Accounting 2020 Chapter 10
When the actual cost incurred exceeds the standard cost allowed for the actual level of output, the spending variance is ______.
unfavorable
The standard hours per unit includes both direct and indirect labor hours.
false
When less hours are worked than the standard hours allows, the labor efficiency variance is ______.
favorable
The materials price variance is generally calculated at the time materials are purchased because ______.
it allows materials to be carried in the inventory accounts at standard cost it simplifies bookkeeping management can generate more timely variance reports
Poor supervision is one possible cause of an unfavorable ______ variance.
labor efficiency
Material requirements plus an allowance for normal inefficiencies are added together to determine the ______ ____ per unit of output for direct materials.
standard quantity
The amount of direct-labor hours that should be used to produce one unit of finished goods is the ______ hours per unit.
standards
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
The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead.
variable
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 _____ variances.
material labor
An unfavorable labor efficiency variance can result from ______.
poor quality materials unmotivated workers faulty equipment
Most companies compute the material price variance when materials are ______ and the material quantity variance when materials are ______.
purchased used
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.
quantity
The difference between the standard and the actual direct labor wages per hour is reflected in the labor _______ variance.
rate
The material variance terms price and quantity are replaced with the terms _______ and ________ when computing direct labor variances.
rate hours
When the standard hours allowed are lower than the actual hours used, the labor efficiency variance is ______.
unfavorable
Given the following, compute the standard cost per widget.
$26.00 Materials (4 Pounds * $1.25) + labor(1.5 hours * $10) +overhead (1.5 * $4)
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. The labor rate variance is ______.
$4125 Unfavorable
The price variance is ______.
(AQ * AP) - (AQ * SP)
The quantity variance is ______.
(AQ * SP) - (SQ * SP)
Standards are ______.
Compared to the actual quantities and costs of inputs benchmarks for measuring performance set for each major production input or task
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.
Standard
The materials price variance is calculated using the ______ quantity of the input purchased.
actual
A price variance is the difference between the ______.
actual price and the standard price multiplied by the actual amount of the input
Given the following, the standard cost of this item is $ _______ per unit. (Enter your answer as a whole number.)
23
The material quantity variance reflects the difference between the _____ quantity of materials used in production and the ______ quantity of materials allowed for the actual output.
actual standard
When using a standard cost system, ______.
an undue emphasis on labor efficiency can create pressure to build excess inventory employees may take unfavorable actions to ensure favorable variances
The materials price variance is the difference between the actual price of materials ______.
and the standard price or materials with the difference multiplied by the actual quantity of materials
A quantity variance is ______.
calculated using the standard price of the input
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 normal scrap and spoilage
The variable overhead _____ variance measures activity differences and the variable overhead ______ variance measures cost differences.
efficiency rate
The labor rate variance measures the productivity of direct labor.
false
Advantages to using a standard cost system include ______.
standards provide benchmarks to evaluate and improve performance standard costs can simply bookkeeping
