A202 Chapter 10 SB
An unfavorable materials quantity variance occurs when: Multiple choice question.
the actual amount of material used is greater than the standard amount of material allowed for the actual output
True or false: A favorable labor rate variance is always favorable for a company. True false question.
False
True or false: All materials variances are generally the responsibility of the production manager. True false question.
False
True or false: The standard hours or quantity allowed for an input is the amount of the input that should have been used to produce the standard output for the period. True false question.
False
An unfavorable labor efficiency variance can result from:
faulty equipment poorly motivated workers poor-quality materials
The material variance terms price and quantity are replaced with the terms _____ and _____ when computing direct labor variances.
rate hours
A materials price variance is equivalent to a labor ______ variance and a materials quantity variance is equivalent to a labor _______ variance.
rate, efficiency
The difference between actual results and the flexible budget amount is a(n) ______ variance
spending
A benchmark used in measuring performance is called a(n) _______
standard
The amount of an input that should have been used to produce the actual output is known as the _______ quantity or hours allowed.
standard
True or false: The labor rate variance measures the productivity of direct labor.
False
The difference between the standard and the actual variable overhead cost is reflected in the Multiple choice question.
variable overhead rate variance
If managers consider it unwise to adjust the workforce in response to changes in workload: Multiple choice question.
the direct labor workforce is really fixed in the short run
Excessive inventory on hand, especially in the work in process inventory account, may lead to:
high defect rates inefficient operations obsolete goods
The standard price of the material is used in the calculation of the material quantity variance because:
using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager
When direct labor is used as the overhead allocation base, the variable overhead efficiency variance:
will be favorable when the direct labor efficiency variance is favorable
Which of the following statements are true?
How production supervisors use direct labor workers can lead to labor rate variances. Overtime premiums can cause an unfavorable labor rate variance.
The variable overhead _____ variance measures activity differences and the variable overhead _____ variance measures cost differences.
efficiency rate
When demand for a product is insufficient to keep all of the production workers busy and no layoffs occur, an unfavorable ______ _____ variance may occur.
labor, efficiency
Unfavorable labor rate variances may occur as a result of:
overtime premiums being charged to the direct labor account. skilled workers being assigned to jobs requiring little skill.
The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials ______ variance
price
SP(AQ-SQ) is the formula for the materials ________ variance
quantity
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(n) ______ variance
quantity
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
The purchasing manager is generally responsible for the material ______ variance, and the production manager is generally responsible for the material ______ variance
price, quantity
The labor efficiency variance is generally the responsibility of the ______ manager.
production
If poor-quality materials results in excessive labor processing time, the ______ manager will probably be held responsible for the labor efficiency variance
purchasing
The materials price variance is generally the responsibility of the ______ department manager.
purchasing
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 activity variance is:
$1,500 U $7,500 ÷ 500 = $15 standard rate per hour x 600 = $9,000 flexible budget - $7,500 planning budget = $1,500 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: Multiple choice question.
$300 U $7,500/500 = $15 standard rate per unit x 600 = $9,000 flexible budget - $9,300 actual = $300 U
The spending variance is: Multiple choice question.
(AQ x AP) - (SQ x SP)
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 $
- 1050 - F
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 $
- 670 - F
Which of the following statements are true?
- Material quantity variances due to inferior materials are the responsibility of the purchasing department. - The production manager is usually responsible for the materials quantity variance.
Which of the following statements are correct?
Building inventories can reduce unfavorable labor efficiency variances. Excessive inventories contribute to inefficient operations.
A labor rate variance is ________ when the standard hourly rate is lower than the actual rate.
unfavorable
If the actual level of activity is greater than the planned level of activity, the activity variances will be: Multiple choice question.
unfavorable
The difference between the standard and the actual direct labor hourly rates is reflected in the _______ _______ variance
labor rate
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: Multiple choice question.
$600 F
Which statement regarding variable overhead variance analysis is true? Multiple choice question.
The variable overhead efficiency variance may depend on the efficiency of direct labor.
Which of the following statements is true? Multiple choice question.
The variable part of manufacturing overhead is analyzed using the same basic formulas used for materials and labor.
Which of the following statements are true? Multiple select question.
When actual results depart significantly from the standard, the reasons why should be investigated. Standards provide information for measuring performance.
A quantity variance is: Multiple choice question.
calculated using the standard price of the input : A quantity variance looks at the difference between actual and standard quantities.
The materials price variance is calculated using the ______ quantity of the input purchased. Multiple choice question.
actual
A price variance is the difference between the:
actual price and the standard price multiplied by the actual amount of the input
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
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 materials price variance is the difference between the actual price of materials:
and the standard price for materials with the difference multiplied by the actual quantity of materials
The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor _____ variance
efficiency
The difference between the actual level of activity and the standard activity allowed for the actual output x the variable part of the predetermined overhead rate is the variable overhead ______ variance.
efficiency
A materials price variance is ________ when the standard price is higher than the actual price. Multiple choice question.
favorable
When the actual quantity of materials used is less than the standard quantity allowed, the material quantity variance is labeled as
favorable
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.
standard
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate. Multiple choice question.
standard
Which of the following statements is true? Multiple choice question.
A labor efficiency variance is a quantity variance.
The materials price variance is:
charged to the production manager when production problems occur generally the responsibility of the purchasing manager impacted by the delivery method chosen
