When computing standard cost variances

  

1. When computing standard cost variances, the difference between actual and

standard price multiplied by actual quantity yields a(n):When computing
standard cost variances, the difference between actual and standard price
multiplied by actual quantity yields a(n):

combined price and quantity variance.
efficiency variance.
price variance.
quantity variance.

2.

The purchasing agent of the Dynazone Company ordered materials of lower
quality in an effort to economize on price and in response to the demands of
the production manager due to a mistake in production scheduling. The
materials were shipped by airfreight at a rate higher than that ordinarily
charged for shipment by truck, resulting in an unfavorable materials price
variance. The lower quality material proved to be unsuitable on the
production line and resulted in excessive waste. In this situation, who
should be held responsible for the materials price and quantity variances?

Materials Price Variance
A
B
C
D

Purchasing Agent
Production Manager
Production Manager
Purchasing Agent

Materials Quantity Variance
Purchasing Agent
Production Manager
Purchasing Agent
Production Manager

Option A
Option D
Option B
Option C

3. Total Care planned to produce 3,000 units of its single product, Playmore,

during November. The standard specifications for one unit of Playmore
include six pounds of material at $0.30 per pound. Actual production in
November was 3,100 units of Playmore. The accountant computed a
favorable materials purchase price variance of $380 and an unfavorable
materials quantity variance of $120. Based on these variances, one could
conclude that:

more materials were used than were purchased.

more materials were purchased than were used.
the actual usage of materials was less than the standard allowed.

the actual cost of materials was less than the standard cost.

4. Skyscraper Company planned to produce 3,000 units of its single product,

Titanium­magic, during November. The standards for one unit of Titanium­
magic specify six pounds of materials at $0.30 per pound. Actual
production in November was 3,100 units of Titanium­magic. There was an
unfavorable materials price variance of $380 and a favorable materials
quantity variance of $120. Based on these variances, one could conclude
that:

the actual usage of materials was less than the standard allowed.
the actual cost per pound for materials was less than the standard cost per pound.
more materials were used than were purchased.
more materials were purchased than were used.

5.

If the labor efficiency variance is unfavorable, then:

standard hours allowed for the actual output exceeded actual hours.
actual hours exceeded standard hours allowed for the actual output.
the actual rate exceeded the standard rate.
the standard rate exceeded the actual rate.

6.

The Primo Company has a standard cost system. In July the company
purchased and used 22,500 pounds of direct material at an actual cost of
$53,000; the materials quantity variance was $1,875 Unfavorable; and the

standard quantity of materials allowed for July production was 21,750
pounds. The materials price variance for July was:

$3,250 U

$2,725 U

7.

$3,250 F

$2,725 F

The Illustrious Company has a standard costing system. The following data
are available for October:

Actual quantity of direct materials purchased
25,000 pounds
Standard price of direct materials
$2 per pound
Material price variance
$2,500 unfavorable

The actual price per pound of direct materials purchased in October is:

8.

$1.85
$2.00
$2.15
$2.10

The Nationals Company uses standard costing. The following data are
available for January:

Actual quantity of direct materials used

12,200 gallons

Standard price of direct materials

$4 per gallon

Material quantity variance

$2,000 unfavorable

The standard quantity of material allowed for January production is:

9.

12,700 gallons
10,200 gallons
11,700 gallons
14,200 gallons

The following labor standards have been established for a particular
product:
1.5 hours

Standard labor­hours per unit of output
Standard labor rate
$17.55 per hour

The following data pertain to operations concerning the product for the last month:
Actual hours worked 5,300 hours
Actual total labor cost $94,340
Actual output 3,600 units

What is the labor rate variance for the month?

10.

•
•
•
•

$430 F
$430 U
$1,780 F
$1,325 U

Blaxton Company uses standard costing. For the month of June, the
company reported the following data:

Standard direct labor rate: $10 per hour
Standard hours allowed for actual production: 8,000 hours
Actual direct labor rate: $9.50 per hour
Labor efficiency variance: $4,800 Favorable
The labor rate variance for June is:

11.

$2,850 U
$3,760 U
$3,760 F
$2,850 F

The following standards for variable manufacturing overhead have been
established for a company that makes only one product:

Standard hours per unit of output 2.7 hours

Standard variable overhead rate $13.05 per hour

The following data pertain to operations for the last month:
Actual hours
Actual total variable manufacturing overhead cost
Actual output

What is the variable overhead efficiency variance for the month?

2,400 hours
$30,360
600 units

$9,219 U
$9,867 U
$648 U
$10,179 U

12.

The following data have been provided by Simpson Corporation, a
company that produces forklift trucks:

6,000 trucks
Budgeted production
Standard machine­hours per truck
3.7 machine­hours
Standard supplies cost
$2.20 per machine­hour

Actual production
6,200 trucks
Actual machine­hours
23,160 machine­hours
Actual supplies cost (total)
$53,111

Supplies cost is an element of variable manufacturing overhead. The variable
overhead efficiency variance for supplies cost is:

$484 F
$484 U
$2,643 U
$2,643 F

13.

The Bigton Company has established standards as follows:

Direct material: 3 pounds per unit @ $4 per pound = $12 per unit
Direct labor: 2 hours per unit @ $8 per hour = $16 per unit

Variable manufacturing overhead: 2 hours per unit @ $5 per hour = $10 per unit
Actual production figures for the past year are given below. The company records
the materials price variance when materials are purchased.
Units produced
600 units
Direct material used
2,000 pounds
Direct material purchased (3,000 pounds)
$11,400
Direct labor cost (1,100 hours)
$9,240
Variable manufacturing overhead cost incurred
$5,720

13A. The company applies variable manufacturing overhead to products on the
basis of standard direct labor­hours.
The materials price variance is:

$600 F
$600 U
$400 F
$400 U

14A.

The materials quantity variance is:

$760 F
$760 U
$800 U
$4,000 U

15A.

The labor rate variance is:

$480 U

$440 U
$440 F
$480 F