Managerial Acct Ch 10 Connect

The standard labor rate per hour

reflects the expected mix of workers

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

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

The standard quantity allowed equals

Actual output x standard quantity

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

Direct material standards

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

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

Standard

The standard quantity or hours and the standard price or rate required to produce a unit of a specific product is shown on a standard ________ __________

Cost card

When the actual quantity of materials used is less than the standard quantity allowed the material quantity variance is labeled as __________

Favorable

The materials price variance is generally calculated at the time materials are purchased because:

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

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

Labor efficiency

The difference between the standard and the actual direct labor hourly rates is reflected in the ________ ________ variance

Labor rate

The purchasing manager is generally responsible for the material ________ variance, and the production manager is generally responsible for the material _________ variance

Price / quantity

How much should be paid for an input is indicated by a(n) ______ _______

Price standard

The labor efficiency variance is generally the responsibility of the _______ manager

Production

The labor rate variance is typically the responsibility of the __________ supervisor

Production

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

Purchase price of the materials, purchase discounts, shipping costs

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

Quantity

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

Quantity

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

Standard

Advantages to using a standard cost system include

Standard costs can simplify bookkeeping and can provide benchmarks individuals use to judge their own performance

The MOST difficult standard to determine is PERHAPS the

Standard hours per unit

The materials price variance is calculated using the

Standard price of the input, actual quantity of the input purchased, and actual price of the input

The standard hours per unit of an output includes

The estimated time to complete the unit , and an allowance for cleanup and downtime

An allowance for rejects increases the standard quantity per unit of materials (T/F)

True

How production supervisors use direct labor workers can lead to labor rate variances (T/F)

True

Material quantity variances due to inferior materials are the responsibility of the purchasing department (T/F)

True

Overtime premiums can cause an unfavorable labor rate variance (T/F)

True

The production manager is most often responsible for the materials quantity variance (T/F)

True

The variable part of manufacturing overhead is analyzed using the same basic formulas used for materials and labor (T/F)

True

If the actual level of activity is greater than the planned level of activity the activity variances will be

Unfavorable

A price variance is the difference between the

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

When using a standard cost system:

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

A quantity variance is

calculated using the standard price of the input

The variable overhead _______ variance measures activity differences and the variable overhead _______ variance measures cost differences

efficiency / rate

An unfavorable labor efficiency variance can result from

faulty equipment, poorly motivated workers, insufficient product demand