Question 1

Figure 9-1
Bender 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:
Materials: Standard Actual
Standard: 210 pounds at $3.00 per pound $630
Actual: 240 pounds at $2.85 per pound $684
Direct labor:
Standard: 400 hours at $15.00 per hour 6,000
Actual: 368 hours at $16.50 per hour 6,072
-Refer to Figure 9-1. What is the material price variance for Bender Corporation?

Accepted Answer

The answer of Figure 9-1
Bender Corporation produced 100 units of...

Question 2

Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: Standard direct labor rate per hour $15.00
Actual direct labor rate per hour $13.50
Labor rate variance $18,000 favorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours
How many actual labor hours were worked during February for Montana Company?

Accepted Answer

The labor rate variance is favorable, meaning the actual rate paid was lower than the standard rate. Therefore, the actual labor hours worked should be higher than the standard hours allowed for actual production. 
Labor rate variance = (Actual rate - Standard rate) x Actual hours
$18,000 = ($13.50 - $15.00) x Actual hours
Actual hours = $18,000 / ($13.50 - $15.00) = 12,000 hours.

Question 3

During January, 7,175 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

Accepted Answer

The direct labor rate variance is calculated as (Actual Rate - Standard Rate) x Actual Hours. Given a favorable variance of $17,500 and standard cost of $20 per hour for 7,175 hours, we can set up the equation: (Actual Rate - $20) x 7,175 = -$17,500 (favorable variance means actual cost was less). Solving for the Actual Rate gives us $17.56 per hour.

Question 4

During September, 12,000 pounds of materials were purchased at a cost of $8 per pound. If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be

Accepted Answer

The answer of During September, 12,000 pounds of materials were...

Question 5

During November, 10,000 units were produced. The standard quantity of material allowed per unit was 10 pounds at a standard cost of $3 per pound. If there was an unfavorable usage variance of $18,750 for November, the actual quantity of materials used must be

Accepted Answer

The answer of During November, 10,000 units were produced. The...

Question 6

Price/rate variances focus on the differences between

Accepted Answer

Price/rate variances analyze the difference between the actual price paid for an input and the standard price, multiplied by the actual quantity of inputs used. Option A is incorrect because it refers to a different variance (quantity variance) that compares actual and standard inputs, not actual and standard prices. Option C is an incorrect phrase as it would be quantity variance, and option D is incorrect because it mentions budgeted quantities, which are not relevant to price/rate variances.

Question 7

Rowing Company has developed the following standards for one of its products: Direct materials: 7 pounds × $8 per pound
Direct labor: 2 hours × $12.50 per hour
Variable manufacturing overhead: 2.5 hours × $7 per hour
The following activity occurred during the month of March:
Materials purchased: 5,000 pounds costing $42,500
Materials used: 3,600 pounds
Units produced: 500 units
Direct labor: 1,150 hours at $11.80/hour
Actual variable manufacturing overhead: $7,500
The company records materials price variances at the time of purchase.
The variable standard cost per unit is

Accepted Answer

Direct materials:
7 pounds × $8 per pound = $56 per unit

Direct labor:
2 hours × $12.50 per hour = $25 per unit

Variable manufacturing overhead:
2.5 hours × $7 per hour = $17.50 per unit

Total variable standard cost per unit:
$56 + $25 + $17.50 = $98.50

Materials price variances are recorded at the time of purchase, so the actual cost of materials used for the 3,600 pounds is not relevant for calculating the variable standard cost per unit.

Actual variable manufacturing overhead is $7,500, which is not needed to calculate the variable standard cost per unit.

Question 8

Which of the following equations measures the direct labor rate variance?

Accepted Answer

The direct labor rate variance is calculated as (Actual Rate (AR) × Actual Hours (AH)) − (Standard Rate (SR) × Actual Hours (AH)). This measures the difference between what the labor actually cost and what it should have cost at the standard rate.

Question 9

Which of the following equations measures a price variance?

Accepted Answer

A price variance measures the difference between the actual price paid for something and the standard (or expected) price, multiplied by the actual quantity purchased. The formula AQ × (AP − SP) captures this, where AQ is the actual quantity, AP is the actual price, and SP is the standard price.

Question 10

Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00
Actual purchase price per lb. $16.50
Quantity purchased 3,100 lbs.
Quantity used 2,950 lbs.
Standard quantity allowed for actual output 3,000 lbs.
Actual output 1,000 units
Malkovich Company reports its material price variances at the time of purchase. What is the standard quantity of direct materials per unit for Malkovich Company?

Accepted Answer

The standard quantity of direct materials per unit can be calculated as follows:

Standard quantity per unit = Standard quantity allowed for actual output / Actual output
= 3,000 lbs / 1,000 units
= 3 lbs per unit

Therefore, the answer is B: 3.00 lbs.

Question 11

Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: Standard direct labor rate per hour $15.00
Actual direct labor rate per hour $13.50
Labor rate variance $18,000 favorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours
What is the total labor budget variance for Montana Company?

Accepted Answer

The answer of Montana Company uses a standard costing system....

Question 12

Which of the following equations measures the total budget variance?

Accepted Answer

The formula for total budget variance is the difference between the actual cost of the inputs (AQ x AP) and the budgeted cost of the inputs (SQ x SP). This is represented in option D. The other options measure other variances, such as price variance (option A) or quantity variance (option C). Option B measures the profit variance, not the total budget variance.

Question 13

The usage variances focus on the difference between

Accepted Answer

Usage variances measure the difference between the actual quantity of inputs used and the standard quantity allowed for actual production. This variance can occur if the actual quantity used is more or less than the standard quantity allowed. Option B is talking about cost variances which are different from usage variances. Option C is talking about quantity variances which are different from usage variances. Option D is incorrect because only option A is correct.

Question 14

Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00
Actual purchase price per lb. $16.50
Quantity purchased 3,100 lbs.
Quantity used 2,950 lbs.
Standard quantity allowed for actual output 3,000 lbs.
Actual output 1,000 units
Malkovich Company reports its material price variances at the time of purchase. What is the material usage variance for Malkovich Company?

Accepted Answer

Material usage variance = (Standard quantity allowed for actual output - Quantity used) x Standard price per lb.

Material usage variance = (3,000 - 2,950) x $18.00 = $900 (F)

Question 15

During September, 40,000 units were produced. The standard quantity of material allowed per unit was 5 pounds at a standard cost of $2.50 per pound. If there was a favorable usage variance of $25,000 for September, the actual quantity of materials used must have been

Accepted Answer

First, we need to calculate the standard cost of materials for the 40,000 units produced:

Standard quantity per unit = 5 pounds
Standard cost per pound = $2.50

Standard cost per unit = 5 pounds x $2.50 per pound = $12.50

Total standard cost for 40,000 units = 40,000 x $12.50 = $500,000

Next, we can use the formula for calculating usage variance to solve for the actual quantity of materials used:

Usage Variance = (Standard Quantity - Actual Quantity) x Standard Price

Favorable Usage Variance = $25,000
Standard Quantity = 5 pounds per unit x 40,000 units = 200,000 pounds
Standard Price = $2.50 per pound

$25,000 = (200,000 - Actual Quantity) x $2.50

$25,000 / $2.50 = 200,000 - Actual Quantity

10,000 = 200,000 - Actual Quantity

Actual Quantity = 200,000 - 10,000 = 190,000 pounds

Therefore, the best choice is B, with an actual quantity of materials used of 190,000 pounds.

Question 16

Standard costing

Accepted Answer

Standard costing establishes price and quantity standards for inputs.

Question 17

Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00
Actual purchase price per lb. $16.50
Quantity purchased 3,100 lbs.
Quantity used 2,950 lbs.
Standard quantity allowed for actual output 3,000 lbs.
Actual output 1,000 units
Malkovich Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?

Accepted Answer

The correct answer is A because the journal entry to record material purchases should include a debit to Materials for the actual cost of the materials purchased, a credit to Accounts Payable for the amount owed to the supplier, and a debit to Materials Price Variance for the difference between the actual cost and the standard cost.

Question 18

If the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed, the labor rate variance and labor efficiency variance will be Labor Rate Variance Labor Efficiency Variance

Accepted Answer

When the actual labor rate exceeds the standard labor rate, the labor rate variance is unfavorable. Similarly, when the actual labor hours exceed the allowed hours, the labor efficiency variance is also unfavorable.

Question 19

Firecracker Company has developed the following standards for one of its products. Direct materials: 15 pounds × $16 per pound
Direct labor: 4 hours × $24 per hour
Variable manufacturing overhead: 4 hours × $14 per hour
The following activity occurred during the month of October:
Materials purchased: 10,000 pounds costing $170,000
Materials used: 7,200 pounds
Units produced: 500 units
Direct labor: 2,300 hours at $23.60/hour
Actual variable manufacturing overhead: $30,000
The company records materials price variances at the time of purchase.
The direct materials price variance is

Accepted Answer

The answer of Firecracker Company has developed the following standards...

Question 20

Figure 9-1
Bender 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:
Materials: Standard Actual
Standard: 210 pounds at $3.00 per pound $630
Actual: 240 pounds at $2.85 per pound $684
Direct labor:
Standard: 400 hours at $15.00 per hour 6,000
Actual: 368 hours at $16.50 per hour 6,072
-Refer to Figure 9-1. What is the material usage variance for Bender Corporation?

Accepted Answer