Chapter 10

Assume (1) the quantity of materials purchased equals the quantity used in production, (2) the materials spending variance is $400 unfavorable, and (3) the materials quantity variance is $200 favorable. Given these assumptions, which of the following statements is true?

Spending Var = Quantity Var + Price Var

The flexible budget for direct labor is computed in which of the following ways?

Standard hours allowed (SH) × standard rate (SR)

The flexible budget for variable manufacturing overhead is computed in which of the following ways?

Standard hours allowed (SH) × standard rate (SR)

The standard direct labor cost per unit of finished goods is computed in which of the following ways?

Standard hours per unit of finished goods × standard rate per hour Correct

A standard cost card does not explicitly mention which of the following?

Standard indirect materials cost per unit

The flexible budget for direct materials is computed in which of the following ways?

Standard quantity allowed (SQ) × standard price (SP)

The standard direct material cost per unit of finished goods is computed in which of the following ways?

Standard quantity per unit of finished goods × standard price per unit of direct material Correct

Which of the following statements is true for a manufacturing company that uses standard costing and allocates its manufacturing overhead to production based on direct labor-hours?

If the company's labor spending variance is unfavorable and its actual hourly labor rate is less than the standard hourly rate, then its variable overhead efficiency variance must be unfavorable. Correct

The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,000 pounds. The actual purchase price per pound of materials was $2.25. The company produced 13,000 units of finished goods during the period. Price Var=(AP-SP)xAQ

$12,500 U

The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,000 pounds. The actual purchase price per pound of materials was $2.25. The company produced 13,000 units of finished goods during the period. Quantity Var=(AQ-SQ)xSP

$4,000 F

Variable Overhead Efficiency Variance

(AH-SH)xSR

Materials price variance

(AP − SP) x AQ AP>SP unfavorable

Labor Efficiency Variance

(AQ − SQ) x SP AQ>SQ unfavorable

Materials quantity variance

(AQ − SQ) x SP AQ>SQ unfavorable

Labor Rate Variance

(AR − SR) x AQ AR>SR unfavorable

Labor Rate Variance

(AR-SR)xAH

Variable Overhead Rate Variance

(AR-SR)xAH

Which of the following statements is true with respect to the labor spending variance?

It encompasses the labor rate and efficiency variances.

Which of the following statements is true with respect to the materials price variance?

It is computed using the actual quantity of materials purchased.

Which of the following statements is true with respect to the materials quantity variance?

It is computed using the standard price.

Labor Spending Variance

Labor efficiency var + Labor rate var

Labor Rate Variance/efficieny

Positives are unfavorable Negatives are favorable

Assume (1) the quantity of materials purchased equals the quantity used in production, (2) the materials spending variance is unfavorable, and (3) the materials quantity variance is favorable. Given these assumptions, which of the following statements is true?

The materials price variance must be unfavorable. Correct

For expenses negative is

favorable

For expenses positive is

unfavorable