&\$ 4\\\text { Direct labour (3 hours \( @ \$ 8 \) per hour)}&24\\\end{array}$


-Refer to the Figure.What is Aqua's labour rate variance?

A)$97,500 U
B)$217,500 U
C)$217,500 F
D)$225,000 U

Question 64

High Fly Company manufactures model airplanes. During the month, it manufactured 10,000 airplanes. Each airplane used an average of 6.5 direct labour hours and an average of 1.5 sheets of aluminum. High Fly normally manufactures 7,500 airplanes each month. Materials and labour standards for making the airplanes are as follows:
$\begin{array}{lr}\text { Direct materials ( } 1 \text { sheet of aluminum } @ \$ 10.00 \text { per sheet) } & \$ 10.00 \\\text { Direct materials (other accessories }(\$ 8.75) & 8.75 \\\text { Direct labour (6 hours }(07.00 \text { per hour) } & 42.00\end{array}$

-Refer to the Figure.What is the standard number of sheets of aluminum allowed for a volume of 10,000 airplanes?

A)7,500 sheets
B)10,000 sheets
C)11,250 sheets
D)15,000 sheets

Question 65

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

-Refer to the Figure.How many actual labour hours were worked during March for Bear Company?

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

Question 66

Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour:
During the year, Serenity Equestrian Corporation produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 2,500 hours at $16 per hour.
$\begin{array}{lll}\text {Leather (20 strips@ \( \$ 15 \) per strip)}&\$300\\\text {Direct labour ( 15 hours \( @ \$ 15 \) per hour) }&225\\\text {Total prime cost }&\$252\\\end{array}$


-Refer to the Figure.What are the materials price variance and the materials usage variance,respectively?

A)$9,000 U and $1,200 F
B)$9,000 F and $1,200 U
C)$9,300 U and $1,500 F
D)$9,300 F and $1,500 U

Question 67

Perfect Builders constructs houses. The standard labour rate is $20 per hour, and the standard number of hours is 12,000 hours per home. During the year, it constructed 10 homes using 14,000 labour hours per home and a rate of $22 per hour.
Refer to the Figure.What was the labour efficiency variance?

A)$400,000 U
B)$400,000 F
C)$440,000 U
D)$440,000 F

Question 68

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

-Refer to the Figure.What is the total labour budget variance for Bear Company?

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

Question 69

Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour:
During the year, Serenity Equestrian Corporation produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 2,500 hours at $16 per hour.
$\begin{array}{lll}\text {Leather (20 strips@ \( \$ 15 \) per strip)}&\$300\\\text {Direct labour ( 15 hours \( @ \$ 15 \) per hour) }&225\\\text {Total prime cost }&\$252\\\end{array}$


-Refer to the Figure.What are the costs of leather and direct labour incurred for the production of 150 saddles?

A)$36,000 and $36,000
B)$37,200 and $40,000
C)$45,000 and $33,750
D)$46,500 and $37,500

Question 70

Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour:
During the year, Serenity Equestrian Corporation produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 2,500 hours at $16 per hour.
$\begin{array}{lll}\text {Leather (20 strips@ \( \$ 15 \) per strip)}&\$300\\\text {Direct labour ( 15 hours \( @ \$ 15 \) per hour) }&225\\\text {Total prime cost }&\$252\\\end{array}$


-Refer to the Figure.What are the labour rate variance and the labour efficiency variance,respectively?

A)$2,250 U and $4,000 U
B)$2,250 F and $4,000 F
C)$2,500 U and $3,750 U
D)$2,500 F and $3,750 F

Question 71

AirSoar Company produces model airplanes. During August, the company produced 1,000 planes. The actual labour hours were 10 hours per plane. The company's standard labour hours are 15 hours per plane. The standard labour rate is $12 per hour. At the end of August, AirSoar found that it had a favourable labour rate variance of $7,500.
Refer to the Figure.What was AirSoar's total labour variance?

A)$52,500 F
B)$55,000 F
C)$65,000 F
D)$67,500 F

Question 72

Serenity Equestrian Corporation produces high-quality leather saddles. The company has a standard cost system and has set the following standards for materials and labour:
During the year, Serenity Equestrian Corporation produced 150 saddles. Actual leather purchased was 3,100 strips at $12 per strip. There were no beginning or ending inventories of leather. Actual direct labour was 2,500 hours at $16 per hour.
$\begin{array}{lll}\text {Leather (20 strips@ \( \$ 15 \) per strip)}&\$300\\\text {Direct labour ( 15 hours \( @ \$ 15 \) per hour) }&225\\\text {Total prime cost }&\$252\\\end{array}$


-Refer to the Figure.What are the total budget variances for materials and labour,respectively?

A)$1,500 U and $3,750 U
B)$1,500 F and $3,750 F
C)$7,800 U and $6,250 F
D)$7,800 F and $6,250 U

Question 73

AirSoar Company produces model airplanes. During August, the company produced 1,000 planes. The actual labour hours were 10 hours per plane. The company's standard labour hours are 15 hours per plane. The standard labour rate is $12 per hour. At the end of August, AirSoar found that it had a favourable labour rate variance of $7,500.
Refer to the Figure.What was AirSoar's actual cost per labour hour?

A)$11.25
B)$11.50
C)$12.50
D)$12.75

Question 74

Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows:
$$\begin{array} { l r } \text { January } & \$ 135,000 \\\text { February } & 120,000 \\\text { March } & 145,000 \\\text { April } & 165,000 \\\text { May } & 170,000 \\\text { June } & 180,000\end{array}$$

-Refer to the Figure.What is the variance that is lower than the lower control limit?

A)$120,000
B)$145,000
C)$170,000
D)$180,000

Question 75

Perfect Builders constructs houses. The standard labour rate is $20 per hour, and the standard number of hours is 12,000 hours per home. During the year, it constructed 10 homes using 14,000 labour hours per home and a rate of $22 per hour.
Refer to the Figure.What was Perfect Builders' labour rate variance?

A)$240,000 U
B)$240,000 F
C)$280,000 U
D)$280,000 F

Question 76

Which of the following is NOT a characteristic of kaizen standards?

A)Kaizen standards are the standards used for continuous improvement.
B)Kaizen standards are a currently attainable standard that reflects planned improvement.
C)Kaizen standards are constantly changing.
D)Kaizen standards are the standards used in traditional costing systems.

Question 77

Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
$\begin{array}{lll}\text {Direct materials ( 2 sheets of glass @\( \$ 2 \) per sheet) }&\$ 4\\\text { Direct labour (3 hours \( @ \$ 8 \) per hour)}&24\\\end{array}$


-Refer to the Figure.What is Aqua's total labour variance?

A)$97,500 U
B)$97,500 F
C)$120,000 U
D)$217,000 F

Question 78

Aqua Company produces aquariums. During the year, 150,000 aquariums were produced. Materials and labour standards for producing the aquariums are as follows:
Aqua purchased and used 310,000 sheets of glass at $1.50 per sheet, and its actual labour hours were 435,000 hours at a wage rate of $8.50 per hour.
$\begin{array}{lll}\text {Direct materials ( 2 sheets of glass @\( \$ 2 \) per sheet) }&\$ 4\\\text { Direct labour (3 hours \( @ \$ 8 \) per hour)}&24\\\end{array}$


-Refer to the Figure.What is the materials price variance?

A)$135,000 U
B)$150,000 F
C)$155,000 F
D)$170,000 U

Question 79

Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows:
$$\begin{array} { l r } \text { January } & \$ 135,000 \\\text { February } & 120,000 \\\text { March } & 145,000 \\\text { April } & 165,000 \\\text { May } & 170,000 \\\text { June } & 180,000\end{array}$$

-Refer to the Figure.What is the variance that is higher than the upper control limit?

A)$135,000
B)$145,000
C)$150,000
D)$170,000

Question 80

Bi-land Company's standard cost is $150,000. The allowable deviation is ±10%. The actual costs for six months are as follows:
$$\begin{array} { l r } \text { January } & \$ 135,000 \\\text { February } & 120,000 \\\text { March } & 145,000 \\\text { April } & 165,000 \\\text { May } & 170,000 \\\text { June } & 180,000\end{array}$$

-Refer to the Figure.What are the upper and lower control limits,respectively?

A)$165,000 and $105,000
B)$165,000 and $135,000
C)$175,000 and $150,000
D)$205,000 and $95,000