Chapter 10 Accounting

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 ______ variance.

quantity

The material variance terms price and quantity are replaced with the terms ______ and ______ when computing direct labor variances.

rate; hour

Which of the following statements are true? Multiple select question. Overtime premiums can cause an unfavorable labor rate variance. How production supervisors use direct labor workers can lead to labor rate variances. Assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance. Wage rates paid to workers are unpredictable in most companies.

Overtime premiums can cause an unfavorable labor rate variance. How production supervisors use direct labor workers can lead to labor rate variances.

Standards are Blank______. benchmarks for measuring performance compared to the actual quantities and costs of inputs rarely used outside of management accounting set for each major production input or task

benchmarks for measuring performance rarely used outside of management accounting set for each major production input or task

The purchasing manager is generally responsible for the material Blank______.

quantity not price

Fill in the blank question. The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor variance.

efficiency

A materials price variance is equivalent to a labor ________ variance and a materials quantity variance is equivalent to a labor ______ variance.

rate; efficiency

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

standard quantity

The materials price variance is calculated using the ______ quantity of the input purchased.

actual

When direct labor is used as the overhead allocation base, the variable overhead efficiency variance Blank______. Multiple choice question. explains how efficient overhead resources were used will be favorable when the direct labor efficiency variance is favorable will always be unfavorable cannot be calculated

will be favorable when the direct labor efficiency variance is favorable

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

The quantity variance is ______. (AQ x AP) - (AQ x SP) (AQ x AP) - (SQ x SP) (AQ x SP) - (SQ x SP)

(AQ x SP) - (SQ x SP)

The price variance is Blank______. Multiple choice question. (AQ × AP) - (SQ × SP) (AQ × AP) - (AQ × SP) (AQ × SP) - (SQ × SP)

(AQ × AP) - (AQ × SP)

Given the following, the standard cost of this item is $____ per unit. Direct materials per unit 2 pounds Direct material cost $2.50 per pound Direct labor per unit .75 hours Direct labor rate $16.00 per hour Variable overhead rate $8.00 per hour

23

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

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

A price variance is the difference between the ______. standard quantity allowed and the actual quantity used multiplied by the standard price actual price and the standard price multiplied by the standard amount allowed 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 actual price

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

The material quantity variance reflects the difference between the ________ quantity of materials used in production and the ______ quantity of materials allowed for the actual output.

actual; standard

A quantity variance is Blank______. based only on the standard quantity of inputs calculated using the standard price of the input based only on the actual quantity of inputs calculated using the actual price of the input

calculated using the standard price of the input

The terms price and quantity are used when computing direct variance, while the terms rate and hours are used when computing direct variances.

material; labor

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

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

standard quantity

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

unfavorable

The same basic formulas used for materials and labor are used to analyze Blank______ portion of manufacturing overhead.

variable

The same basic formulas used for materials and labor are used to analyze the ______ portion of manufacturing overhead.

variable

Which of the following statements is true? Multiple choice question. The variance that computes the price difference for materials is called a material rate variance. Price variances can only be computed for direct materials and direct labor. A labor efficiency variance is a quantity variance. Quantity variances are computed for direct materials, direct labor and fixed overhead.

A labor efficiency variance is a quantity variance.

Which of the following are used to calculate the standard quantity per unit of direct materials? Freight and transportation costs Direct materials requirements per unit of finished product Allowance for waste and spoilage

Direct materials requirements per unit of finished product Allowance for waste and spoilage

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

False

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

False

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

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

When the standard purchase price is less than the actual price paid for materials, the material price variance is Blank______.

Unfavorable

When direct labor is used as the overhead allocation base, the variable overhead efficiency variance Blank______. Multiple choice question. will always be unfavorable cannot be calculated explains how efficient overhead resources were used will be favorable when the direct labor efficiency variance is favorable

will be favorable when the direct labor efficiency variance is favorable

Which statement regarding variable overhead variance analysis is true? Multiple choice question. The variable overhead efficiency variance uses exactly the same inputs as the direct labor efficiency variance. Efficient use of variable overhead results in a favorable variable overhead efficiency variance. Variable overhead variances are easy to interpret. The variable overhead efficiency variance may depend on the efficiency of direct labor.

The variable overhead efficiency variance may depend on the efficiency of direct labor.

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

unfavorable

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

false

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

false