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.