Acct 2020 Ch 10
The materials price variance is the difference between the actual price of materials ______.
and the standard price for materials with the difference multiplied by the actual quantity of materials
Poor supervision is one possible cause of an unfavorable ______ variance.
labor efficiency
SR(AH - SH) is the formula for the ______ variance.
labor efficiency
The difference between the actual price paid for the material and what should have been paid according to the standard is reflected in the direct materials BLANK variance.
price
Most companies compute the material price variance when materials are ______ and the material quantity variance when materials are ______.
purchased, used
The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials BLANK variance.
quantity
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(n) BLANK
quantity
Standard costs fit naturally into an integrated system of BLANK accounting
responsibility
The difference between actual results and the flexible budget amount is a(n) BLANK variance.
spending
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.
standard
The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead.
the variable
When the actual cost incurred exceeds the standard cost allowed for the actual level of output, the spending variance is ______.
unfavorable
The same basic formulas used for materials and labor are used to analyze the BLANK portion of manufacturing overhead.
variable
The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor.
variable
The standard rate per unit that a company expects to pay for variable overhead equals the ______.
variable portion of the predetermined overhead rate
A price variance is the difference between the ______.
actual price and the standard price multiplied by the actual amount of the input
Standards are ______.
1. compared to the actual quantities and costs of inputs 2. benchmarks for measuring performance 3. set for each major production input or task
An unfavorable labor efficiency variance can result from ______.
1. faulty equipment 2. poorly motivated workers 3. insufficient product demand
The difference between the standard and the actual direct labor hourly rates is reflected in the BLANK BLANK variance.
1. labor 2. rate
Standard costs are a key element in the BLANK by BLANK approach utilized by some companies.
1. management 2. exception
The materials price variance is generally calculated at the time materials are purchased because ______.
1. management can generate more timely variance reports 2. it allows materials to be carried in the inventory accounts at standard cost 3. it simplifies bookkeeping
To calculate a quantity variance, multiply the BLANK quantity times the standard price and compare it to the standard quantity allowed times the BLANK price.
1. standard 2. actual
Advantages to using a standard cost system include ______.
1. standard costs can simplify bookkeeping 2. standards can provide benchmarks for individuals to judge their own performance
The materials price variance is calculated using the ______ quantity of the input purchased.
actual
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:
$300 U Reason: $7,500 ÷ 500 = $15 standard rate per unit × 600 = $9,000 flexible budget - $9,300 actual = $300 U
Use the following information to calculate the labor rate variance for Adkinson Company. Actual hours used 5,500; Standard hours allowed 5,800; Actual labor rate $14.75 per hour; and Standard labor rate $14.00 per hour.
$4,125 Unfavorable Reason: This is the labor efficiency variance. The labor rate variance is: AH(AR-SR): 5,500 × ($14.75 - $14.00) = $4,125 Unfavorable
Use the following information to calculate the labor efficiency variance for Adkinson Company. Actual hours used 5,500; Standard hours allowed 5,800; Actual labor rate $14.75 per hour; and Standard labor rate $14.00 per hour.
$4,200 Favorable Reason: $14.00 × (5,800 - 5,500) = $4,200 Favorable. The labor efficiency variance is calculated using the standard, not the actual, labor rate.
The standard price of materials is $4.10 per pound and the standard quantity allowed for actual output is 5,800 pounds. If the actual quantity purchased and used was 6,000 pounds, and the actual price per pound was $4.00, the direct materials price variance is ______.
$600 F Reason: 6,000 × ($4.00 - $4.10) = $600 F The variance is favorable because the actual price is less than the standard price.
The materials price variance is calculated using the ______.
1. standard price of the input 2. actual price of the input 3. actual quantity of the input purchased
Which of the following are used to calculate the standard quantity per unit of direct materials?
1. Allowance for waste and spoilage 2. Direct materials requirements per unit of finished product
Which of the following statements are true?
1. Managers should not use standards to assign blame. 2. Standard cost reports may be too outdated to be useful.
Material requirements plus an allowance for normal inefficiencies are added together to determine the BLANK BLANK of a direct material per unit of output.
1. Standard 2. Quantity
To calculate a price variance, multiply the BLANK quantity times the actual price and compare it to the actual quantity times the BLANK price.
1. actual 2. standard
The material quantity variance reflects the difference between the BLANK quantity of materials used in production and the BLANK quantity allowed for the actual output.
1. actual 2. standard
When calculating the labor rate variance, multiply the actual hours worked times the BLANK labor rate and compare it to the actual hours worked times the BLANK labor rate.
1. actual 2. standard
When using a standard cost system, ______.
1. an undue emphasis on labor efficiency variances can create pressure to build excess inventory. 2. the information in the variance reports may be too old to be useful.
The variable overhead BLANK variance measures activity differences and the variable overhead BLANK variance measures cost differences.
1. efficiency 2. rate
True or false: The standard hours per unit includes both direct and indirect labor hours.
False
True or false: The labor rate variance measures the productivity of direct labor.
False Reason: The labor rate variance reflects the difference between the actual and standard direct labor rates.
A benchmark used in measuring performance is called a(n) BLANK.
Standard
The amount of direct-labor hours that should be used to produce one unit of finished goods is the BLANK hours per unit. (
Standard
Which statement regarding variable overhead variance analysis is true?
The variable overhead efficiency variance may depend on the efficiency of direct labor.
A quantity variance is ______.
calculated using the standard price of the input
The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor BLANK variance.
efficiency
The difference between the actual level of activity and the standard activity allowed for the actual output x the variable part of the predetermined overhead rate is the variable overhead BLANK variance.
efficiency
When direct labor is used as the overhead allocation base, the variable overhead efficiency variance ______.
will be favorable when the direct labor efficiency variance is favorable
The terms price and quantity are used when computing direct BLANK variance, while the terms rate and hours are used when computing direct BLANK variances.
1. material 2. labor
The material variance terms price and quantity are replaced with the terms BLANK and BLANK when computing direct labor variances.
1. rate 2. hours