ACC LS CH10
excessive inventory on hand, especially in the work in process inventory account, may lead to
high defect rates, inefficient operations, obsolete goods
net operating ______ from the income statement is recorded in ______-______ on the balance sheet
income, retained earnings
the materials price variance is generally calculated at the time materials are purchased because:
it simplifies bookkeeping, management can generate more timely variance reports, it allows materials to be carried in the inventory accounts at standard cost
SP(AQ-SQ) is the formula for the materials _____ variance.
quantity
the standard labor rate per hour:
reflects the expected mix of workers
the amount of an input that should have been used to produce the actual output is known as the _____ quantity or hours allowed
standard
the budgeted fixed overhead costs exceeds fixed overhead applied to work in process, the volume variance is labeled _____
unfavorable
when the standard purchase price is less than the actual price, the material price variance is __.
unfavorable
the standard rate per unit that a company expects to pay for variable overhead equals the:
variable portion of the predetermined overhead rate
the difference between the standard and the actual direct labor hourly rates is reflected in the __________-________ variance
labor rate
how much should be paid for each unit of an input is specified by a _____ standard
price
the purchasing manger is generally responsible for the material _______ variance, and the production manager is generally responsible for the material ______ variance
price, quantity
the labor efficiency variance is generally the responsibility of the _____ manager
production
the calculation of a standard price per unit of direct materials includes:
purchase discounts, purchase price of the materials, shipping costs
most companies compute the material price variance when materials are _____ and the materials quantity variance when materials are _____
purchased, used
the materials price variance is generally the responsibility of the ________ department manger
purchasing
How much input should be used to produce a product or provide a service is a _____ standard.
quantity
the final, delivered price that should be paid for each unit of direct materials is the ______ price per unit of materials.
standard
material requirements plus an allowance for normal inefficiencies are added together to determine the _____-______ of a direct material per unit of output
standard quantity
in a standard cost system, overhead is applied on the basis of the _______ hours allowed for the ______ output of the period
standard, actual
an unfavorable materials quantity variance occurs when:
the actual amount of material used is grater than the standard amount of material allowed for the actual output
the standard cost for ____ manufacturing overhead is computed the same way as the standard cost for direct labor
variable
the predetermined overhead rate includes
both fixed and variable overhead
Which of the following statements are correct?
excessive inventories contribute to inefficient operations, building inventories can reduce unfavorable labor efficiency variances
if overhead is over applied the total of the standard cost overhead variances is
favorable
when actual fixed overhead cost is less than budgeted fixed overhead cost, the budget variance is labeled
favorable
The standard rate per hour includes:
fringe benefits, direct labor rate per hour, employment taxes
the standard hours per unit of an output includes:
an allowance for cleanup and downtime, the estimated time to complete the unit
the standard price of materials is 3.50 per pound and the standard quantity allowed for actual output is 7000 pounds. If the actual quantity purchased and used was 6700 pounds, and the actual price per pound was 3.40, the direct materials price variance is _____ favorable or unfavorable
670 F
the standard price per unit for direct materials:
can change based on a change in the delivery method
the materials price variance is:
charged to the production manger when production problems occur, generally the responsibility of the purchasing manager, impacted by the delivery method chosen
the difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor _________ variance
efficiency
when direct labor is used as the overhead allocation base, the variable overhead efficiency variance:
will be favorable when the direct labor efficiency variance is favorable
direct material standards:
- should be based on input from production and purchasing managers. - are based on standard price and quantity.
the variable overhead efficiency variance compares the ______ hours times the standard rate with the standard hours allowed for the actual output times the _____ rate
actual, standard
When setting direct labor standards:
the production manager should be consulted. time and motion studies may be used. It is best to use tight but attainable standards.
Which statement regarding variable overhead variance analysis is true?
the variable overhead efficiency variance may depend on the efficiency of direct labor
