Accnt 2010 Managerial CH 10

standard rate

the labor efficiency variance is the difference between actual hours used and standards hours allowed multiplied by the ___ hourly rate.

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

the materials price variance is calculated using the:

purchasing

the materials price variance is generally the responsibility of the ____ department manager

-insufficient product demand -faulty equipment -poorly motivated workers

an unfavorable labor efficiency variance can result from:

-high defect rates -inefficient operations -obsolete goods

excessive inventory on hand, especially in the work in process inventory account, may lead to:

Responsibility Accounting

standard costs fit naturally into an integrated system of _____ accounting

variable portion of the predetermined overhead rate

standard rate per unit that a company expects to pay for variable overhead = the:

standard quantity

the amount of an input that should have been used to produce the actual output is known as the _____ quantity or hours allowed

Efficiency

the difference between the actual level of activity & the standard activity allowed for the actual output x the variable part of the predetermined overhead rate is the variable overhead ___ variance

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 _____ variance

standard price per unit of materials

the final, delivered price that should be paid for each unit of direct materials is the ___ price per unit of materials

purchasing manager

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

-standard cost reports may be too outdated to be useful -managers should not use standards to assign blame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?

standard cost card

standard quantities and the cost of the inputs to make a single product are accumulated on a(n) ____ card

Materials Quantity Variance

SP(AQ-SQ) is the formula for the materials ______ variance.

labor efficiency variance

SR(AH-SH) is the formula for the _____ variance

- purchase price of the materials -purchase discounts- the standard price per unit reflects the final, delivered price of materials -shipping costs

The calculation of a standard price per unit of direct materials includes:

Spending Variance

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

(AQ x AP) - (SQ x SP)

The spending variance is

Labor Rate Variance $4,125 Unfavorable. The labor rate variance is: AH(AR-SR): 5,500 x (14.75-14.00)= $4,125 U.

Use the following info to calculate the labor rate variance for Adkinson Company Actual hours used 5,500 stands hours allowed 5,800 actual labor rate $14.75 per hr standard labor rate $14 per hr

Spending Variance $300 Unfavorable. $7,500/500 (total direct labor cost/planning budget called to be produced) = $15 standard rate per hour x 600 = $9,000 flexible budget - $9,300 actual = $300 U.

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:

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

a price variance is the difference between the:

calculated using the standard price of the input

a quantity variance is:

should be based on input from production and purchasing managers are based on standard price and quantity

direct materials standards:

$26.00 materials(4 pounds x $1.25) + labor(1.5 hours x $10) +overhead(1.5 hrs x $4)= $26.00

given the following, compute the standard cost per widget Direct materials per unit- 4 pounds direct material cost- $1.25 per pound direct labor per unit- 1.5 hours direct labor rate- $10 an hr variable overhead rate- $4 per hr

quantity

how much input should be used to produce a product or provide a service is a(n) ______ standard

price standards

how much should be paid for an input is indicated by a price

the direct labor workforce is really fixed in the short run

if managers consider it unwise to adjust the workforce in response to changes in workload:

unfavorable

if the actual level of activity is greater than the planned level of activity, the activity variances will be:

-skilled workers being assigned to jobs requiring little skill -overtime premiums being charged to the direct labor account

unfavorable labor rate variances may occur as a result of:

materials quantity variance $600 U. SP(AQ-SQ)= $3.00(5,200-5,000)= $600 u.

using the information provided, calculate the materials quantity variance. standard price- $3.00 per pound actual price- $3.20 per pound actual quantity used- 5,200 pounds standard quantity allowed: 5,000 pounds

Unfavorable labor efficiency variance

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

will be favorable when the direct labor efficiency variance is favorable

when direct labor is used as the overhead allocation base, the variable overhead efficiency variance

-it's best to use "tight but attainable" standards -the production manager should be consulted -time and motion studies may be used

when setting direct labor standards

favorable

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 purchase price is less than the actual price paid for materials, the material price variance is

1. standards provide info for measuring performance 2. when actual results depart significantly from the standard, the reasons why should be investigated

which of the following statements are true? -standards are only used in managerial accounting -the purpose of using standards is to assess blame and responsibility -standards provide info for measuring performance -when actual results depart significantly from the standard, the reasons why should be investigated

false

True or False. the standard hours per unit includes both direct and indirect labor hours

Labor Efficiency Variance $4,200 Favorable. $14.00 x (5,800 - 5,500) = $4,200 Favorable. The labor efficiency variance is calculated using the standard, not the actual, labor rate.

Use the following info to calculate the labor efficiency variance for Adkinson Company Actual hours used 5,500 Standard hours used 5,800 Actual labor rate $14.75 per hour Standard rate $14.00 per hour

Standard Quantity

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

$670 F. 6,700 x ($3.40-$3.50)= $670

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?

$1,050 Favorable. $3.50(6,700-7,000)= 1,050

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

$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:

- direct labor rate per hour -fringe benefits -employment taxes

the standard rate per hr includes

1. an undue emphasis on labor efficiency variances can create pressure to build excess inventory 2. the information in the variance reports may be too old to be useful

when using a standard cost system:

-building inventories can reduce unfavorable labor efficiency variances -excessive inventories contribute to inefficient operations

which of the following statements are correct?

actual and standard

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

-how production supervisors 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? -how production supervisors use direct labor workers can lead to labor rate variances -wage rates paid to workers are unpredictable in most companies -overtime premiums can cause an unfavorable labor rate variance -assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance

-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?

- impacted by the delivery method chosen -generally the responsibility of the purchasing manager -charged to the production manager when production problems occur

the materials price variance is

1. price variance 2. quantity variance

the purchasing manager is generally responsible for the material ___ variance, and the production manager is generally responsible for the material ___ variance.

actual and standard

the variable overhead efficiency variance compares the ______ hours times the standard rate with the standard hours allowed for the actual output times the ____ rate