Question 1

Tetrene Fliers Company produces model airplanes.During the month of November, it produced 2,500 planes.The actual labor hours were 9 hours per plane.Its standard labor hours are 12 hours per plane.The standard labor rate is $8 per hour.At the end of November, Tetrene Fliers found that it had a favorable labor rate variance of $9,000. ​
What was Tetrene Fliers' total labor variance?
A) $610,000 F
B) $69,000 F
C) $723,500 U
D) $41,500 U

Accepted Answer

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Question 2

The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However, its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.  
-
What is Perfect's standard hours allowed for a volume of 80,000 blades?
A) 210,000 hours
B) 189,000 hours
C) 115,000 hours
D) 125,000 hours

Accepted Answer

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Question 3

Assume that SQ = Standard Quantity, SP = Standard Price, AQ = Actual Quantity, and AP = Actual Price.Which of the following is the correct entry along with the equation to record the issuance and usage of materials?
A)
 
B)

C)

D)

E) None of these

Accepted Answer

Only standard quantities and standard prices are used to assign costs to Work in Process.

Question 4

Which of the following is true if the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed? ​
A) Labor Rate Variance Favorable; Labor Efficiency Variance Favorable
B) Materials Usage Variance Favorable; Materials Efficiency Variance Unfavorable
C) Materials Usage Variance Unfavorable; Materials Efficiency Variance Favorable
D) Labor Rate Variance Unfavorable; Labor Efficiency Variance Unfavorable

Accepted Answer

When the actual labor rate exceeds the standard labor rate, it creates an unfavorable labor rate variance. Similarly, when the actual labor hours exceed the number of hours allowed, it creates an unfavorable labor efficiency variance. Therefore, both variance will be unfavorable if the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed.

Question 5

Which of the following costing methods focuses on the continuous reduction of the manufacturing costs of existing products and processes?
A) Kaizen costing
B) Variance costing
C) Overhead costing
D) Sigma costing

Accepted Answer

Kaizen costing differs from traditional standard costing in that the standard changes frequently, reflecting continuous improvement efforts.

Question 6

Which of the following is not true about 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.

Accepted Answer

Kaizen standards are not used in traditional costing systems. They are used for continuous improvement and are constantly changing to reflect planned improvement.

Question 7

During April, a small roofing company purchased 500 bundles of a certain type of shingle at a price of $20 per bundle, $5 more than the standard price.The standard quantity of this type of shingle is 550 bundles. What is the journal entry to record the issuance and usage of materials assuming that the roofing company purchased and used 500 bundles?
A)

B)

C)

D)

Accepted Answer

Standard price per bundle = Actual price - $5 = $20 - $5 = $15
Work in process = Standard quantity × Standard price = 550 × $15 = $8,250
Materials usage variance = (Actual quantity - Standard quantity) × Standard price
= (500 - 550) × $15 = $750 F
Materials = Actual quantity × Standard price = 500 × $15 = $7,500

Question 8

Benzyne Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows: 
 What is the labor efficiency variance for Benzyne Corporation?
A) $810 U
B) $540 F
C) $602 U
D) $500 F

Accepted Answer

Labor Efficiency Variance = (Actual Hours - Standard Hours) × Standard Rate
Labor Efficiency Variance = (350 - 300) × $10 = $500 F

Question 9

Which of the following is true regarding the disposition of materials and labor variances?
A) The variances for materials and labor 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 labor variances, if material, are prorated among Work in Process, Finished Goods, and Cost of Goods Sold.
D) The materials usage variance and the labor variances are always prorated among Work in Process, Finished Goods, and Cost of Goods Sold.
E) The materials usage variance and the labor variances are always closed to Cost of Goods Sold.

Accepted Answer

The variances for materials and labor are closed directly to Cost of Goods Sold only if immaterial.If the materials price variance is material, it is prorated among Materials Inventory, Materials Usage Variance, Work in Process, Finished Goods, and Cost of Goods Sold.

Question 10

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour.If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be
A) $10.40.
B) $10.00.
C) $9.60.
D) $9.20.

Accepted Answer

10,000 × $10 = $100,000
$100,000 + $4,000 = $104,000
$104,000 / 10,000 = $10.40

Question 11

The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However, its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000.  
-  What is Perfect's labor rate variance?
A) $57,500 U
B) $57,500 F
C) $60,000 U
D) $60,000 F

Accepted Answer

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Question 12

Majenta Company uses a standard costing system.The following information pertains to direct labor costs for February: ?
 
-How many actual labor hours were worked during February for Majenta Company?
A) 6,300 hours
B) 9,000 hours
C) 4,200 hours
D) 7,500 hours

Accepted Answer

Labor rate variance = (Actual rate - Standard rate) × Actual hours
Actual hours = Labor rate variance / (Actual rate - Standard rate) = $15,000 / ($10.00 - $12.00)
= 7,500 hours

Question 13

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February:

-
What is the total labor budget variance for Claire Company?

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

Accepted Answer

$18,000 / ($15.00- $13.50) = 12,000 actual hours
(12,000 × $13.50) -(10,000 × $15) = $12,000 U

Question 14

Alkyl Fliers Company produces model airplanes.During the month of November, it produced 3,000 planes.The actual labor hours were 5 hours per plane.Its standard labor hours are 10 hours per plane.The standard labor rate is $8 per hour.At the end of November, Alkyl Fliers found that it had a favorable labor rate variance of $12,000. What was Alkyl Fliers' actual cost per labor hour?
A) $12.75
B) $7.60
C) $9.50
D) $7.20

Accepted Answer

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Question 15

Ethene Builders constructs houses.The standard labor rate is $20 per hour and the standard number of hours is 13,000 hours per home.During the year, it constructed 12 homes using 15,000 labor hours per home and a rate of $23 per hour. Calculate the labor efficiency variance.
A) $540,000 F
B) $480,000 U
C) $540,000 U
D) $480,000 F

Accepted Answer

Labor Efficiency Variance = (Actual Hours* - Standard Hours**) × Standard Rate = (180,000 - 156,000) × $20 = $480,000 U
Actual Hours* = Units produced × Actual labor hours = 15,000 ×12 = 180,000 hours
Standard Hours** = Units produced × Standard labor hours = 13,000 × 12 = 156,000 hours

Question 16

During April, a small roofing company purchased 400 bundles of a certain type of shingle at a price of $40 per bundle, $5 more than the standard price.The standard quantity of this type of shingle is 440 bundles. ?
What is the journal entry to record the purchase of materials?
A)

B)

C)

D)

Accepted Answer

Accounts payable = Actual price × Actual quantity = $40 × 400 = $16,000
Materials price variance = (Actual price - Standard price*) × Actual quantity
= ($40 - $35) × 400 = $5 × 400 = $2,000 U
Materials = Actual quantity × Standard price* = 400 × $35 = $14,000
*Standard price = $40 - $5 = $35

Question 17

During September, a small roofing company purchased 200 bundles of a certain type of shingle at a price of $25 per bundle, $5 less than the standard price.Its standard quantity of this type of shingle is 400 bundles.What is the journal entry to record the purchase of materials?
A)

B)

C) 
D)

Accepted Answer

Standard price = Actual price + $5 = $25 + $5 = $30
Materials = Standard price × Actual quantity = $30 × 200 = $6,000
Materials price variance = (Actual price - Standard price) × Actual quantity
= ($25 - $30) × 200 = $1,000 F

Question 18

During June, Propene Company produced 20,000 chainsaw blades.The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $4 per pound.The actual purchase price was $5 per pound.Propene determined that it had a favorable materials usage variance of $2,000 for June.What is the journal entry to record the issuance and usage of materials?
A)

B)

C)

D)

Accepted Answer

Standard quantity of steel = Total number of blades × Material used per unit = 20,000 blades × 2 pounds = 40,000 pounds of steel
 
Materials usage variance = (Actual quantity - Standard quantity) × Standard price
 
 11ea8a4c_4971_bedc_a0e6_ef89395c24d5_TB5550_00 Actual quantity = 39,500 pounds 
 
Work in process = Standard quantity × Standard price = 40,000 × $4 = $160,000
Materials = Actual quantity × Standard price = 39,500 × $4 = $158,000

Question 19

During January, 7,000 direct labor hours were worked at a standard cost of $20 per hour.If the direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour must be
A) $17.50.
B) $20.00.
C) $22.50.
D) $25.00.

Accepted Answer

7,000 × $20 = $140,000
$140,000 - $17,500 = $122,500
$122,500 / 7,000 = $17.50

Question 20

Extreme Builders constructs houses.The standard labor rate is $25 per hour and the standard number of hours is 15,000 hours per home.During the year, it constructed 12 homes using 18,000 labor hours per home and a rate of $28 per hour ​
Calculate the Extreme Builders' labor rate variance.
A) $540,000 U
B) $540,000 F
C) $648,000 U
D) $648,000 F

Accepted Answer

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Quiz 10: Standard Costing and Variance Analysis

Assume that SQ = Standard Quantity, SP = Standard Price, AQ = Actual Quantity, and AP = Actual Price.Which of the following is the correct entry along with the equation to record the issuance and usage of materials?

Which of the following is true if the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed?

Which of the following costing methods focuses on the continuous reduction of the manufacturing costs of existing products and processes?

Which of the following is not true about Kaizen Standards?

Benzyne Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows: What is the labor efficiency variance for Benzyne Corporation?

Which of the following is true regarding the disposition of materials and labor variances?

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour.If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be

The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year.It took 1.5 hours of labor per blade at a rate of $8.50 per hour.However, its standard labor rate is $8.00.Its labor efficiency variance was an unfavorable $40,000. - What is Perfect's labor rate variance?

Majenta Company uses a standard costing system.The following information pertains to direct labor costs for February: ? -How many actual labor hours were worked during February for Majenta Company?

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February: - What is the total labor budget variance for Claire Company?

Ethene Builders constructs houses.The standard labor rate is $20 per hour and the standard number of hours is 13,000 hours per home.During the year, it constructed 12 homes using 15,000 labor hours per home and a rate of $23 per hour. Calculate the labor efficiency variance.

During April, a small roofing company purchased 400 bundles of a certain type of shingle at a price of $40 per bundle, $5 more than the standard price.The standard quantity of this type of shingle is 440 bundles. ? What is the journal entry to record the purchase of materials?

During September, a small roofing company purchased 200 bundles of a certain type of shingle at a price of $25 per bundle, $5 less than the standard price.Its standard quantity of this type of shingle is 400 bundles.What is the journal entry to record the purchase of materials?

During January, 7,000 direct labor hours were worked at a standard cost of $20 per hour.If the direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour must be

Extreme Builders constructs houses.The standard labor rate is $25 per hour and the standard number of hours is 15,000 hours per home.During the year, it constructed 12 homes using 18,000 labor hours per home and a rate of $28 per hour Calculate the Extreme Builders' labor rate variance.