Chapter 10 LearnSmart
- set for each major performance production input or task - benchmarks for measuring performance - compared to the actual quantities and costs of inputs
Standards are:
standard
The amount of an input that should have been used to produce the actual output is know 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.
spending
The difference between actual results and the flexible budget amount is a _________ variance.
(AQ x AP) - (SQ x SP)
The spending variance is:
- How production supervision use direct labor workers can lead to labor rate variances - Overtime premiums can cause an unfavorable labor rate variance
Which of the following statements are true?
- Material quantity variances due to inferior materials are the responsibility of the purchasing department. - The production manager is usually responsible for the materials quantity variance.
Which of the following statements are true?
$4,200 F 14 x (5800-5000) = 4200 F. The labor efficiency variance is calculated using the standard, not the actual, labor rate.
Actual hours used 5500 Standard hours allowed 5800 Actual labor rate 14.75 Standard rate 14.00
- inefficient operations - obsolete goods - high defect rates
Excessive inventory on hand, especially in the word in process inventory account, may lead to:
- obsolete goods - inefficient operations - high defect rates
Excessive inventory on hand, especially in the work in process inventory account, may lead to:
$1050 F 3.50(6700-7000) = 1050
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.
can change based on a change in the delivery method (The standard price reflects the final, delivered cost of materials)
The standard price per unit for direct materials:
SR(AH - SH) is the formula for the __________ variance.
labor efficiency
standard
A benchmark used in measuring performance is called a:
calculated using the standard price of the input
A quantity variance is:
$4,125 U AH(AR-SR)
Actual hours 5500 Standard hours 5800 Actual labor rate $14.75 per hour Standard labor rate $14.00
unfavorable
If the actual level of activity is greater than the planned level of activity, the activity variances will be:
Standard quantity
Material requirements plus an allowance for normal inefficiencies are added together to determine the ________________ of a direct material per unit of output.
Labor efficiency
Poor supervision is one possible cause of an unfavorable _________ variance.
quantity
SP(AQ-SQ) is the formula for the materials ________ variance.
labor efficiency
SR(AH-SH) is the formula for the __________ variance.
$600 U SP(AQ-SQ)
Standard price 3.00 / pound Actual price 3.20 / pound Actual quantity used 5200 pounds Standard quantity allowed 5000
- The production manager is usually responsible for the materials quantity variance - Material quantity variances due to inferior materials are the responsibility of the purchasing department.
Which of the following statements are true?
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 _______ variance
actual
The materials price variance is calculated using the _______ quantity of the input purchased.
- standard price of the input - actual price of the input
The materials price variance is calculated using the:
production
The materials quantity variance is generally the responsibility of the ___________ department manager.
price quantity
The purchasing manager is generally responsible for the material ________ variance, and the production manager is generally responsible for the material _______ variance.
reflects the expected mix of workers
The standard labor rate per hour:
$600 F 6,000 x (4.00 - $4.10) = $600 F
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:
Using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager
The standard price of the material is used in the calculation of the material quantity variance because:
- the direct labor rate per hour - employment taxes - fringe benefits
The standard rate per hour includes:
-fringe benefits - employment taxes - the direct labor rate per hour
The standard rate per hour includes:
False
True or false: The standard hours or quantity allowed for an input is the amount of the input that should have been used to product the standard output for the period.
- overtime premiums being charged to the direct labor account - skilled workers being assigned to jobs requiring little skill
Unfavorable labor rate being assigned variances may occur as a result of:
standard actual
When calculating the labor rate variance, multiply the actual hours worked times the ________ labor rate and compare it to the actual hours worked times the ________ labor rate.
actual standard
When calculating the labor rate variance, multiply the actual hours worked times the _________ labor rate and compare it to the actual hours worked times the ________ labor rate.
favorable
When the standard cost allowed for the actual output is less than the standard cost allowed for the planned output the activity variance is labeled as:
- Building inventories can reduce unfavorable labor efficiency variances - Excessive inventories contribute to inefficient operations
Which of the following statements are correct?
- Excessive inventories contribute to inefficient operations. - Building inventories can reduce unfavorable labor efficiency variances.
Which of the following statements are correct?
- Standards provide information for measuring performance. - When actual results depart significantly from the standard, the reasons why should be investigated.
Which of the following statements are true?