Question 1

AquaMarine Company's standard cost is $750,000.The allowable deviation is ±5%.Its actual costs for three months are as follows:
 The upper and lower control limits are, respectively, _____.

Accepted Answer

The upper control limit = Standard cost + (Standard cost × Allowable deviation)
The upper control limit = [$750,000 + ($750,000 × 5%)] = $787,500
The lower control limit = Standard cost - (Standard cost × Allowable deviation)
The lower control limit = [$750,000 - ($750,000 × 5%)] = $712,500

Question 2

Which of the following is not true concerning control limits?

Accepted Answer

In current practice, control limits are set subjectively, using past experience, judgment, and intuition.

Question 3

Which of the following is true concerning the materials price variance?

Accepted Answer

The materials price variance is calculated as the difference between the actual price paid for a material and the standard price for that material, multiplied by the quantity of the material purchased. Therefore, the correct choice is C - it is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased. A is incorrect because it uses the number of inputs used, rather than purchased. B and D are incorrect because they involve the unit price of an output, rather than an input.

Question 4

Which of the following formulas is used to calculate the materials price variance?

Accepted Answer

The materials price variance formula is given by (Actual Price × Actual Quantity) - (Standard Price × Actual Quantity).

Question 5

Anemone Company manufactures model airplanes.During the month, it manufactured 20,000 airplanes.Each one used an average of 8 direct labor hours and an average of 2 sheets of aluminum.It normally manufactures 8,000 airplanes.Materials and labor standards for making the airplanes are as follows: 
 Compute the standard hours allowed for a volume of 20,000 airplanes.

Accepted Answer

Standard Hours (SH) = Unit Labor Standard × Actual Output = 5 × 20,000 = 100,000 hours

Question 6

All of the following are true regarding variance investigation except

Accepted Answer

Only material variances are investigated.

Question 7

Which of the following is not true concerning direct materials variances?

Accepted Answer

Typically, the quantity of material purchased is used to determine the materials price variance.

Question 8

The difference between the actual cost of the input and its planned cost is

Accepted Answer

The answer of The difference between the actual cost of...

Question 9

Which of the following formulas computes usage (efficiency) variance?

Accepted Answer

Usage variance measures the efficiency with which resources are used, and it is calculated as the difference between actual and standard quantity used multiplied by the standard price per unit. Option B is the only choice that subtracts the standard quantity from actual quantity, which is the basis for computing usage variance. Option A calculates price variance and options C and D do not make sense in this context.

Question 10

Which of the following is not true regarding the use of materials variance information?

Accepted Answer

All the statements provided are true regarding the use of materials variance information. The purchasing agent is indeed responsible for controlling the materials price variance by negotiating prices and selecting suppliers. The production manager is responsible for materials usage, focusing on minimizing scrap, waste, and rework, and ensuring that operations are efficient. The purchasing department's responsibility includes acquiring quality materials to prevent issues in production that could lead to increased variances.

Question 11

Which of the following is the difference between the actual cost of materials and the materials cost allowed for the actual level of activity?

Accepted Answer

The difference between the actual cost of materials and the materials cost allowed for the actual level of activity is known as the total materials variance. This variance is calculated by subtracting the standard cost of materials from the actual cost of materials.

Question 12

During June, Zinc Company produced 10,000 chainsaw blades.The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $5 per pound.Zinc determined that it had a favorable materials usage variance of $1,500 for June.Calculate the actual quantity of materials used by Zinc Company in June.

Accepted Answer

Total materials used = 10,000 blades × 2 pounds = 20,000 pounds of steel
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= [(10,000 blades × 2 pounds × $50) - $1,500] / $5 = $98,500 / $5 = 19,700 pounds

Question 13

During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March, Baker's Express found that it had a favorable materials price variance of $500.The standard cost per pound must be

Accepted Answer

MPV = (AP- SP) × AQ
$500 = ($1 - SP) × 10,000
SP = $1.05
OR
(10,000 × $1.00) + 500 = $10,500
$10,500 / 10,000 = $1.05
 11ea8a4c_496c_b5ab_a0e6_37b989332338_TB5550_00 11ea8a4c_496c_b5ac_a0e6_6f44570d65e6_TB5550_00 11ea8a4c_496c_dcbd_a0e6_5b4722c65714_TB5550_00

Question 14

Which of the following mathematical expressions is used to compute the materials usage variance?

Accepted Answer

The materials usage variance compares the actual quantity of materials used to the standard quantity of materials that should have been used. This is calculated by multiplying the difference between the standard and actual quantity by the standard price per unit. Therefore, A, (Standard Price × Actual Quantity) - (Standard Price × Standard Quantity), is the correct expression.

Question 15

Which of the following is true regarding variances?

Accepted Answer

Unfavorable variances occur when actual costs exceed standard costs, so actual prices or usage being greater than standard prices or usage would result in an unfavorable variance. B is incorrect because actual prices or usage being less than standard prices or usage would result in a favorable variance. C and D are incorrect because whether a variance is favorable or unfavorable has nothing to do with whether it is a debit or credit.

Question 16

Flying High Company manufactures model airplanes.During the month, it manufactured 10,000 airplanes.Each one used an average of 6.5 direct labor hours and an average of 1.5 sheets of aluminum.It normally manufactures 7,500 airplanes.Materials and labor standards for making the airplanes are:
 Compute the standard number of sheets of aluminum allowed for a volume of 10,000 airplanes.

Accepted Answer

SQ = Unit quantity standard × Actual output.SQ = 10,000 × 1 = 10,000 sheets.

Question 17

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are ​
​
 The actual cost which is lower than the lower control limit is

Accepted Answer

The lower control limit for Highland Company's standard cost is calculated as follows:
Lower control limit = Standard cost - (Allowable deviation x Standard cost)
Lower control limit = $250,000 - (0.1 x $250,000)
Lower control limit = $225,000

The actual cost which is lower than the lower control limit is $220,000 (option A). Therefore, option A is the best choice.

Question 18

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are 
 The upper and lower control limits are, respectively,

Accepted Answer

The upper control limit is $275,000 [$250,000 + ($250,000 × 10%)].
The lower control limit is $225,000 [$250,000 - ($250,000 × 10%)].

Question 19

During the month of March, Rexelegg purchased 25,000 pounds of flour at $2 per pound.At the end of March, Rexelegg found that it had an unfavorable materials price variance of $750.The standard cost per pound must be:

Accepted Answer

11ea8a4c_496c_8e9a_a0e6_13e7ccaa485c_TB5550_00

Question 20

Glascro Company's standard cost is $500,000.The allowable deviation is ±15%.Its actual costs for six months are as follows: 
 The actual cost which is higher than the upper control limit is _____.

Accepted Answer

The upper control limit is = Standard cost + (Standard cost × Allowable deviation)
= $500,000 + ($500,000 × 15%) = $575,000

Quiz 10: Standard Costing and Variance Analysis

AquaMarine Company's standard cost is $750,000.The allowable deviation is ±5%.Its actual costs for three months are as follows: The upper and lower control limits are, respectively, _____.

Which of the following is not true concerning control limits?

Which of the following is true concerning the materials price variance?

Which of the following formulas is used to calculate the materials price variance?

All of the following are true regarding variance investigation except

Which of the following is not true concerning direct materials variances?

The difference between the actual cost of the input and its planned cost is

Which of the following formulas computes usage (efficiency) variance?

Which of the following is not true regarding the use of materials variance information?

Which of the following is the difference between the actual cost of materials and the materials cost allowed for the actual level of activity?

During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March, Baker's Express found that it had a favorable materials price variance of $500.The standard cost per pound must be

Which of the following mathematical expressions is used to compute the materials usage variance?

Which of the following is true regarding variances?

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are The actual cost which is lower than the lower control limit is

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are The upper and lower control limits are, respectively,

During the month of March, Rexelegg purchased 25,000 pounds of flour at $2 per pound.At the end of March, Rexelegg found that it had an unfavorable materials price variance of $750.The standard cost per pound must be:

Glascro Company's standard cost is $500,000.The allowable deviation is ±15%.Its actual costs for six months are as follows: The actual cost which is higher than the upper control limit is _____.

Quiz 10: Standard Costing and Variance Analysis

AquaMarine Company's standard cost is $750,000.The allowable deviation is ±5%.Its actual costs for three months are as follows: The upper and lower control limits are, respectively, _____.

Which of the following is not true concerning control limits?

Which of the following is true concerning the materials price variance?

Which of the following formulas is used to calculate the materials price variance?

All of the following are true regarding variance investigation except

Which of the following is not true concerning direct materials variances?

The difference between the actual cost of the input and its planned cost is

Which of the following formulas computes usage (efficiency) variance?

Which of the following is not true regarding the use of materials variance information?

Which of the following is the difference between the actual cost of materials and the materials cost allowed for the actual level of activity?

During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound.At the end of March, Baker's Express found that it had a favorable materials price variance of $500.The standard cost per pound must be

Which of the following mathematical expressions is used to compute the materials usage variance?

Which of the following is true regarding variances?

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are ​ ​ The actual cost which is lower than the lower control limit is

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are The upper and lower control limits are, respectively,

During the month of March, Rexelegg purchased 25,000 pounds of flour at $2 per pound.At the end of March, Rexelegg found that it had an unfavorable materials price variance of $750.The standard cost per pound must be:

Glascro Company's standard cost is $500,000.The allowable deviation is ±15%.Its actual costs for six months are as follows: The actual cost which is higher than the upper control limit is _____.

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are The actual cost which is lower than the lower control limit is