ACC225 ch 10

both the activity variances and the spending variances

A flexible budget performance report for variable manufacturing costs shows _______. multiple choice only the activity variances. both the activity variances and the spending variances. both the revenue variances and the spending variances. both the quantity variances and the price variances.

will be unfavorable

Assume that direct labor-hours are used as the overhead allocation base. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance ________. multiple choice will be favorable. will be unfavorable. cannot be determined without additional information. will be equal to zero.

$220 F Labor rate variance = AH (AR − SR) Labor rate variance = 2,200 ($1.90 − $2.00) = $220 F Alternatively:Labor rate variance = (AH × AR) − (AH × SR)Labor rate variance = (2,200 hours × $1.90) − (2,200 hours × $2.00) = $4,180 - $4,400 = $220 F Because the actual labor rate of $1.90 per hour is less than the standard labor rate of $2.00 per hour, the labor rate variance is favorable.

Consider the following information: Actual Hours of Inputat Actual Rate(AH × AR)Actual Hours of Inputat Standard Rate(AH × SR)Standard Hours of Inputat Standard Rate(SH × SR)= (2,200 hours × $1.90)= (2,200 hours × $2.00)= (2,000 hours × $2.00) Knowledge Check 01 What is the labor rate variance? multiple choice $180 F $220 F $220 U $400 U

$180 U Spending variance = (AH × AR) − (SH × SR) Spending variance = (2,200 hours × $1.90) − (2,000 hours × $2.00) = $4,180 − $4,000 = $180 U Because the amount actually paid of $4,180 is greater than the standard amount allowed of $4,000, the spending variance is unfavorable.

Consider the following information: Actual Hours of Inputat Actual Rate(AH × AR)Actual Hours of Inputat Standard Rate(AH × SR)Standard Hours of Inputat Standard Rate(SH × SR)= (2,200 hours × $1.90)= (2,200 hours × $2.00)= (2,000 hours × $2.00) Knowledge Check 01 What is the spending variance? multiple choice $180 F $180 U $4,000 F $4,000 U

$3.50 per machine-hour. Fixed component of the predetermined overhead rate = $21,000 ÷ 6,000 machine-hours = $3.50 per machine hour

Consider the following information: Budgeted production (in units) 1,200Budgeted machine-hours or denominator activity 6,000Actual production 1,500Standard hours allowed for the actual output 7,500 Budgeted fixed manufacturing overhead$21,000Actual fixed manufacturing overhead$22,000 Assume that machine-hours is used as the overhead allocation base. What is the fixed component of the predetermined overhead rate? multiple choice$2.80 per machine-hour.$3.00 per machine-hour.$3.14 per machine-hour.$3.50 per machine-hour.

$5,250 F Volume variance = $21,000 − (7,500 units × $3.50 per machine hour) = $5,250 F

Consider the following information: Budgeted production (in units) 1,200Budgeted machine-hours or denominator activity 6,000Actual production 1,500Standard hours allowed for the actual output 7,500 Budgeted fixed manufacturing overhead$21,000Actual fixed manufacturing overhead$22,000 What is the volume variance? multiple choice $1,000 U $2,520 U $5,250 F $5,250 U

$600 U The standard hours allowed for the actual output (SH) is the time that should have been taken to complete the period's output. SH = 1,000 units × 3 direct labor-hours per unit = 3,000 hours Variable overhead efficiency variance = SR × (AH − SH) = $2.00 × (3,300 − 3,000) = $600 U Alternatively:Variable overhead efficiency variance = (AH x SR) - (SH x SR) = (3,300 hours x $2.00) - (3,000 hours x $2.00) = $6,600 - $6,000 = $600 U Because the actual labor-hours of 3,300 hours is greater than the standard hours allowed for the actual output of 3,000 hours, the variable overhead efficiency variance is unfavorable.

Consider the following information: Standard rate per direct labor-hour$2Standard direct labor-hours for each unit produced 3Units manufactured 1,000Actual direct labor-hours worked during the month 3,300Total actual variable manufacturing overhead$6,600 Assume that direct labor-hours is used as the overhead allocation base. What is the variable overhead efficiency variance? multiple choice $300 F $300 U $600 F $600 U

overhead is applied to products based on the standard hours allowed for the actual output multiplied by the predetermined overhead rate.

In a standard cost system _______. multiple choice overhead is applied to products based on the actual hours used multiplied by the predetermined overhead rate. overhead is applied to products based on the actual hours used multiplied by the actual overhead rate. overhead is applied to products based on the standard hours allowed for the actual output multiplied by the predetermined overhead rate.

received from suppliers and transported to raw materials inventory.

Most companies compute the materials price variance when raw materials are _______. multiple choice received from suppliers and transported to raw materials inventory. withdrawn from raw materials inventory and used in production. ordered from suppliers. moved from work in process inventory to finished goods inventory.

the direct labor-hours that should have been used to complete the actual output for the period

The standard hours allowed is ________. multiple choice the direct labor-hours that should have been used to complete the planned output for the period. the direct labor-hours that should have been used to complete the actual output for the period. computed by multiplying the standard labor-hours allowed per unit by the planned output for the period. computed by multiplying the actual labor-hours per unit by the planned output for the period.

the amount of an input that should have been used to complete the actual output for the period.

The standard quantity allowed is _______. multiple choice the amount of an input that should have been used to complete the planned output for the period. the actual amount of input that was used to complete the planned output for the period. the amount of an input that should have been used to complete the actual output for the period. the actual amount of input that was used to complete the actual output for the period.

amount of direct materials that should be used for each unit of finished product including an allowance for normal inefficiencies, such as scrap and spoilage

The standard quantity per unit defines the ________. multiple choice price that should be paid for each unit of direct materials. total cost of direct materials that should be used for each unit of finished product. amount of direct materials that should be used for each unit of finished product including an allowance for normal inefficiencies, such as scrap and spoilage. amount of direct labor-hours that should be used to produce one unit of finished goods.

variable portion of the predetermined overhead rate

When computing variable manufacturing overhead variances, the standard rate represents the ________. multiple choice predetermined overhead rate. variable portion of the predetermined overhead rate. standard hourly pay rate for direct laborers. the amount of hours allowed for the actual output.

$2,500 U Materials price variance = AQ(AP − SP) = 25,000 yards ($2.10 per yard − $2.00 per yard) = $2,500 U Alternatively:Materials price variance = (AQ x AP) - (AQ x SP) = (25,000 yards x $2.10) - $25,000 yards x 2.00) = $52,500 - $50,000 = $2,500 U Because the actual price of $2.10 per yard is greater than the standard price of $2.00 per yard, the materials price variance is unfavorable.

Zeta Corporation is a manufacturer of sports caps, which require soft fabric. The standards for each cap allow 2.00 yards of soft fabric, at a cost of $2.00 per yard. During the month of January, the company purchased and used 25,000 yards of soft fabric at $2.10 per yard, to produce 12,000 caps. What is Zeta Corporation's materials price variance for the month of January? multiple choice $2,000 F $2,000 U $2,500 F $2,500 U