ACCT CHAPTER 10

Standard Quantities Allowed of Labor and Materials Miel Company produces ready-to-cook oatmeal. Each carton of oatmeal requires 16 ounces of rolled oats per carton (the unit quantity standard) and 0.04 labor hour (the unit labor standard). During the year, 960,000 cartons of oatmeal were produced. Calculate the total amount of oats allowed for the actual output. Calculate the total amount of labor hours allowed for the actual output.

1. SQ= unit quantity standard x actual output 16* 96000= $15,360,000 2. sh= unit quantity standard x actual output 0.04 x 96000= $38,400

Moccasin Company manufactures cotton shirts. 18,000 shirts are produced during the first week of July. The unit quantity standard is 4 meters cloth per shirt and the actual quantity used was 0.50 meters per shirt. Determine the quantity of cloth that should be used for the actual output of 18,000 shirts. a.9,000 meters b.72,000 meters c.48,000 meters d.54,000 meters

B. 72,000 METERS STANDARD QUANTITY OF MATERIALS ALLOWED= unit quantity standard x actual output 4 x 18000= 72000

Total Materials Variance Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.7 ounces of aluminum per can. During the month of April, 450,000 cans were produced using 1,875,000 ounces of aluminum. The actual cost of aluminum was $0.10 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the total variance for aluminum for the month of April. Enter amount as a positive number and select Favorable or Unfavorable.

Compute the actual costs = actual quantity x actual cost per unit; (AQ × AP) Compute the standard cost = standard quantity (units produced x standard unit quantity) x standard cost per unit; (SQ × SP) Subtract standard costs from the actual costs then determine if the result is favorable or unfavorable -18,300

Total Labor Variance Ambient Inc. produces aluminum cans. Each can has a standard labor requirement of 0.03 hour. During the month of May, 500,000 cans were produced using 14,000 labor hours @ $15.00. The standard wage rate is $14.50 per hour. Required: Calculate the total variance for production labor for the month of May. Enter the amount as a positive number and select Favorable or Unfavorable.

Total variance = Standard cost - Actual cost Total variance = (500,000*0.03*$14.50)-(14,000*$15) Total variance = $217,500 - $210,000 Total variance = $7,500 Favorable

The standard quantity of materials allowed is computed as

Unit Quantity Standard × Actual Output.

Mahogany Inc. has an unfavorable total labor variance of $750 for the month of September. It had a favorable labor rate variance of $205. Determine the labor efficiency variance of Mahogany for the month of September. a.$955 Unfavorable b.$885 Favorable c.$545 Unfavorable d.$625 Favorable

a.$955 Unfavorable The labor efficiency variance measures the difference between the labor hours that were actually used and the labor hours that should have been used

Which of the following is true of control limits? a.Control limits identify variances that fall outside an acceptable range. b.Control limits should be based only on past experience and intuition. c.The lower control limit is the standard plus the allowable deviation. d.The upper control limit is the standard minus the allowable deviation.

a.Control limits identify variances that fall outside an acceptable range.

The standard direct labor hours allowed is computed as a.Unit Labor Standard × Actual Output. b.Unit Labor Standard × Practical Output. c.Unit Labor Standard × Standard Output. d.Unit Labor Standard × Normal Output. e.Unit Labor Standard × Theoretical Output.

a.Unit Labor Standard × Actual Output.

Arsenic Corp. manufactures coffee. The actual quantity of input used for the month of November was 450 kilograms of coffee beans, and the standard quantity of input allowed was 465 kilograms of coffee beans. The standard price per kilogram of coffee beans was $8. Determine the material usage variance of the month of November. a.$105F b.$120F c.$315U d.$210U

b. $120F Usage (efficiency) Variance = (Actual Quantity of Input Used - Standard Quantity of Input Allowed for the Actual Output) × Standard Price per Unit or Usage Variance = (AQ-SQ) X SP = (450-465) X $8 = $120

Identify the equation used to determine material price variance. a.Material Price Variance = (Standard Price per Unit - Actual Price per Unit) × Actual Quantity of Input Used b.Material Price Variance = (Actual Price per Unit - Standard Price per Unit) × Actual Quantity of Input Used c.Material Price Variance = (Standard Price per Unit - Actual Price per Unit) × Standard Quantity of Input Allowed for the Actual Output d.Material Price Variance = (Actual Price per Unit - Standard Price per Unit) × Standard Quantity of Input Allowed for the Actual Output

b.Material Price Variance = (Actual Price per Unit - Standard Price per Unit) × Actual Quantity of Input Used

Which of the following equations is used to determine standard quantity of material allowed? a.Standard Quantity of Materials Allowed = Unit Quantity Standard × Standard Output b.Standard Quantity of Materials Allowed = Unit Quantity Standard × Actual Output c.Standard Quantity of Materials Allowed = Unit Actual Standard × Standard Output d.Standard Quantity of Materials Allowed = Unit Actual Standard × Actual Output

b.Standard Quantity of Materials Allowed = Unit Quantity Standard × Actual Output

In a standard costing system, costs are assigned to products using quantity and price standards: a.for direct materials, indirect labor, and overhead. b.for direct materials, direct labor, and overhead. c.only for direct materials and overhead. d.only for direct materials and direct labor.

b.for direct materials, direct labor, and overhead.

The responsibility for deviations from planned usage of inputs tends to be located in: a.the marketing department. b.the production department. c.the purchasing department. d.the administrative department.

b.the production department.

Which of the following equations is used to determine the total materials variance? a.Total Materials Variance = (Standard Price × Actual Quantity) - (Actual Price × Standard Quantity) b.Total Materials Variance = (Actual Price per Unit × Actual Quantity of Input Used) - (Actual Price per Unit × Standard Quantity of Input Allowed for the Actual Output) c.Total Materials Variance = (Actual Price per Unit × Actual Quantity) - (Standard Price × Standard Quantity) d.Total Materials Variance = (Actual Price per Unit × Actual Quantity of Input Used) - (Standard Price per Unit × Actual Quantity of Input Used)

c.Total Materials Variance = (Actual Price per Unit × Actual Quantity) - (Standard Price × Standard Quantity)

The materials usage variance should be calculated: a.only when there is a negative variance involved. b.based on the actual price per unit of material used. c.based on the amount of materials used in production. d.based on the type of labor used.

c.based on the amount of materials used in production.

When material variances are unfavorable, they are: a.credited to the finished goods account. b.added to selling expenses. c.debited to the profit and loss account. d.added to cost of goods sold.

d.added to cost of goods sold.