LS 10

T/F: 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.

False

True or False: Quantity standards refer to the price to be paid for each unit of the input.

False

The terms price and quantity are used when computing direct _______ variance, while the terms rate and hours are used when computing direct _______ variances.

material; labor

The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials __________ variance.

quantity

The material variance terms price and quantity are replaced with the terms ________ and _________ when computing direct labor variances.

rate; hours

The standard labor rate per hour _________. -should only include hourly wages and employment taxes -should account for differences in skill and seniority -reflects the expected mix of workers -is often determined using time and motion studies

reflects the expected mix of workers

The amount of direct-labor hours that should be used to produce one unit of finished goods is the ______ hours per unit.

standard

when the standard purchase price is less than the actual price, the material price variance is __.

unfavorable

The standard price of the material is used in the calculation of the material quantity variance because __________. -materials are acquired at their standard prices, not their actual prices -actual prices are not known when the material quantity variance is calculated -using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager -using actual prices is unfair to the purchasing manager

using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager

Which of the following statements are true? -How production supervisors use direct labor workers can lead to labor rate variances. -Wage rates paid to workers are unpredictable in most companies. -Overtime premiums can cause an unfavorable labor rate variance. -Assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance.

-How production supervisors use direct labor workers can lead to labor rate variances -Overtime premiums can cause an unfavorable labor rate variance

Which of the following are used to calculate the standard quantity per unit of direct materials? -Allowance for waste and spoilage -Freight and transportation costs -Direct materials requirements per unit of finished product

-allowance for waste and spoilage -direct materials requirements per unit of finished product

Which of the following statements is true? -A labor efficiency variance is a quantity variance. -The variance that computes the price difference for materials is called a material rate variance. -Price variances can only be computed for direct materials and direct labor. -Quantity variances are computed for direct materials, direct labor and fixed overhead.

Labor efficiency variance is a quantity variance.

Standard costs are a key element in the ________ by ________ approach utilized by some companies.

Management; exception

How much should be paid for each unit of an input is specified by a(n) _________ standard.

Price

the standard price per unit for direct materials ______________. -does not consider purchase discounts -is adjusted for an allowance for waste and spoilage -can change based on a change in the delivery method

can change based on a change in the delivery method

The difference between the standard and the actual direct labor hourly rates is reflected in the ________ __________.

Labor Rate

Excessive inventory on hand, especially in the work in progress inventory account, may lead to ________. -high defect rates -price increases in direct materials -obsolete goods -inefficient operations

-high defect rates -obsolete goods -inefficient operations

When setting direct labor standards_________ -it is best to use "tight but attainable" standards -time and motion studies may be used -it is important to consult the purchasing manager -the production manager should be consulted

-it is best to use "tight but attainable" standards -time and motion studies may be used -the production manager should be consulted

The materials price variance is calculated using the _______. -standard price of the input -actual price of the input -standard quantity allowed of the input for the actual output -actual quantity of the input purchased

-standard price of the input -actual price of the input -actual quantity of the input purchased

An unfavorable materials quantity variance would occurs when: -the actual amount of material used is greater than the standard amount of material allowed for the actual output -too much material is purchased -the actual price paid for material is greater than the standard price allowed for the material

The actual amount of material used is greater than the standard amount of material allowed for the actual output

Which of the following statements are true? -Standards provide information for measuring performance. -Standards are only used in managerial accounting. -When actual results depart significantly from the standard, the reasons why should be investigated. -The purpose of using standards is to assess blame and responsibility.

-standards provide information for measuring performance -When actual results depart significantly from the standard, the reasons why should be investigated.

The variable overhead _______ variance measures activity differences and the variable overhead _______ variance measures cost differences.

Efficiency; Rate

T/F: All materials variances are generally the responsibility of the production manager.

False

How much input should be used to produce a product or provide a service is a(n) __________ standard.

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, efficiency, or usage

A materials price variance is equivalent to a labor ______ variance and a materials quantity variance is equivalent to a labor ________ variance.

Rate; Efficiency

A benchmark used in measuring performance is called a(n) ________.

Standard

The final, delivered price that should be paid for each unit of direct materials is the ______ price per unit of materials.

Standard

Standard quantities and the cost of the inputs to make a single product are accumulated on a(n) _________ ___________ card

Standard Cost

Material requirements plus an allowance for normal inefficiencies are added together to determine the _________ ___________ of a direct material per unit of output.

Standard Quantity

If the actual level of activity is greater than the planned level of activity, the activity variances will be_____ -favorable -unfavorable

Unfavorable

To calculate price variance, multiply the _________ quantity times the actual price and compare it to the actual quantity times the ________ price.

actual; standard