Chapter 11
The ________ tells managers how much of the overall variance id due to paying a higher or lower price than expected for the quantity of materials it purchased.
Price Variance
The direct materials flexible budget variance can be divided into which of the following two variances?
Price variance and the quantity variance
The ________ "tells managers how much of the total direct materials variance is due to using more or less materials than anticipated the by standards."
Quantity Variance
As managers use less and different types of direct materials, which of the following standards do managers focus on to enhance sustainability in the workplace?
Quantity/Efficiency Standard and the Flexible Standard
A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.
Standard
A favorable direct materials quantity variance indicates which of the following?
The Actual Quantity (AQ) of direct materials used was less than the standard quantity for actual output.
The Standard Quantity (SQ) of direct materials is calculated as
The Standard Quantity (SQ) of input per unit times the number of units actually made.
The direct materials price variance is calculated as
The difference in prices of the Actual Quantity Purchased (AQP) and the Actual Price (AP) multiplied by the Actual Quantity Purchased (AQP) and the Standard Price (SP) of the input purchased.
Which of the following situations may lead to a favorable direct materials price variance?
The purchasing manager was able to negotiate a lower purchase price for raw materials.
A favorable direct materials price variance indicates which of the following?
The standard cost of materials purchased was greater than the actual cost of materials purchased.
A direct materials flexible budget variance can be broken down into a price variance and a quantity variance.
True
A price variance for direct materials measures how well a company keeps unit prices of material within standards.
True
A price variance for production inputs is the difference between the actual unit price of an input and the standard unit price of the input, multiplied by the actual input quantity.
True
A quantity (efficiency) variance for production inputs (materials and labor) is the difference between the Actual Quantity (AQ) of input used and the standard quantity of input, multiplied by the standard price per unit of input.
True
A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.
True
Circumstances can occur that result in favorable direct materials price variances and unfavorable direct materials quantity variances.
True
Ideal standards allow for a normal amount of waste and inefficiency.
True
If a company produces many different products, it will develop a standard cost for each type of product.
True
Perfection standards do not allow for poor-quality raw materials, waste in the production process, machine-breakdown, or other inefficiencies.
True
Raw material, ruined through mistakes during production, results in a materials quantity variance.
True
Standard costs for production inputs are used to develop flexible budgets.
True
The direct materials price variance tells managers how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.
True
The standard for the direct labor rate per hour does not include fringe benefits such as health care insurance and vacations.
True
The Southside Corporation budgeted 4,300pounds of direct materials to make 3,000 units of product. The company actually used 5,300 pounds of direct materials to make the 3,000 units. The direct materials quantity variance is $ 1,500 unfavorable. What is the Standard Price (SP) per pound of direct materials?
$1.50
Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $ 11.00 per hour. Happy Helpers incurs payroll tax expense of 14% of the direct labor rate and incurs costs for sick-days and vacation days of $ 3.00 per hour. What is the standard rate per direct labor hour?
$15.54
The actual cost of direct materials is $ 55.00 per pound. The standard cost per pound is $ 58.00. During the current period, 6,800 pounds were used in production. The standard quantity for actual units produced is 6,700 pounds. How much is the direct materials price variance?
$20,400 favorable
Piper Corporation, which manufactures dog toys, is developing direct labor standards. The basic direct labor rate is $ 19.14 per hour. Payroll taxes are 8% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $ 6.21 per hour. What is the standard rate per direct labor hour?
$26.88
Benny Company budgeted 570 pounds of direct materials costing $ 28.00 per pound to make 8,000 units of product. The company actually used 580 pounds of direct materials costing $ 29.00 per pound to make the 8,000 units. What is the direct materials quantity variance?
$280 unfavorable
The actual cost of direct materials is $ 13.00 per pound. The standard cost per pound is $ 9.25. During the current period, 9,300 pounds of direct materials were used in production and 17,000 pounds were purchased. The standard quantity of direct materials for actual units produced is 16,400 pounds. How much is the direct materials quantity variance?
$65,675 favorable
Theresa Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $ 25.00 per hour. Payroll taxes are 1% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $ 5.00 per hour. What is the standard rate per direct labor hour?
%33.75
Kalanja Designs, which produces earrings, is developing direct material standards. Each earring requires 0.54 kilograms of a special metal. The allowance for waste is 0.2 kilograms per earring, while the allowance for rejects is 0.5 kilograms per earring. What is the standard quantity of metal per earring?
1.24 Kg
Sandy's Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of sauce requires 0.61 kilograms of base. The allowance for waste is 0.8 kilograms per bottle, while the allowance for rejects is 0.1 kilograms per bottle. What is the standard quantity of base per bottle?
1.51 Kg
DOT Safety Systems manufactures motorcycle helmets. What is the standard quantity of material used manufacture each helmet if the material required is 1.3 pounds, and DOT allows for 0.15 pounds of waste and 0.27 pounds of rejected material?
1.72 Pounds
A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted?
Direct Materials Price Variance
A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?
Direct Materials Price Variance
Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded?
Direct Materials Quantity Variances
If the Standard Quantity Allowed (SQA) for direct materials is greater than the Actual Quantity (AQ) used, the quantity variance is unfavorable.
False
The type of standard that expects no waste and no inefficiencies in the production process is referred to as a(n)
Ideal Standard
A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?
Less expensive, inferior materials requiring more than the standard amount were used in production.
f the purchasing manager purchased a greater quantity of raw materials than budgeted, but paid the Standard Price (SP), which variance may be affected?
Neither Variance will be affected
The type of standard that provides allowances for normal amounts of waste and inefficiency in the production process is referred to as a(n)
Practical Standard
Standards should be reviewed and adjusted at least
Yearly
The standard cost of direct labor per unit is calculated by
multiplying the standard quantity of direct labor by the standard price of direct labor.
The standard cost of direct materials per unit is calculated by
multiplying the standard quantity of direct materials by the standard price of direct materials.