Managerial Accounting- Ch 10 SmartBook

The standard rate per unit that a company expects to pay for variable overhead equals the ______.

variable portion of the predetermined overhead rate

An unfavorable labor efficiency variance can result from ______.

- poorly motivated workers - insufficient product demand - faulty equipment

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

1. rate 2. hours

Material requirements plus an allowance for normal inefficiencies are added together to determine the _____ _____ of a direct material per unit of output. (Enter only one word per blank.)

1. standard 2. quantity

Standards are ______

- Benchmarks for measuring performance - Compared to the actual quantities and costs of inputs - Set for each major production input or task

The amount of direct-labor hours that should be used to produce one unit of finished goods is the _______ hours per unit

Standard

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

The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials _____ variance.

quantity

A benchmark used in measuring performance is called a(n) _____

standard

The amount of direct-labor hours that should be used to produce one unit of finished goods is the _______ hours per unit.

standard

The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.

standard

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

actual standard

SR(AH - SH) is the formula for the ______ variance.

labor efficiency

The spending variance is ______.

(AQ × AP) - (SQ × SP)

The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor.

variable

True or false: The labor rate variance measures the productivity of direct labor.

false

The difference between actual results and the flexible budget amount is a(n) _____ variance

spending

Standard costs fit naturally into an integrated system of _____ accounting.

responsibility

If poor-quality materials results in excessive labor processing time, the _____ manager will probably be held responsible for the labor efficiency variance.

purchasing

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) _____ variance

quantity , efficiency, or usage

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

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 Favorable

The materials price variance is calculated using the ______.

- actual quantity of the input purchased - standard price of the input - actual price of the input

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 Unfavorable

True or false: The standard hours per unit includes both direct and indirect labor hours.

False

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

actual

The difference between actual results and the flexible budget amount is a(n) _____ variance.

spending

The difference between the standard and the actual direct labor hourly rates is reflected in the _____ _____ variance

1. labor 2. rate

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

1. material 2. labor

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 _____ variance.

price

The labor efficiency variance is generally the responsibility of the ______ manager.

production

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

To calculate a price variance, multiply the _____ quantity times the actual price and compare it to the actual quantity times the _____ price.

1. actual 2. standard

When the actual cost incurred exceeds the standard cost allowed for the actual level of output, the spending variance is ______.

unfavorable

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 $___ ___

1. 670 2. Favorable

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.

1. actual 2. standard

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

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 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.

To calculate a quantity variance, multiply the _____ quantity times the standard price and compare it to the standard quantity allowed times the _____ price

1. standard 2. actual

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.

A price variance is the difference between the ______.

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

A quantity variance is ______.

calculated using the standard price of the input

When demand for a product is insufficient to keep all of the production workers busy and no layoffs occur, an unfavorable _____ _____ variance may occur.

- labor - efficiency

The difference between the standard and the actual direct labor hourly rates is reflected in the _____ _____ variance.

- labor - rate

Standard costs are a key element in the _____ by _____ approach utilized by some companies.

- management - exception

Advantages to using a standard cost system include ______.

- standards can provide benchmarks for individuals to judge their own performance - standard costs can simplify bookkeeping