Question 1

The Standard Quantity (SQ)of direct materials is calculated as

Accepted Answer

The answer of The Standard Quantity (SQ)of direct materials is...

Question 2

The direct materials flexible budget variance can be divided into which of the following two variances?

Accepted Answer

The direct materials flexible budget variance can be divided into two variances: the price variance and the quantity variance. The price variance reflects the difference between the actual price paid for materials and the expected or standard price, while the quantity variance reflects the difference between the actual quantity of materials used and the expected or standard quantity. Therefore, the correct choice is C, which refers to the two variances that are commonly used to calculate the direct materials flexible budget variance.

Question 3

The ________ "tells managers how much of the total direct materials variance is due to using more or less materials than anticipated the by standards."

Accepted Answer

The quantity variance calculates the difference between the actual quantity of direct materials used and the standard quantity allowed at the actual price, and tells managers how much of the total direct materials variance is due to using more or less materials than anticipated by the standards.

Question 4

The ________ "shows how well management has controlled overhead costs."

Accepted Answer

Overhead flexible budget variance shows the difference between the total budgeted overhead costs and the actual overhead costs incurred, taking into account the difference in the actual and budgeted level of activity. A favorable overhead flexible budget variance indicates that the actual overhead costs were lower than the budgeted overhead costs, which means that management has controlled overhead costs effectively.

Question 5

Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded?

Accepted Answer

Dropping the raw material results in a direct materials quantity variance, as the amount of raw material used is different from what was expected. The direct materials price variance is impacted by changes in the price of the raw material, not by its quantity. Direct labor rate variance and direct labor efficiency variance are related to labor costs, not raw material usage.

Question 6

The ________ tells managers how much of the overall variance id due to paying a higher or lower price than expected for the quantity of materials it purchased.

Accepted Answer

The price variance calculates the difference between the actual cost paid for materials and the budgeted or standard cost for the same quantity. Therefore, it shows how much of the overall variance is due to paying a higher or lower price than expected for the materials purchased. The other options listed are not related to the specific question being asked.

Question 7

A favorable direct materials quantity variance indicates which of the following?

Accepted Answer

A favorable direct materials quantity variance means that the actual quantity of materials used was less than the standard quantity of materials for actual output. This could indicate that there was less waste, more efficient production processes, or the materials were used more effectively than anticipated.

Question 8

A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?

Accepted Answer

A favorable direct materials price variance indicates that the actual cost of materials was less than the expected cost, suggesting that less expensive materials were purchased. An unfavorable direct materials quantity variance indicates that more materials were used than expected, which could be due to the inferior quality of the cheaper materials requiring more to be used to meet production needs.

Question 9

The direct materials price variance is the difference between the Actual Price (AP)and the Standard Price (SP),multiplied by the Actual Quantity Purchased (AQP).

Accepted Answer

The answer of The direct materials price variance is the...

Question 10

A company uses sugar in producing its product.If the price of sugar doubles,which variance is directly impacted?

Accepted Answer

When the price of sugar doubles, the direct materials price variance is directly impacted because the cost of the raw material has increased. This will affect the cost of goods sold and ultimately impact the profitability of the company.

Question 11

A direct materials flexible budget variance can be broken down into a price variance and a quantity variance.

Accepted Answer

This statement is true. The direct materials flexible budget variance can be split into two components - a price variance and a quantity variance. The price variance indicates the difference between the actual cost of materials and the expected cost based on the budgeted price, while the quantity variance shows the difference between the actual amount of materials used and the expected amount based on the budgeted quantity.

Question 12

Raw material,ruined through mistakes during production,results in a materials quantity variance.

Accepted Answer

Raw material that is ruined due to mistakes during production would result in a materials quantity variance, as the expected quantity of material would be greater than the actual quantity used in production.

Question 13

A favorable direct materials price variance indicates which of the following?

Accepted Answer

A favorable direct materials price variance occurs when the actual cost of materials is less than the standard cost anticipated for those materials. This means the company paid less for its materials than it had planned, which is a positive outcome.

Question 14

A quantity (efficiency)variance for production inputs (materials and labor)is the difference between the Actual Quantity (AQ)of input used and the standard quantity of input,multiplied by the standard price per unit of input.

Accepted Answer

This is the correct formula for calculating a quantity (efficiency) variance.

Question 15

Which of the following situations may lead to a favorable direct materials price variance?

Accepted Answer

If the purchasing manager negotiates a lower purchase price for raw materials, the actual cost will be lower than the standard cost, leading to a favorable direct materials price variance.

Question 16

If the purchasing manager purchased a greater quantity of raw materials than budgeted,but paid the Standard Price (SP),which variance may be affected?

Accepted Answer

The answer of If the purchasing manager purchased a greater...

Question 17

The direct materials price variance is calculated as

Accepted Answer

The direct materials price variance is calculated as the difference between the Actual Price (AP) and the Standard Price (SP) of the input, multiplied by the Actual Quantity Purchased (AQP). This measures how much more or less was paid for the materials than was expected.

Question 18

Jackson Industries has collected the following data for one of its products:

What is the total actual cost of the direct materials used?

Accepted Answer

C)
26,000 units × $3.30 per unit = $85,800
Mat'l budget variance 12,000
Total $97,800

Question 19

If the Standard Quantity Allowed (SQA)for direct materials is greater than the Actual Quantity (AQ)used,the quantity variance is unfavorable.

Accepted Answer

If the Standard Quantity Allowed (SQA)for direct materials is greater than the Actual Quantity (AQ)used, the quantity variance is favorable, as it means that less material was used than expected, resulting in cost savings.

Question 20

A company's purchasing department negotiates all of the purchasing contracts for raw materials.Which variance is most useful in assessing the performance of the purchasing department?

Accepted Answer

The direct materials price variance is the most useful in assessing the performance of the purchasing department because it measures the difference between the actual price paid for materials and the standard price that was negotiated by the purchasing department. This helps to identify whether the purchasing department is able to negotiate favorable contracts for raw materials. The other variances listed are more relevant to assessing the performance of production and labor rather than purchasing.

Quiz 11: Standard Costs and Variances

The Standard Quantity (SQ) of direct materials is calculated as