Question 1

Use the following to answer questions:
Cabot Inc. uses a standard costing system for its only product. The standards are as follows:
  
Actual data for September are:
 
-Which of the following is the journal entry that was made when the material was purchased?

Accepted Answer

The answer of Use the following to answer questions:
Cabot Inc....

Question 2

Use the following to answer questions:
Cabot Inc. uses a standard costing system for its only product. The standards are as follows:
  
Actual data for September are:
 
-Which of the following is the journal entry to record the use of direct material?

Accepted Answer

The answer of Use the following to answer questions:
Cabot Inc....

Question 3

Use the following to answer questions:
Cabot Inc. uses a standard costing system for its only product. The standards are as follows:
  
Actual data for September are:
 
-Which of the following journal entries would be used to record direct labor for September?

Accepted Answer

The answer of Use the following to answer questions:
Cabot Inc....

Question 4

During March 20,000 direct labor hours were worked at a standard cost of $20per hour. The direct labor rate variance for March was $60,000 unfavorable. The actual cost for direct labor in March was:

Accepted Answer

The answer of During March 20,000 direct labor hours were...

Question 5

Which of the following is/are a signal that a variance should be investigated?

Accepted Answer

All of the options listed are valid signals that a variance should be investigated. The size of the variance, a trend over time, and the recurrence of a variance can all indicate underlying issues that need to be addressed.

Question 6

Which of the following does not affect a material purchase price variance?

Accepted Answer

Increases in the demand for the firm's output do not directly affect the purchase price of materials, whereas the other options can lead to changes in material costs.

Question 7

Which of the following variances might be affected by the purchase of off-standard materials?
I favorable material purchase price variance
II unfavorable material quantity variance
III unfavorable labor rate variance
IV unfavorable labor efficiency variance

Accepted Answer

The answer of Which of the following variances might be...

Question 8

The following statements relate to standard costing systems:
I Computation of standard costs and cost variances enables managers to employ management by exception.
II Variances provide a means of performance evaluation and rewards for employees
III Short product life cycles mean that standards are relevant for only a short time
IV Use of standard costs in product costing results in more stable product costs than if actual product costs were used
Which of these statements are considered advantages of standard costing?

Accepted Answer

Standard costing systems offer several advantages, including management by exception (I), which allows managers to focus on significant variances and make adjustments accordingly. They also facilitate performance evaluation and reward systems (II) by providing benchmarks for measuring employee performance. Additionally, using standard costs in product costing leads to more stable product costs (IV), which is beneficial for budgeting, pricing, and decision-making, despite the potential short-term relevance of standards in rapidly changing environments (III).

Question 9

The following statements relate to standard costing systems:
I Traditional standard costing systems focus too much on the cost and efficiency of direct labor which is rapidly becoming a relatively unimportant factor of production
II Traditional standard cost variances are too aggregated in the sense that they are not tied to specific product lines, production batches, or flexible manufacturing systems
III Traditional standard costing systems tend to focus too much on cost minimization rather than increasing product quality or customer service
IV Traditional standard costing is not defined broadly enough to capture various important aspects of performance
Which of these statements relate to disadvantages of standard costing under modern cost management systems?

Accepted Answer

All four statements (I, II, III, IV) describe recognized disadvantages of traditional standard costing systems in the context of modern cost management practices. These include an outdated focus on direct labor costs, overly aggregated variance analysis, a narrow focus on cost minimization over quality or service, and a lack of broad performance metrics.

Question 10

Lopata Manufacturing uses a standard cost system for its guitar boxes. The standard labor rate per box is $1 per box. This standard was established on the basis of producing 8 boxes per hour. This month, Lopata produced 1,500 boxes using 580 direct labor hours at an actual direct labor cost of $5,800. The direct labor rate variance was

Accepted Answer

The direct labor rate variance is calculated as (Actual Hours Worked × Actual Rate) - (Actual Hours Worked × Standard Rate). Given that the actual direct labor cost is $5,800 for 580 hours, the actual rate is $5,800 / 580 = $10 per hour. The standard rate is $1 per box, and with a standard of 8 boxes per hour, the standard rate per hour is 8 boxes/hour × $1/box = $8/hour. Thus, the variance is (580 hours × $10/hour) - (580 hours × $8/hour) = $5,800 - $4,640 = $1,160 unfavorable.

Question 11

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The material price variance is

Accepted Answer

The answer of Use the following to answer questions:
The Alperti...

Question 12

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The material quantity variance is

Accepted Answer

The answer of Use the following to answer questions:
The Alperti...

Question 13

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The direct labor rate variance is

Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. The actual rate is $276,000 / 24,000 hours = $11.50 per hour. The standard rate is $12 per hour. The variance is ($11.50 - $12) x 24,000 = $12,000 favorable.

Question 14

Use the following to answer questions:
The Alperti Company manufactures surgical gowns for hospitals. Their controller, Ethell Hieken is preparing the variance analysis report for October. Standard Costs are as follows: Direct Material 2.0 yards at $6 per yard
Direct Labor 0.25 hours at $12 per hour
During October, Ms Hieken's report shows:
100,000 gowns produced
175,000 yards of fabric purchased at a cost of $1,137,500
185,000 yards of fabric used
Employees worked 24,000 hours at a cost of $276,000
-The direct labor efficiency variance is

Accepted Answer

The direct labor efficiency variance is favorable because the actual hours worked were less than the standard hours allowed.

Question 15

During August, 10,000 pounds of raw material were purchased at a cost of $18.50 per pound. The direct material price variance was $1,000 favorable. What was the standard price per pound?

Accepted Answer

The direct material price variance formula is (Actual Price - Standard Price) x Actual Quantity. Given a favorable variance of $1,000 and an actual price of $18.50 per pound for 10,000 pounds, the calculation is ($18.50 - Standard Price) x 10,000 = $1,000. Solving for the Standard Price gives $18.60 per pound.

Question 16

Variance Accounts are

Accepted Answer

Variance accounts are temporary accounts that are closed at the end of each accounting period, and they are usually closed into the Cost of Goods Sold account to adjust the cost of goods for the variances recorded during the period.

Question 17

Which of the following are possible reasons for altering the material mix?

Accepted Answer

Altering the material mix can be driven by a shortage of one of the materials, necessitating a change to continue production, or an attempt to improve yield by optimizing the mix of materials used.

Question 18

Hirsch Co. uses three types of direct materials in producing one of its products. The overall material quantity variance is favorable. Which of the following combinations of mix and yield variance could not have occurred?

Accepted Answer

The answer of Hirsch Co. uses three types of direct...

Question 19

Use the following to answer questions:
 Zhons Corporation uses two materials and two types of labor in the production of one of its products. The following standard cost information is available
 
-What is the material mix variance?

Accepted Answer

The material mix variance is calculated to assess the impact of deviations in the actual mix of materials used from the standard mix that was expected to be used. It is part of the material usage variance. If the actual mix leads to higher costs than the standard mix, the variance is unfavorable. The specific calculation details are not provided in the question, but based on the options given, the correct answer is identified as a $30,000 unfavorable variance.

Question 20

Use the following to answer questions:
 Zhons Corporation uses two materials and two types of labor in the production of one of its products. The following standard cost information is available
 
-What is the material yield variance?

Accepted Answer

The answer of Use the following to answer questions:
 Zhons...

Quiz 16: Standard Costing, Variance Analysis, and Kaizen Costing

Use the following to answer questions: Cabot Inc. uses a standard costing system for its only product. The standards are as follows: Actual data for September are: -Which of the following is the journal entry that was made when the material was purchased?

Use the following to answer questions: Cabot Inc. uses a standard costing system for its only product. The standards are as follows: Actual data for September are: -Which of the following is the journal entry to record the use of direct material?

Use the following to answer questions: Cabot Inc. uses a standard costing system for its only product. The standards are as follows: Actual data for September are: -Which of the following journal entries would be used to record direct labor for September?

During March 20,000 direct labor hours were worked at a standard cost of $20per hour. The direct labor rate variance for March was $60,000 unfavorable. The actual cost for direct labor in March was:

Which of the following is/are a signal that a variance should be investigated?

Which of the following does not affect a material purchase price variance?

Which of the following variances might be affected by the purchase of off-standard materials? I favorable material purchase price variance II unfavorable material quantity variance III unfavorable labor rate variance IV unfavorable labor efficiency variance

During August, 10,000 pounds of raw material were purchased at a cost of $18.50 per pound. The direct material price variance was $1,000 favorable. What was the standard price per pound?

Variance Accounts are

Which of the following are possible reasons for altering the material mix?

Hirsch Co. uses three types of direct materials in producing one of its products. The overall material quantity variance is favorable. Which of the following combinations of mix and yield variance could not have occurred?

Use the following to answer questions: Zhons Corporation uses two materials and two types of labor in the production of one of its products. The following standard cost information is available -What is the material mix variance?

Use the following to answer questions: Zhons Corporation uses two materials and two types of labor in the production of one of its products. The following standard cost information is available -What is the material yield variance?