Managerial Accounting Chapter 10

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

spending

Select all that apply Which of the following statements are true? -Standard cost reports may be too outdated to be useful. -Meeting standards is sufficient to remain competitive. -Managers should not use standards to assign blame. -Favorable variances are always better than unfavorable variances.

Standard cost reports may be too outdated to be useful. Managers should not use standards to assign blame.

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

standard quantity

Select all that apply The materials price variance is generally calculated at the time materials are purchased because ______. -it simplifies bookkeeping -management can generate more timely variance reports -it allows materials to be carried in the inventory accounts at standard cost -GAAP requires variances to be recognized when they are incurred

it simplifies bookkeeping management can generate more timely variance reports it allows materials to be carried in the inventory accounts at standard cost

SR(AH - SH) is the formula for the ______ variance. -material price -labor rate -labor efficiency -material quantity

labor efficiency

SR(AH - SH) is the formula for the ______ variance. -material quantity -labor rate -material price -labor efficiency

labor efficiency

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

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

standard

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

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

The variable overhead ____ variance measures activity differences and the variable overhead ____ variance measures cost differences.

efficiency rate

Select all that apply An unfavorable labor efficiency variance can result from ______. -faulty equipment -insufficient product demand -poorly motivated workers -the payment of overtime premiums

faulty equipment insufficient product demand poorly motivated workers

The difference between the standard and the actual direct labor hourly rates is reflected in the ____ ____ varaince

labor rates

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

management exception

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

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

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(n) ____ variance

quantity

Most companies compute the material price variance when materials are ______ and the material quantity variance when materials are ______. -purchased, used -used, used -used, purchased -purchased, purchased

purchased, used

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

rates, hours

Standard costs fit naturally into an integrated system of ____ accounting

responsibility

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

standard

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 F -$1,800 U -$300 U -$1,500 U -$1,500 F

$300 U ($7,500 ÷ 500 = $15 standard rate per unit × 600 = $9,000 flexible budget - $9,300 actual = $300 U)

The spending variance is ______. -(AQ × SP) - (SQ × SP) -(AQ × AP) - (SQ × SP) -(AQ × AP) - (AQ × SP)

(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 price variance is $ ____ _____

670, F

Select all that apply 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 -Freight and transportation costs

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

Select all that apply Which of the following statements are true? -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. -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.

The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead. -the variable -both the variable and fixed -neither the variable nor fixed -the fixed

the variable

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

unfavorable

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

variable

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; and Standard labor rate $14.00 per hour. -$4,200 Favorable -$4,125 Unfavorable -$4,350 Unfavorable

$4,125 Unfavorable (5,500 × ($14.75 - $14.00) = $4,125 Unfavorable)

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; and Standard labor rate $14.00 per hour. -$4,125 Unfavorable -$4,425 Favorable -$4,200 Favorable

$4,200 Favorable ($14.00 × (5,800 - 5,500) = $4,200 Favorable)

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 ______. -$580 F -$600 U -$600 F -$580 U

$600 F (6,000 × ($4.00 - $4.10) = $600 F)

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

actual

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

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

actual, standard

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

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 rates

actual, standard

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

calculated using the standard price of the input

Select all that apply Standards are ______. -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

compared to the actual quantities and costs of inputs set for each major production input or task benchmarks for measuring performance

The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor ____ varaince

efficiency

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 ____ variance

efficiency

The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor. -variable -both variable and fixed -fixed

variable

The standard rate per unit that a company expects to pay for variable overhead equals the ______. -variable portion of the predetermined overhead rate -variable portion of actual overhead the company expects to incur -total actual overhead the company expects to incur -total predetermined overhead rate

variable portion of the predetermined overhead rate

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

False

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

False

Select all that apply When using a standard cost system, ______. -an undue emphasis on labor efficiency variances can create pressure to build excess inventory. -the most important objective for the company is to meet the standards -the information in the variance reports may be too old to be useful.

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 ______. -times the actual quantity of materials and the standard price of materials times the standard quantity allowed for production -and the standard price for materials with the difference multiplied by the standard quantity of material allowed -and the standard price for materials with the difference multiplied by the actual quantity 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 -material price -fixed overhead budget -labor rate

labor efficiency

Select all that apply Advantages to using a standard cost system include ______. -standards can provide benchmarks for individuals to judge their own performance -too much emphasis on standards can impede other objectives -standards provide feedback that can reduce employee morale -standard costs can simplify bookkeeping

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

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

standard