Question 1

Bodacious 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: $\begin{array} { l l l l } \text { Materials: } & & \text { Standard } & \text { Actual } \ \text { Standard: } & 200 \text { pounds at } \$ 3.00 \text { per pound } & \$ 600 & \ \text { Actual: } & 220 \text { pounds at } \$ 2.85 \text { per pound } & & \$ 627 \
\
\text { Direct labor: } & \ \text { Standard: } & 400 \text { pounds at } \$ 15.00 \text { per pound } & \$ 600 & \ \text { Actual: } & 368 \text { pounds at } \$ 16.50 \text { per pound } & & \$ 6,027 \end{array}$ What is the labor efficiency variance for Bodacious Corporation?

Accepted Answer

A) $480 (U) 
B) $480 (F) 
C) $552 (U) 
D) $552 (F)

Question 2

San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standards: $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Material } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \
\text { X } & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \
\text { Y } & 1,500 \text { units } & 3.00 \text { per unit } & \$ 4,500 \
\text { Yield } & 4,000 \text { units } & &
\end{array}\
\text { During April, the following actual production information was provided: }\
\begin{array} { l l } 
\text { Material } & \text { Actual Mix } \
\hline \mathrm { Y } & 30,000 \text { units } \
\mathrm { Y } & 20,000 \text { units } \
\text { Yield } & 36,000 \text { units }
\end{array}
\end{array}$$ What is the materials mix variance?

Accepted Answer

A) $10,000 (U) 
B) $5,000 (F) 
C) $10,000 (F) 
D) $15,000 (F)

Question 3

Using more highly skilled direct laborers might affect which of the following variances?

Accepted Answer

A) direct materials usage variance 
B) direct labor efficiency variance 
C) variable manufacturing overhead efficiency variance 
D) all of these

Question 4

The standard cost sheet includes all of the following EXCEPT

Accepted Answer

A) the standard quantity per unit. 
B) the standard material costs per unit. 
C) the standard cost per unit. 
D) the standard labor hours allowed for actual production.

Question 5

How are standards developed? What is the difference between ideal and currently attainable standards?

Accepted Answer

The answer of How are standards developed? What is the...

Question 6

Standard costs are the amount that should be spent to produce a product or service.

Accepted Answer

A) True 
 B)False

Question 7

The standard overhead cost assigned to each unit of product manufactured is called the

Accepted Answer

A) total manufacturing cost. 
B) predetermined overhead cost. 
C) applied overhead cost. 
D) estimated overhead cost.

Question 8

The unit standard cost is

Accepted Answer

A) the product of the standard price times the standard quantity for each unit. 
B) the price standard for each unit. 
C) the actual cost for a standard product. 
D) the amount of actual cost to produce a unit in a standardized process.

Question 9

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array}{ll}
\text { Direct materials: } & 10 \text { pounds } \times \$ 3 \text { per pound } \
\text { Direct labor: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \
\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }
\end{array}$

$\text { The following activity occurred during the month of June: }$

$\begin{array}{ll}
\text { Materials purchased: } & 125,000 \text { pounds at } \$ 2.60 \text { per pound } \
\text { Materials used: } & 110,000 \text { pounds } \
\text { Units produced: } & 10,000 \text { units } \
\text { Direct labor: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \
\text { Actual variable manufacturing overhead: } & \$ 51,000
\end{array}$ The company records materials price variances at the time of purchase.
The direct labor efficiency variance is

Accepted Answer

A) $8,000 unfavorable. 
B) $8,000 favorable. 
C) $20,000 unfavorable. 
D) $20,000 favorable.

Question 10

If the standard quantity (SQ), actual quantity (AQ), standard price (SP), and actual price (AP) are 350 units, 400 units, $12, and $13 respectively, then the total budget variance is _____.

Accepted Answer

A) $1,000 favorable 
B) $250 favorable 
C) $250 unfavorable 
D) $1,000 unfavorable

Question 11

All variances accounts are closed out at the end of the year.

Accepted Answer

A) True 
 B)False

Question 12

Organics Corporation uses two different types of labor to manufacture its product. The types of labor, Cutting and Setup, have the following standards: $\begin{array} { l r r r } \text { Labor Type } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \ \text { Cutting } & 400 \text { hours } & \$ 6.00 \text { per unit } & \$ 2,400 \ \text { Setup } & 100 \text { hours } & 4.00 \text { per unit } & \$ 400 \end{array}$
Yield 2,500 units
During July, the following actual production in formation was provided:
$\begin{array}{ll}
\text { Labor Type } & \text { A.ctual Mix } \
\text { Cutting } & 3,500 \text { hours } \
\text { Setup } & 1,500 \text { hours }
\end{array}$ Yield 22,500 units
Required:
Calculate the labor mix and yield variances.

Accepted Answer

The answer of Organics Corporation uses two different types of...

Question 13

A variable overhead efficiency variance could be caused by

Accepted Answer

A) using a poor quality material that needs more labor time to meet production standards. 
B) not taking a quantity discount. 
C) paying more than the standard rate for labor. 
D) price increases on the materials.

Question 14

Which of the following is true about the variable overhead spending variance?

Accepted Answer

A) The variable overhead spending variance measures the aggregate effect of differences in the actual variable overhead rate and the standard variable overhead rate. 
B) The variable overhead spending variance measures the change in variable overhead consumption that occurs because of efficient (or inefficient) use of direct labor. 
C) The variable overhead spending variance is calculated by deducting actual direct labor hours used from standard direct labor hours that should have been used. 
D) The variable overhead spending variance is calculated by deducting actual variable overhead from standard variable overhead.

Question 15

San Francisco Corporation uses two materials in the production of its product. The materials, X and Y, have the following standards: $$\begin{array}{l}
\begin{array} { l r r r } 
\text { Material } & \text { Standard Mix } & \text { Standard Unit Price } & \text { Standard Cost } \
\text { X } & 3,500 \text { units } & \$ 1.00 \text { per unit } & \$ 3,500 \
\text { Y } & 1,500 \text { units } & 3.00 \text { per unit } & \$ 4,500 \
\text { Yield } & 4,000 \text { units } & &
\end{array}\
\text { During April, the following actual production information was provided: }\
\begin{array} { l l } 
\text { Material } & \text { Actual Mix } \
\hline \mathrm { Y } & 30,000 \text { units } \
\mathrm { Y } & 20,000 \text { units } \
\text { Yield } & 36,000 \text { units }
\end{array}
\end{array}$$ What is the materials yield variance?

Accepted Answer

A) $4,000 (F) 
B) $4,000 (U) 
C) $8,000 (F) 
D) $8,000 (U)

Question 16

Colina Production Company uses a standard costing system. The following information pertains to the current year. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array}{ll}
\text { Actual production } & 5,500 \text { units } \
\text { Actual factory overhead costs ( } \$ 16,500 \text { is fixed) } & \$ 40,125 \
\text { Actual direct labor costs }(11,250 \text { hours) } & \$ 131,625 \
\text { Standard direct labor for } 5,500 \text { units: } & \
\text { Standard hours allowed } & 11,000 \text { hours } \
\text { Labor rate } & \$ 12.00
\end{array}$
The factory overhead rate is based on an activity level of 10,000 direct labor hours. Standard cost data for 5,000 units is as follows:
$\begin{array}{lr}
\text { Variable factory overhead } & \$ 22,500 \
\text { Fixed factory overhead } & 13,500 \
\text { Total factory overhead } & \mathbf{\underline { 36 , 0 0 0 }}
\end{array}$ What is the fixed overhead volume variance for Colina Production Company?

Accepted Answer

A) $3,600 (F) 
B) $1,350 (F) 
C) $4,125 (U) 
D) $1,350 (U)

Question 17

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

Accepted Answer

A) $2,850 (F) 
B) $1,950 (F) 
C) $900 (F) 
D) $900 (U)

Question 18

Compare and contrast mix and yield variances.

Accepted Answer

The answer of Compare and contrast mix and yield variances....

Question 19

If actual fixed manufacturing overhead was $55,000 and there was a $1,400 unfavorable spending variance and a $1,000 unfavorable volume variance, budgeted fixed manufacturing overhead must have been

Accepted Answer

A) $57,400. 
B) $53,600. 
C) $54,000. 
D) $51,700.

Question 20

A materials price variance would NOT be caused by

Accepted Answer

A) ordering the wrong quality of materials. 
B) ordering from the wrong supplier. 
C) not taking a quantity discount. 
D) requiring laborers to work overtime.

Exam 9: Standard Costing: a Functional-Based Control Approach