Quiz 3

Labor rate variance

(AH*AR) -(AH*SR)

Labor efficiency variance

(AH-SH) * SR

Variable overhead efficiency

(AH-SH) * SR

Materials quantity variance

(AQ - SQ) * SP

Materials price variance

(AQ*AP) - (AQ*SP)

Turnover

sales/average operating assets

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 9.0 hours; Standard labor rate $15.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 8,100 hours Actual total labor cost $119,880 Actual output 800 units What is the labor rate variance for the month? A. $11,160 F B. $13,320 U C. $11,160 U D. $2,430 F

Labor rate variance = (AH*AR) - (AH*SR) D. $2,430 F

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 meters; Standard price $17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters; Actual cost of materials purchased $141,345 Actual materials used in production 7,600 meters; Actual output 1,400 units What is the materials price variance for the month? A. $3,141 U B. $2,025 U C. $8,600 U D. $8,725 U

Materials price variance = (AQ*SP) - (AQ*SP) B. $2,025 U

Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August? A. $1,500 Unfavorable B. $18,000 Favorable C. $19,500 Unfavorable D. $54,000 Unfavorable

Materials quantity variance = (AQ - SQ) * SP D. $54,000 Unfavorable

The following labor standards have been established for a particular product: Standard labor-hours per unit of output 8.7 hours; Standard labor rate $18.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 3,800 hours; Actual total labor cost $67,640; Actual output 500 units What is the labor efficiency variance for the month? A. $9,790 F B. $11,095 U C. $9,955 F D. $11,095 F

SH = units * hours per unit Labor efficiency variance = (AH-SH) * SR C. $9,955 F

Standard hours per unit of output

direct labor hours/units

Residual income can be used most effectively in comparing the performance of divisions of different size

false

The labor rate variance measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the standard hours allowed for the actual output.

false

ROI

margin * turnover

Margin

net operating income/sale

Residual income is the difference between net operating income and the product of average operating assets and the minimum rate of return

true

Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.

true

BBP Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During February the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for February would be: A. 1,250 hours B. 1,000 hours C. 1,200 hours D. 1,300 hours

Standard hours per unit of output = direct labor hours/units Standard hours allowed = units * direct labor per unit C. 1,200 hours

The standard quantity or standard hours allowed refers to the amount of the input that should have been used to produce the actual output of the period

True

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 3.5 hours; Standard variable overhead rate $15.20 per hour The following data pertain to operations for the last month: Actual hours 3,800 hours; Actual total variable manufacturing overhead cost $59,090; Actual output 800 units What is the variable overhead efficiency variance for the month? A. $15,550 U B. $15,200 U C. $16,530 U D. $980 F

Variable overhead efficiency = (AH-SH) * SR B. $15,200 U

Lion Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 9,700MHs; Actual level of activity 9,900MHs Standard variable manufacturing overhead rate $6.30per MH Actual total variable manufacturing overhead $60,390 What was the variable overhead rate variance for the month? A. $2,000 Favorable B. $720 Favorable C. $1,260 Unfavorable D. $1,980 Favorable

Variable overhead rate variance = (AH*AR) - (AH*SR) D. $1,980 Favorable

Stand hours allowed

units * direct labor per unit

Standard hours

units * hours per unit