Chapter 10

(Appendix 10B) What does a credit balance in a direct labour efficiency variance account indicate? A) The average wage rate paid to direct labour employees was less than the standard rate. B) The standard hours allowed for the units produced were greater than actual direct labour hours used. C) The actual total direct labour costs incurred were less than standard direct labour costs allowed for the units produced. D) The number of units produced was less than the number of units budgeted for the period.

b

During March, Younger Company's direct material costs for product T were as follows: Actual unit purchase price $6.50 per metre Standard quantity allowed for actual Production 2,100 metres Quantity purchased and used for actual Production 2,300 metres Standard unit price $6.25 per metre What was Younger's material quantity variance for March? A) $1,250 unfavourable. B) $1,250 favourable. C) $1,300 unfavourable. D) $1,300 favourable.

a

The Reedy Company uses a standard costing system. The following data are available for November: Actual direct labour hours worked 5,800 hours Standard direct labour rate $9 per hour Labour rate variance $1,160 favourable What was the actual direct labour rate for November? A) $8.80. B) $8.90. C) $9.00 D) $9.20.

a

The following labour standards have been established for a particular product: Standard labour hours per unit of output 1.7 hours Standard labour rate $14.05 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 3,700 hours Actual total labour cost $50,690 Actual output 2,300 units What was the labour rate variance for the month? A) $1,295 favourable. B) $2,877 favourable. C) $4,246 favourable. D) $4,246 unfavourable.

a

The following materials standards have been established for a particular product: Standard quantity per unit of output 8.3 grams Standard price $19.15 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,500 grams Actual cost of materials purchased $141,375 Actual materials used in production 7,100 grams Actual output 700 units What was the materials price variance for the month? A) $2,250 favourable. B) $7,540 unfavourable. C) $7,660 unfavourable. D) $24,317 unfavourable

a

Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance? A) The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid, experienced individuals. B) The mix of workers assigned to the particular job was heavily weighted towards the use of new, relatively low-paid, unskilled workers. C) Because of the production schedule, workers from other production areas were assigned to assist this particular process. D) Defective materials caused more labour to be used in order to produce a standard unit.

a

A favourable materials price variance coupled with an unfavourable materials usage variance would MOST likely result from which of the following? A) Problems with processing machines. B) Purchase of low quality materials. C) Problems with labour efficiency. D) Changes in the product mix.

b

A labour efficiency variance resulting from the use of poor quality materials should be charged to which/whom? A) The production manager. B) The purchasing agent. C) Manufacturing overhead. D) The engineering department

b

If a company follows a practice of isolating variances at the earliest point in time, what would be the appropriate time to isolate and recognize a direct material price variance? A) When material is issued. B) When material is purchased. C) When material is used in production. D) When production is completed

b

In a certain standard costing system, the following results occurred last period: labour rate variance, $1,000 unfavourable; labour efficiency variance, $2,800 favourable; and the actual labour rate was $0.20 more per hour than the standard labour rate. What the number of actual direct labour hours was used last period? A) 4,800 hours. B) 5,000 hours. C) 5,400 hours. D) 9,000 hours.

b

The Fletcher Company uses standard costing. The following data are available for October: Actual quantity of direct materials used 23,500 kilograms Standard price of direct materials $2 per kilogram Materials quantity variance $1,000 favourable What was the standard quantity of material allowed for October production? A) 23,000 kilograms. B) 24,000 kilograms. C) 24,500 kilograms. D) 25,000 kilograms.

b

The following labour standards have been established for a particular product: Standard labour hours per unit of output 8.3 hours Standard labour rate $12.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 6,100 hours Actual total labour cost $71,370 Actual output 900 units What was the labour efficiency variance for the month? A) $16,029 favourable. B) $16,577 favourable. C) $19,017 favourable. D) $19,017 unfavourable

b

The following materials standards have been established for a particular product: Standard quantity per unit of output 1.7 metres Standard price $19.80 per metre The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 metres Actual cost of materials purchased $113,680 Actual materials used in production 5,100 metres Actual output 3,200 units What was the materials quantity variance for the month? A) $6,664 favourable. B) $6,732 favourable. C) $13,720 unfavourable. D) $13,860 unfavourable

b

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 5.6 hours Standard variable overhead rate $12.00 per hour The following data pertain to operations for the last month: Actual hours 2,600 hours Actual total variable overhead cost $31,330 Actual output 400 units What was the variable overhead spending variance for the month? A) $112 favourable. B) $130 unfavourable. C) $4,338 unfavourable. D) $4,450 unfavourable

b

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 7.8 hours Standard variable overhead rate $12.55 per hour The following data pertain to operations for the last month: Actual hours 2,900 hours Actual total variable overhead cost $36,975 Actual output 200 units What was the variable overhead efficiency variance for the month? A) $312 favourable. B) $16,817 unfavourable. C) $17,085 unfavourable. D) $17,397 unfavourable

b

The standards for direct labour for a product are 2.5 hours at $8 per hour. Last month, 9,000 units of the product were made, and the labour efficiency variance was $8,000 favourable. What was the actual number of hours worked during the past period? A) 20,500 hours. B) 21,500 hours. C) 22,500 hours. D) 23,500 hours.

b

Yola Company manufactures a product with standards for direct labour of 4 direct labour-hours per unit at a cost of $12.00 per direct labour-hour. During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. What was the direct labour efficiency variance? A) $1,200 favourable. B) $1,200 unfavourable. C) $2,020 favourable. D) $2,020 unfavourable.

b

(Appendix 10B) Which of the following entries would correctly record the charging of direct labour costs to Work in Process given an unfavourable labour efficiency variance and a favourable labour rate variance? A) A debit to Work in Process, and credits to Labour Efficiency Variance, Labour Rate Variance, and Wages Payable. B) A debit to Work in Process and an equal credit to Wages Payable. C) Debits to Work in Process and Labour Efficiency Variance, and credits to Labour Rate Variance and Wages Payable. D) Debits to Work in Process and Labour Rate Variance, and credits to Labour Efficiency Variance and Wages Payable.

c

Borden Enterprises uses standard costing. For the month of April, the company reported the following data: Standard direct labour rate $10 per hour Standard hours allowed for actual production 8,000 Actual direct labour rate $9.50 per hour Labour efficiency variance $4,800 favourable What was the labour rate variance for April? A) $2,850 favourable. B) $2,850 unfavourable. C) $3,760 favourable. D) $3,760 unfavourable

c

Cox Company's direct material costs for the month of January were as follows: Actual quantity purchased 18,000 kilograms Actual unit purchase price $ 3.60 per kilogram Materials price variance— Unfavourable (based on purchases) $ 3,600 Standard quantity allowed for actual production 16,000 kilograms Actual quantity used 15,000 kilograms What was the favourable direct materials quantity variance for January? A) $3,360. B) $3,375. C) $3,400. D) $3,800.

c

If the actual labour hours worked exceed the standard labour hours allowed, what type of variance will occur? A) Favourable labour efficiency variance. B) Favourable labour rate variance. C) Unfavourable labour efficiency variance. D) Unfavourable labour rate variance.

c

Information on Fleming Company's direct material costs follows: Actual amount of direct materials used 20,000 kilograms Actual direct material costs $40,000 Standard price of direct materials $2.10 per kilogram Direct materials efficiency variance—favourable $3,000 What was the company's direct material price variance? A) $1,000 favourable. B) $1,000 unfavourable. C) $2,000 favourable. D) $2,000 unfavourable

c

Information on Kennedy Company's direct material costs follows: Standard price per kilogram of raw materials $3.60 Actual quantity of raw materials purchased 1,600 kilograms Standard quantity allowed for actual production 1,450 kilograms Materials purchase price variance—favourable $ 240 What was the actual purchase price per unit, rounded to the nearest cent? A) $3.06. B) $3.11. C) $3.45. D) $3.75.

c

The Porter Company has a standard cost system. In July, the company purchased and used 22,500 kilograms of direct material at an actual cost of $53,000, the materials quantity variance was $1,875 unfavourable, and the standard quantity of materials allowed for July production was 21,750 kilograms. What was the materials price variance for July? A) $2,725 favourable. B) $2,725 unfavourable. C) $3,250 favourable. D) $3,250 unfavourable.

c

To measure controllable production inefficiencies, which of the following is the best basis for a company to use in establishing the standard hours allowed for the output of one unit of product? A) Average historical performance for the last several years. B) Engineering estimates based on ideal performance. C) Engineering estimates based on attainable performance. D) The hours per unit that would be required for the present workforce to satisfy expected demand over the long run.

c

Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six kilograms of materials at $0.30 per kilogram. Actual production in November was 3,100 units of Titactium. There was a favourable materials price variance of $380 and an unfavourable materials quantity variance of $120. Based on these variances, what could one assume? A) That more materials were purchased than were used. B) That more materials were used than were purchased. C) That the actual cost per kilogram for materials was less than the standard cost per kilogram. D) That the actual usage of materials was less than the standard allowed.

c

Under a standard cost system, who is usually held responsible for the materials price variances? A) The production manager. B) The sales manager. C) The purchasing manager. D) The engineering manager

c

What do the terms "standard quantity allowed" or "standard hours allowed" mean? A) The actual output in units multiplied by the standard output allowed. B) The actual input in units multiplied by the standard output allowed. C) The actual output in units multiplied by the standard input allowed. D) The standard output in units multiplied by the standard input allowed.

c

What does an unfavourable labour efficiency variance indicate? A) The actual labour rate was higher than the standard labour rate. B) The labour rate variance must also be unfavourable. C) Actual labour hours worked exceeded standard labour hours for the production level achieved. D) Overtime labour was used during the period.

c

Which of the following refers to standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times? A) Normal standards. B) Practical standards. C) Ideal standards. D) Budgeted standards.

c

Which of the following statements concerning practical standards is NOT correct? A) Practical standards can be used for product costing and cash budgeting. B) Practical standards can be attained by the average worker. C) When practical standards are used, there is no reason to adjust standards if an old machine is replaced by a newer, faster machine. D) Under practical standards, large variances are less likely than under ideal standards.

c

(Appendix 10B) Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per kilogram from a supplier at $1.60 per kilogram would include which of the following? A) A credit to Raw Materials Inventory. B) A debit to Work in Process. C) A credit to Materials Price Variance. D) A debit to Materials price variance

d

Dahl Company, a clothing manufacturer, uses a standard costing system. Each unit of a finished product contains 2 metres of cloth. However, there is unavoidable waste of 20%, calculated on input quantities, when the cloth is cut for assembly. The cost of the cloth is $3 per metre. What is the standard direct material cost for cloth per unit of finished product? A) $4.80. B) $6.00. C) $7.00. D) $7.50.

d

For the month of April, Thorp Co.'s records disclosed the following data relating to direct labour: Actual cost $10,000 Rate variance $ 1,000 favourable Efficiency variance $ 1,500 unfavourable For the month of April, actual direct labour hours amounted to 2,000. In April, what was Thorp's standard direct labour rate per hour? A) $4.50. B) $4.75. C) $5.00. D) $5.50.

d

Lab Corp. uses a standard cost system. Direct labour information for Product CER for the month of October follows: Standard direct labour rate $6.00 per hour Actual direct labour rate paid $6.10 per hour Standard hours allowed for actual production 1,500 hours Labour efficiency variance—unfavourable $600 What were the actual hours worked? A) 1,400 hours. B) 1,402 hours. C) 1,598 hours. D) 1,600 hours.

d

Last month, 75,000 kilograms of direct materials were purchased, and 71,000 kilograms were used. If the actual purchase price per kilogram was $0.50 more than the standard purchase price per kilogram, what was the materials price variance? A) $2,000 favourable. B) $35,500 unfavourable. C) $37,500 favourable. D) $37,500 unfavourable

d

What does a favourable labour rate variance indicate? A) Actual hours exceed standard hours. B) Standard hours exceed actual hours. C) The actual rate exceeds the standard rate. D) The standard rate exceeds the actual rate

d

Which department is usually held responsible for an unfavourable materials quantity variance? A) Marketing. B) Purchasing. C) Engineering. D) Production.

d