Question 1

The standard cost card for a product indicates that one unit of the product requires 8 kilograms of a raw material at $0.80 per kilogram.The production of the product in April was 870 units,but production had been budgeted for 850 units.During April,8,200 kilograms of the raw material were purchased for $6,888 and 7,150 kilograms of the raw material were used in production.The material variances for April were:

Accepted Answer

Materials price variance = (AQ × AP)- (AQ × SP)
= $6,888 - (8,200 kilograms × $0.80 per kilogram)
= $6,888 - $6,560
= $328 U
Materials quantity variance = (AQ - SQ)× SP
= [7,150 kilograms - (870 units × 8 kilograms per unit)] × $0.80 per kilogram
= [7,150 kilograms - (6,960 kilograms)] × $0.80 per kilogram
= [190 kilograms] × $0.80 per kilogram
= $152 U

Question 2

Blue Corporation's standards call for 2,500 direct labor-hours to produce 1,000 units of product.During May 900 units were produced and the company worked 2,400 direct labor-hours.The standard hours allowed for May production would be:

Accepted Answer

Standard hours per unit of output = 2,500 direct labor-hours ÷ 1,000 units = 2.5 direct labor-hours per unit
Standard hours allowed = 900 units × 2.5 direct labor-hours per unit = 2,250 hours

Question 3

Hejl Catering uses two measures of activity,jobs and meals,in the cost formulas in its budgets and performance reports.The cost formula for catering supplies is $210 per month plus $86 per job plus $15 per meal.A typical job involves serving a number of meals to guests at a corporate function or at a host's home.The company expected its activity in March to be 23 jobs and 222 meals,but the actual activity was 28 jobs and 217 meals.The actual cost for catering supplies in March was $5,830.The spending variance for catering supplies in March would be closest to:

Accepted Answer

First, we need to calculate the expected cost for catering supplies:
Expected cost = ($210/month + $86/job x 23 jobs + $15/meal x 222 meals) = $3,128

Next, we need to calculate the flexible budget for catering supplies using the actual activity levels:
Flexible budget = ($210/month + $86/job x 28 jobs + $15/meal x 217 meals) = $5,144

Finally, we can calculate the spending variance by subtracting the actual cost from the flexible budget:
Spending variance = $5,144 - $5,830 = -$686

Since the actual cost is greater than the flexible budget, the spending variance is unfavorable (U). However, we need to divide the variance by the actual activity levels to determine the per unit variance:
Per unit variance = (-$686) / 217 meals = -$3.16/meal

Since the per unit variance is negative, it means that the actual cost per meal is lower than expected. To find the total variance for the expected activity levels, we need to multiply the per unit variance by the expected activity:
Total variance = (-$3.16/meal) x 222 meals = -$701.52

To find the closest answer choice, we need to round the total variance to the nearest dollar, which is -$702. Since this is a favorable variance (F), we need to choose the answer choice that is closest to $702 in absolute value, which is choice C ($43 F).

Question 4

Gershon Air uses two measures of activity,flights and passengers,in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $38,720 per month plus $2,061 per flight plus $9 per passenger.The company expected its activity in June to be 76 flights and 238 passengers,but the actual activity was 75 flights and 239 passengers.The actual cost for plane operating costs in June was $196,310.The spending variance for plane operating costs in June would be closest to:

Accepted Answer

The answer of Gershon Air uses two measures of activity,flights...

Question 5

The following labor standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the labor rate variance for the month?

Accepted Answer

AH × AR = $50,690
Labor rate variance = (AH × AR)- (AH × SR)
= $50,690 - (3,700 hours × $14.05 per hour)
= $50,690 - ($51,985)
= $1,295 F

Question 6

The standard cost card of a particular product specifies that it requires 4.5 direct labor-hours at $12.80 per direct labor-hour.During March,2,300 units of the product were produced and direct labor wages of $128,300 were incurred.A total of 11,700 direct labor-hours were worked.The direct labor variances for the month were:

Accepted Answer

Labor rate variance = (AH × AR)- (AH × SR)
= $128,300 - (11,700 direct labor-hours × $12.80 per direct labor-hour)
= $128,300 - ($149,760)
= $21,460 F
Labor efficiency variance = (AH - SH)× SR
= [11,700 direct labor-hours - (2,300 units × 4.5 direct labor-hours per unit)] × $12.80 per direct labor-hour
= [11,700 direct labor-hours - (10,350 direct labor-hours)] × $12.80 per direct labor-hour
= [1,350 direct labor-hours] × $12.80 per direct labor-hour
= $17,280 U

Question 7

The Hanson Corporation employs a standard costing system.The following data are available for February:  The actual direct labor rate for February is:

Accepted Answer

Labor rate variance = AH × (AR - SR)
$2,600 F = 6,500 hours × (AR - $8 per hour)
-$2,600 = 6,500 hours × (AR - $8 per hour)
-$2,600 = (6,500 hours × AR)- (6,500 hours × $8 per hour)
-$2,600 = (6,500 hours × AR)- ($52,000)
6,500 hours × AR = $52,000 - $2,600
6,500 hours × AR = $49,400
AR = $49,400 ÷ 6,500 hours
AR = $7.60 per hour

Question 8

Ishibashi Snow Removal's cost formula for its vehicle operating cost is $1,240 per month plus $337 per snow-day.For the month of February,the company planned for activity of 17 snow-days,but the actual level of activity was 12 snow-days.The actual vehicle operating cost for the month was $5,140.The spending variance for vehicle operating cost in February would be closest to:

Accepted Answer

The answer of Ishibashi Snow Removal's cost formula for its...

Question 9

The Swenson Corporation has a standard costing system.The following data are available for June:  The actual price per pound of direct materials purchased in June is:

Accepted Answer

Materials price variance = AQ × (AP - SP)
$7,000 U = 35,000 pounds × (AP - $4 per pound)
$7,000 = 35,000 pounds × (AP - $4 per pound)
AP - $4 per pound = $7,000 ÷ 35,000 pounds
AP - $4 per pound = $0.20 per pound
AP = $4 per pound + $0.20 per pound
AP = $4.20 per pound

Question 10

Krejci Air uses two measures of activity,flights and passengers,in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $41,430 per month plus $2,419 per flight plus $6 per passenger.The company expected its activity in March to be 84 flights and 222 passengers,but the actual activity was 81 flights and 220 passengers.The actual cost for plane operating costs in March was $239,870.The plane operating costs in the planning budget for March would be closest to:

Accepted Answer

Cost = Fixed cost + (Variable cost per unit₁ × q₁)+ (Variable cost per unit₂ × q₂) = $41,430 + ($2,419 × 84)+ ($6 × 222)= $245,958

Question 11

The following labor standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the labor efficiency variance for the month?

Accepted Answer

SH = 900 units × 8.3 hours per unit = 7,470 hours
Labor efficiency variance = (AH - SH)× SR
= (6,100 hours - 7,470 hours)× $12.10 per hour
= (-1,370 hours)× $12.10 per hour
= $16,577 F

Question 12

The following materials standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the materials price variance for the month?

Accepted Answer

Materials price variance = (AQ × AP)- (AQ × SP)
= $141,375 - (7,500 grams × $19.15 per gram)
= $141,375 - $143,625
= $2,250 F

Question 13

The standard cost card for one unit of a certain finished product shows the following:  If the total standard variable cost for one unit of finished product is $85,then the standard price per pound for direct materials is:

Accepted Answer

Standard variable cost per unit = Standard direct materials cost per unit + Standard direct labor cost per unit + Standard variable manufacturing overhead cost per unit
$85 per unit = (10 pounds per unit × SP)+ (2.5 hours per unit × $16 per hour)+ (1.5 hours per unit × $10 per hour)
$85 per unit = (10 pounds per unit × SP)+ ($40 per unit)+ ($15 per unit)
10 pounds per unit × SP = $85 per unit - $40 per unit - $15 per unit
10 pounds per unit × SP = $30 per unit
SP = $30 per unit ÷ 10 pounds per unit
SP = $3 per pound

Question 14

The following materials standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the materials quantity variance for the month?

Accepted Answer

SQ = 1.7 meters per unit × 3,200 units = 5,440 meters
Materials quantity variance = (AQ - SQ)× SP
= (5,100 meters - 5,440 meters)× $19.80 per meter
= (-340 meters)× $19.80 per meter
= $6,732 F

Question 15

Sekuterski Air uses two measures of activity,flights and passengers,in the cost formulas in its budgets and performance reports.The cost formula for plane operating costs is $45,700 per month plus $2,892 per flight plus $4 per passenger.The company expected its activity in November to be 81 flights and 283 passengers,but the actual activity was 80 flights and 282 passengers.The actual cost for plane operating costs in November was $286,360.The plane operating costs in the flexible budget for November would be closest to:

Accepted Answer

Cost = Fixed cost + (Variable cost per unit₁ × q₁)+ (Variable cost per unit₂ × q₂) = $45,700 + ($2,892 × 80)+ ($4 × 282)= $278,188

Question 16

Dreary Credit Agency uses a standard cost system for the processing of its credit applications.The labor standard at Dreary is 10 applications per 8 hour day at a standard cost of $15 per hour. During the last pay period,Dreary's credit agents worked 1,920 hours and processed 2,500 applications.The total labor cost for the agents during this period was $29,184.What was Dreary's labor efficiency variance for this last pay period?

Accepted Answer

Labor efficiency variance = (AH - SH)× SR
= [1,920 hours - (2,500 applications × 0.80 hours per application)] × $15 per hour
= [1,920 hours - (2,000 hours)] × $15 per hour
= [-80 hours)] × $15 per hour
= $1,200 F

Question 17

Krizum Industries makes heavy construction equipment.The standard for a particular crane calls for 24 direct labor-hours at $16 per direct labor-hour.During a recent period 850 cranes were made.The labor rate variance was zero and the labor efficiency variance was $8,800 unfavorable.How many actual direct labor-hours were worked?

Accepted Answer

The labor rate variance of zero implies that the standard labor rate is equal to the actual labor rate of $16 per direct labor-hour.
Labor efficiency variance = (AH - SH)× SR
$8,800 U = [AH - (850 cranes × 24 hours per crane)] × $16 per hour
$8,800 = [AH - (850 cranes × 24 hours per crane)] × $16 per hour
$8,800 = [AH - (20,400 hours)] × $16 per hour
$8,800 = (AH × $16 per hour)- $326,400
AH × $16 per hour = $326,400 + $8,800
AH × $16 per hour = $335,200
AH = $335,200 ÷ $16 per hour
AH = 20,950 hours

Question 18

The standards for direct materials in making a certain product are 20 pounds at $0.75 per pound.During the past period,56,000 units of product were made and the materials quantity variance was $30,000 U.The number of pounds of direct material used during the period amounted to:

Accepted Answer

Materials quantity variance = (AQ - SQ)× SP
$30,000 U = [AQ - (56,000 units × 20 pounds per unit)] × $0.75 per pound
$30,000 = [AQ - (56,000 units × 20 pounds per unit)] × $0.75 per pound
$30,000 = [AQ - 1,120,000 pounds] × $0.75 per pound
AQ - 1,120,000 pounds = $30,000 ÷ $0.75 per pound
AQ - 1,120,000 pounds = 40,000 pounds
AQ = 40,000 pounds + 1,120,000 pounds
AQ = 1,160,000 pounds

Question 19

A quantity of a particular raw material was purchased for $43,250.The standard cost of the material was $2.00 per kilogram and there was an unfavorable materials price variance of $3,250.How many kilograms were purchased?

Accepted Answer

Materials price variance = (AQ × AP)- (AQ × SP)
$3,250 U = $43,250 - (AQ × $2.00 per kilogram)
$3,250 = $43,250 - (AQ × $2.00 per kilogram)
AQ × $2.00 per kilogram = $43,250 - $3,250
AQ × $2.00 per kilogram = $40,000
AQ = $40,000 ÷ $2.00 per kilogram
AQ = 20,000 kilograms

Question 20

The Fischer Corporation uses a standard costing system.The following data have been assembled for December:  The standard hours allowed for December's production is:

Accepted Answer

Labor efficiency variance = (AH - SH)× SR
$1,800 U = (5,800 hour - SH)× $9 per hour
$1,800 = (5,800 hour - SH)× $9 per hour
$1,800 = $52,200 - (SH × $9 per hour)
SH × $9 per hour = $52,200 - $1,800
SH × $9 per hour = $50,400
SH = $50,400 ÷ $9 per hour
SH = 5,600 hours

Quiz 9: Master Budgeting

Blue Corporation's standards call for 2,500 direct labor-hours to produce 1,000 units of product.During May 900 units were produced and the company worked 2,400 direct labor-hours.The standard hours allowed for May production would be:

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor rate variance for the month?

The Hanson Corporation employs a standard costing system.The following data are available for February: The actual direct labor rate for February is:

The Swenson Corporation has a standard costing system.The following data are available for June: The actual price per pound of direct materials purchased in June is:

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor efficiency variance for the month?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials price variance for the month?

The standard cost card for one unit of a certain finished product shows the following: If the total standard variable cost for one unit of finished product is $85,then the standard price per pound for direct materials is:

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials quantity variance for the month?

The standards for direct materials in making a certain product are 20 pounds at $0.75 per pound.During the past period,56,000 units of product were made and the materials quantity variance was $30,000 U.The number of pounds of direct material used during the period amounted to:

A quantity of a particular raw material was purchased for $43,250.The standard cost of the material was $2.00 per kilogram and there was an unfavorable materials price variance of $3,250.How many kilograms were purchased?

The Fischer Corporation uses a standard costing system.The following data have been assembled for December: The standard hours allowed for December's production is: