Chapter 10
Direct materials price variance plus materials quantity variance
A direct materials variance is ...
Normal spoilage
A normal adjustment to production cost standards is required for : ...
A company's best estimate of the cost to produce a single unit
A standard cost is ...
Perfection standard
A standard that can only be attained under the best of circumstances is called a(n) ...
Number of a standard set by a service organization is the
An example of a standard set by a service organization is the ....
High quality materials
An favorable materials quantity variance could be the result of ....
More labor hours are used than allowed by the standard
An unfavorable variance occurs if ...
Standard costs per unit and forecasted demand for product
Budgets are based upon ..
1. Management judgement 2. Management Experience 3. Using agreed upon guidelines
Determining variance significance involves
1. Management judgement 2. Management experience 3. Using agreed upon guidelines
Determining variance significance involves ....
1. Indicate a problem, particularly when investigated in conjunction with other related variances 2. Be indicators of process improvements that could be implemented more broadly
Favorable variance should be considered as significant as unfavorable variances as they can ....
$0.42 Standard price= AQ x SP (5,875 x $0.45) $2,643.75 - $176.25 favorable variance = $2,467.50 AP / 5,875 pounds = $0.42 actual price per pound
Given the following information, calculate the actual price paid per pound of material.
$36,000.00
Given the following information, calculate the total labor standard cost against which actual costs will be measured:
$807.50 F
Given the information, calculate the direct labor rate variance ..
Existing product with no anticipation changes
Historical data is best used to set standards for a(n) ...
An unfavorable variance
If a company spends more than expect, there will be ...
Favorable, as increased efficiency would result in less time spent.
If the mix of workers changed to use more highly skilled, highly paid workers, what would be the likely effect on the direct labor efficiency variance?
Standard cost for actual output
In order to control costs, the benchmark against which actual costs are compared is ..
1. Result in a higher commitment to meeting standards 2. Should result in better cost standards
Participation in setting of cost standards ....
1. Studies to determine what should be used in the production of the product 2. The use of time and motion studies 3. Working with personnel who are intimately familiar with the production process
Task analysis includes : ...
Direct labor variance
The combination of the direct labor rate variance and the direct labor efficiency variance is the total ..
1. The hourly cost of direct labor, including fringe benefits 2. The amount of time it normally takes to make one unit of product
The direct labor standard includes ...
Difference between actual cost and the standard cost of direct labor for actual output
The direct labor variance is the ....
1. Quantity of direct materials required to produce one unit of finished product 2. An allowance for normal waste / inefficiency of materials
The direct materials quantity standard includes ...
(AH x AR) - (AH x SR)
The formula to calculate the labor rate variance is ....
Determined at the time the materials are acquired
The materials purchase price variance is ...
Provide a basis for incentive compensation
The purpose of management by exception is all of the following except to ...
Number of direct labor hours normally required to produce one unit of finished product
The standard direct labor quantity is the ...
hourly cost of compensation, including fringe benefits
The standard direct labor rate is the .....
1. Product requirements 2. The production process 3. Price levels
The use of historical data in standard cost setting should be adjusted for changes in ...
The company pays more per unit of materials than expected
Unfavorable materials price variances occur when ...
1. Quantity and price variances are computed for each type of materials 2. The sum of all the material price and quantity variances is the materials variance
When multiple materials are used in a product ....
1. Direct materials 2. Direct labor
When standard costing is used for product costs, which of the following costs are recorded at standard?
Unfavorable
When the union negotiates an unexpected wage increase midway through the current year, the company will likely experience a(n) ..
Direct materials and direct labor are added to work-in process at standard cost
When using a standard-costing system: ...
1. Due to lay-offs around the country, the company is able to hire more efficient workers at the budgeted wage rate. 2. Due to machine break-downs production is experiencing significant "down-time" by workers.
Which of the following could cause a labor efficiency variable?