Chapter 10 Acc 202
When using a standard cost system, ______.
an undue emphasis on labor efficiency variances can create pressure to build excess inventory. the information in the variance reports may be too old to be useful.
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
The materials price variance is generally calculated at the time materials are purchased because ______.
it simplifies bookkeeping it allows materials to be carried in the inventory accounts at standard cost management can generate more timely variance reports
Poor supervision is one possible cause of an unfavorable ______ variance.
labor efficiency
SR(AH - SH) is the formula for the ______ variance.
labor efficiency
The terms price and quantity are used when computing direct material variance, while the terms rate and hours are used when computing direct
labor variances
The labor efficiency variance is generally the responsibility of the ______ manager.
production
Most companies compute the material price variance when materials are ______ and the material quantity variance when materials are ______.
purchased , used
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)
quantity
SP(AQ-SQ) is the formula for the materials
quantity variance
The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials
quantity variance
The material variance terms price and quantity are replaced with the terms
rate and hours
AH(AR - SR) is the formula for the variable overhead
rate variance
The difference between the standard and the actual direct labor wages per hour is reflected in the labor
rate variance
Standard costs fit naturally into an integrated system of
responsibility accounting
The difference between actual results and the flexible budget amount is a(n)
spending variance
The amount of direct-labor hours that should be used to produce one unit of finished goods is the
standard hours per unit
To calculate a quantity variance, multiply the actual quantity times the standard price and compare it to the standard quantity allowed times the
standard price.
Advantages to using a standard cost system include ______.
standards can provide benchmarks for individuals to judge their own performance standard costs can simplify bookkeeping
An unfavorable materials quantity variance occurs when ______.
the actual price paid for material is greater than the standard price allowed for the material
If managers consider it unwise to adjust the workforce in response to changes in workload ______.
the direct labor workforce is really fixed in the short run
The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead.
the variable
The same basic formulas used for materials and labor are used to analyze the
variable portion of manufacturing overhead.
The standard rate per unit that a company expects to pay for variable overhead equals the ______.
variable portion of the predetermined overhead rate
To calculate a price variance multiply the blank quantity times the actual price and compare it to the actual quantity times the blank
actual standard
When calculating the labor rate variance, multiply the actual hours worked times the standard Unavailable labor rate and compare it to the actual hours worked times the
actual labor force
A price variance is the difference between the ______.
actual price and the standard price multiplied by the actual amount of the input
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. The labor rate variance is ______.
$4,125 U
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
The spending variance is ______.
(AQ × AP) - (SQ × SP)
The standard price of materials is $3.50 per pound and the standard quantity allowed for actual output is 7,000 pounds. If the actual quantity purchased and used was 6,700 pounds, and the actual price per pound was $3.40, the direct materials quantity variance is $
1050 F
Given on the following information, calculate the variable overhead rate variance. Actual variable overhead cost $15,500; Actual hours used 4,200; Standard hours allowed 4,000; and Standard variable overhead rate $3.75 per hour.
250 F
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
The standard price of materials is $3.50 per pound and the standard quantity allowed for actual output is 7,000 pounds. If the actual quantity purchased and used was 6,700 pounds, and the actual price per pound was $3.40, the direct materials price variance is $
670 F
The materials price variance is calculated using the ______ quantity of the input purchased.
Actual
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
Actual Standard
Standards are ______.
Benchmarks for measuring performance - Compared to the actual quantities and costs of inputs - Set for each major production input or task
Which of the following are used to calculate the standard quantity per unit of direct materials?
Direct materials requirements per unit of finished product Allowance for waste and spoilage
All materials variances are generally the responsibility of the production manager.
False
The labor rate variance measures the productivity of direct labor.
False
The standard hours per unit includes both direct and indirect labor hours.
False
If poor-quality materials results in excessive labor processing time, the purchasing manager will probably be held responsible for the
Labor efficiency variance
When demand for a product is insufficient to keep all of the production workers busy and no layoffs occur, an unfavorable
Lobor efficiency
The purchasing manager is generally responsible for the material blank variance, and the production manager is generally responsible for the material blank
Price Quantity
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.
Standard
Material requirements plus an allowance for normal inefficiencies are added together to determine the per unit of output for direct materials
Standard Quantity
Material requirements plus an allowance for normal inefficiencies are added together to determine the
Standard Quantity
Which of the following statements are true?
Standard cost reports may be too outdated to be useful. Managers should not use standards to assign blame.
Which statement regarding variable overhead variance analysis is true?
The variable overhead efficiency variance may depend on the efficiency of direct labor.
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
When the actual hourly rate is lower than the standard hourly rate, the labor rate variance is
Unfavorable
When the actual quantity of materials used is less than the standard quantity allowed, the material quantity variance is labeled as
Unfavorable
When the standard hourly rate is lower than the actual rate, the labor rate variance is ______.
Unfavorable
The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor. Multiple choice question.
Variable
Which of the following statements are true?
When actual results depart significantly from the standard, the reasons why should be investigated. Standards provide information for measuring performance.
A quantity variance is ______.
calculated using the standard price of the input
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
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