A306 Ch 10

The standard hours or quantity allowed for an input is the amount of the input that should have been used to produce the standard output for the period. True false question.TrueReason: The standard hours or quantity allowed is the amount of the input that should have been used to produce the actual, not standard, output. False

False

A price variance is the difference between the Blank______. Multiple choice question. standard quantity allowed and the actual quantity used multiplied by the actual price actual price and the standard price multiplied by the actual amount of the input standard quantity allowed and the actual quantity used multiplied by the standard price Reason: The standard quantity allowed and the actual quantity used multiplied by the standard price is the calculation used to find a quantity variance. actual price and the standard price multiplied by the standard amount allowed Reason: The price variance is based on actual amounts purchased.

actual price and the standard price multiplied by the actual amount of the input

Material requirements plus an allowance for normal inefficiencies are added together to determine the______________ per unit of output for direct materials.

standard quantity

All materials variances are generally the responsibility of the production manager. True false question.

False Reason: The production manager is generally responsible for the quantity variance and the purchasing manager is generally responsible for the price variance.

The standard hours or quantity allowed for an input is the amount of the input that should have been used to produce the standard output for the period. True false question.

False Reason: The standard hours or quantity allowed is the amount of the input that should have been used to produce the actual, not standard, output.

When the standard price is higher than the actual price, the materials price variance is Blank______. Multiple choice question. favorable unfavorable

favorable

The difference between the amount of an input used and the amount that should have been used, all evaluated at the standard price for the input, is called a Blank______ variance. Multiple choice question. price quantity quality

quantity

Given the following, compute the standard cost per widget. Direct materials per unit 4 pounds Direct material cost $1.25 per pound Direct labor per unit 1.5 hours Direct labor rate $10.00 per hour Variable overhead rate $4.00 per hour

$26.00 Reason: Materials (4 pounds × $1.25) + Labor (1.5 hours × $10.00) + Overhead (1.5 hours × $4.00) = $26.00

Given the following, the standard cost of this item is $ _____ per unit.

23

The materials price variance is calculated using the Blank______ quantity of the input purchased. Multiple choice question. standard actual

actual

(Actual cost per unit - standard cost per unit) × actual quantity = the materials _____________ variance.

price

The amount of an input that should have been used to produce the actual output is known as the _____________ quantity or hours allowed.

standard

The amount of direct-labor hours that should be used to produce one unit of finished goods is the ___________ hours per unit.

standard

When the actual cost incurred exceeds the standard cost allowed for the actual level of output, the spending variance is Blank______. Multiple choice question. unfavorable favorable

unfavorable

When the standard purchase price is less than the actual price paid for materials, the material price variance is Blank______. Multiple choice question. unfavorable favorable

unfavorable

The price variance is Blank______. Multiple choice question. (AQ × SP) - (SQ × SP) Reason: This is the quantity variance. (AQ × AP) - (AQ × SP) (AQ × AP) - (SQ × SP) Reason: This is the spending variance.

(AQ × AP) - (AQ × SP)

Which of the following statements is true? Multiple choice question. Price variances can only be computed for direct materials and direct labor. Reason: A price variance can also be computed for variable overhead. Quantity variances are computed for direct materials, direct labor and fixed overhead. Reason: Quantity variances are computed for variable, not fixed overhead. The variance that computes the price difference for materials is called a material rate variance. Reason: This is called a material price variance. A labor efficiency variance is a quantity variance.

A labor efficiency variance is a quantity variance.

Which of the following are used to calculate the standard quantity per unit of direct materials? Multiple select question. Freight and transportation costs. Reason: Freight and transportation costs are used in calculating the standard price per unit. Direct materials requirements per unit of finished product. Allowance for normal scrap and spoilage.

Direct materials requirements per unit of finished product. Allowance for normal scrap and spoilage.

Which of the following statements are true? Multiple select question. The purpose of using standards is to assess blame and responsibility. Reason: The purpose is to improve operations and take corrective action. When actual results depart significantly from the standard, the reasons why should be investigated. Standards are only used in managerial accounting. Reason: Standards are everywhere. Standards provide information for measuring performance.

When actual results depart significantly from the standard, the reasons why should be investigated. Standards provide information for measuring performance.

Standards are Blank______. Multiple select question. benchmarks for measuring performance set for each major production input or task compared to the actual quantities and costs of inputs rarely used outside of management accounting Reason: Standards are found in most situations both inside and outside of accounting.

benchmarks for measuring performance set for each major production input or task compared to the actual quantities and costs of inputs

A quantity variance is Blank______. Multiple choice question. calculated using the standard price of the input calculated using the actual price of the input Reason: The actual price of inputs is part of the price variance, not the quantity variance calculation. based only on the standard quantity of inputs Reason: A quantity variance looks at the difference between actual and standard quantities. based only on the actual quantity of inputs

calculated using the standard price of the input

The purchasing manager is generally responsible for the material Blank______. Multiple choice question. price variance only Reason: The purchasing manager is generally responsible for the price variance. quantity variance only price and quantity variances

price variance only

A materials price variance is equivalent to a labor __________variance and a materials quantity variance is equivalent to a labor ___________ variance.

rate; efficiency

The quantity variance is Blank______. Multiple choice question. (AQ x AP) - (SQ x SP) Reason: This is the spending variance. (AQ x AP) - (AQ x SP) Reason: This is the price variance. (AQ x SP) - (SQ x SP)

(AQ x SP) - (SQ x SP) Flex - Standard

A planning budget called for 500 units to be produced and total direct labor cost of $7,500. Actual production was 600 units and actual direct labor cost was $9,300. The spending variance is Blank______. Multiple choice question.

$300 U Reason: $7,500 ÷ 500 = $15 standard rate per unit × 600 = $9,000 flexible budget - $9,300 actual = $300 U

The materials price variance is the difference between the actual price of materials Blank______. Multiple choice question. and the standard price for materials with the difference multiplied by the standard quantity of material allowed Reason: Standard quantity allowed at the standard price is a component of the materials quantity variance. and the standard price for materials with the difference multiplied by the actual quantity of materials times the actual quantity of materials and the standard price of materials times the standard quantity allowed for production Reason: This is the calculation of the spending variance.

and the standard price for materials with the difference multiplied by the actual quantity of materials

The materials price variance is generally the responsibility of the Blank______ manager. Multiple choice question. purchasing production

purchasing

The standard hours per unit includes both direct and indirect labor hours. True false question.

False (only direct)