Chapter 10 LearnSmart
poor supervision is one possible cause of an unfavorable ________ _____ variance.
labor efficiency
the purchasing manager is generally responsible for the material ____ variance & the production manager is generally responsible for the material ______ variance.
price quantity
how much input should be used to produce a product or provide a service is a ______ standard.
quantity
a materials price variance is equivalent to a labor _______ variance & a materials quantity variance is equivalent to a labor _____ variance.
rate efficiency
the material variance terms price and quantity are replaced with the terms ________ & ______ when computing direct labor variances.
rate & hours
the difference between actual results and the flexible budget amount is a ________ variance.
spending
a benchmark used in measuring performance is called a __________.
standard
a quantity variance is calculated using the _______ price of the input.
standard
the standard cost for _____ manufacturing overhead is computed the same way as the standard cost for direct labor.
variable
the standard hours per unit of an output includes:
1) the estimated time to complete the unit 2) an allowance for cleanup & downtime
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 Standard labor rate $14.00 per hour.
$4,125 U labor rate variance = AH(AR-SR) 5,500 x ($14.75 -$14) = $4,125 U
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 Standard rate $14.00 per hour
$4,200 F $14 x (5,800 - 5,500) = $4,200 F the labor efficiency variance is calculated using the standard 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 6,000 x ($4 - $4.10) = $600 F
the spending variance equation =
(AQ x AP) - (SQ x SP)
the materials price variance is calculated using the:
1) actual price of the input 2) standard price of the input 3) actual quantity purchased
standards are:
1) compared to the actual quantities & costs of inputs 2) set for each major production input or task 3) benchmarks for measuring performance
an unfavorable labor efficiency variance can result from _________.
1) insufficient product demand 2) poorly motivated workers 3) faulty equipment
variable overhead rate variance equation =
AH(AR-SR)
when the standard price is higher than the actual price, the materials price variance is _______ (U/F)
F
when the standard hourly rate is lower than the actual rate, the labor rate variance is _______ (U/F).
U
when calculating the labor rate variance, multiply the actual hours worked times the ______ labor rate & compare it to the actual hours worked times the ______ labor rate.
actual standard
a price variance is the difference between the _______________.
actual price & the standard price multiplied by actual amount
the difference between the actual level of activity & the standard activity allowed for the actual output x the variable part of the predetermined overhead rate is the variable overhead ______ variance.
efficiency
the difference between the standard & the actual direct labor hourly rate is reflected in the _____ ______ variance.
labor rate
standard costs are a key element in the _____ _____ _______ approach utilized by some companies.
management by exception
when using a standard cost system a) the most important objective for the company is to meet standards b) an undue emphasis on labor efficiency variances can create pressure to build excess inventory c) the information in the variance reports may be to old to be useful
b & c b) an undue emphasis on labor efficiency variances can create pressure to build excess inventory c) the information in the variance reports may be to old to be useful
the variable overhead ______ variance measures activity differences & the variable overhead ______ variance measures cost differences.
efficiency rate
True or false: A favorable labor rate variance is always favorable for a company.
false a favorable labor rate variance may not be favorable when lower-paid workers are less efficient than those with the proper pay rate/skills
True or false: Quantity standards refer to the price to be paid for each unit of the input.
false quantity standards are the amount of each input needed to produce a product..price standards specify the price to be paid.
True or false: The labor rate variance measures the productivity of direct labor.
false the labor rate variance reflects the difference between the actual & standard direct labor rates
when the direct labor is used as the overhead allocation base, the variable overhead efficiency variance will be ________ when the direct labor efficiency variance is favorable.
favorable
True or false: Managers reluctance to constantly adjust the workforce in response to decreases in the amount of work that needs to be done often leads to an unfavorable labor efficiency variance.
true
the labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the _____ hourly rate.
standard
the amount of direct-labor hours that should be used to product one unit of finished goods is the _______ hours per unit.
standard
