Question 1

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 2

Fixed manufacturing overhead was budgeted at $105,000, and 25,000 direct labor hours were budgeted. If the fixed overhead volume variance was $4,000 unfavorable and the fixed overhead spending variance was $1,500 favorable, fixed manufacturing overhead applied must be

Accepted Answer

A)  $109,000. 
B)  $106,500. 
C)  $106,500 
D)  $101,000.

Question 3

If variable manufacturing overhead is applied based on direct labor hours and there is an unfavorable direct labor efficiency variance

Accepted Answer

A)  the direct materials usage variance will be unfavorable. 
B)  the direct labor rate variance will be favorable. 
C)  the variable manufacturing overhead efficiency variance will be unfavorable. 
D)  the variable manufacturing overhead spending variance will be unfavorable.

Question 4

A five-percent wage increase for all factory employees would affect which of the following variances?

Accepted Answer

A)  direct materials price variance 
B)  direct labor rate variance 
C)  direct labor efficiency variance 
D)  variable manufacturing overhead efficiency variance

Question 5

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 6

Production of a product utilizes materials D, E, and F. The following are their standards:
  During August, the following actual production information was provided:
Material Actual Mix
D 37,000 units
E 17,000 units
F 7,000 units
Yield 50,000 units
Required:
Calculate the materials mix, yield, and usage variances.

Accepted Answer

The answer of Production of a product utilizes materials D,...

Question 7

Which of the following factors would cause an unfavorable labor rate variance?

Accepted Answer

A)  using higher quality materials 
B)  using low-efficiency workers 
C)  using more unskilled workers 
D)  using more highly skilled workers

Question 8

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

A)  $50,000 favorable. 
B)  $50,000 unfavorable. 
C)  $10,000 favorable. 
D)  $10,000 unfavorable.

Question 9

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

A)  10,000 
B)  12,000 
C)  1,200 
D)  2,000

Question 10

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 11

Which is NOT an acceptable method of disposing of variances?

Accepted Answer

A)  closing them to cost of goods sold 
B)  closing them to raw materials, work-in-process, and finished goods 
C)  closing them to work-in-process, finished goods, and cost of goods sold 
D)  all are acceptable methods

Question 12

The Awesome Systems Company, which uses direct labor hours to assign overhead costs to products, developed the following standard cost for one of their products:
STANDARD COST CARD PER UNIT
Materials: 10 pounds × $8 per pound $80.00
Direct labor: 3 hours × $32 per hour 96.00
Variable manufacturing overhead: $20 per direct labor hour ?
Fixed manufacturing overhead ?
Total standard cost per unit ?
The following information is available regarding the company's operations for the period:
Units produced: 15,000
Materials purchased: 180,000 pounds @ $7.20 per pound
Materials used: 160,000 pounds
Direct labor: 18,000 hours @ $37.00 per hour
Manufacturing overhead incurred:
Variable $880,000
Fixed $2,560,000
Budgeted fixed manufacturing overhead for the period is $4,800,000, and expected capacity for the period is 60,000 direct labor hours.
Required:
a. Calculate the standard fixed manufacturing overhead rate.
b. Complete the standard cost card for the product.

Accepted Answer

The answer of The Awesome Systems Company, which uses direct...

Question 13

A yield variance occurs when the actual output is the same as the standard output.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following equations measures a price variance?

Accepted Answer

A)  AQ × (AP - SP) 
B)  SP × (AQ - SQ) 
C)  SQ × (AP - SP) 
D)  (AQ - SQ) × (AP - SP)

Question 15

The most detailed method to compute overhead variances is the four-variance method.

Accepted Answer

A) True 
 B)False

Question 16

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

A)  $81.00 
B)  $91.00 
C)  $98.50 
D)  $42.50

Question 17

The condition where everything operates perfectly and demands maximum efficiency is called __________ .

Accepted Answer

The answer of The condition where everything operates perfectly and...

Question 18

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

A)  $30 (U) 
B)  $90 (F) 
C)  $36 (U) 
D)  $36 (F)

Question 19

standards are the standards used for continuous improvement.

Accepted Answer

The answer of standards are the standards used for continuous...

Question 20

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

A)  210,000 pounds. 
B)  190,000 pounds. 
C)  105,000 pounds. 
D)  95,000 pounds.

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