Chapter 8: Managerial Accounting
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 material price variance coupled with an unfavourable material usage variance would MOST likely result from? A. problems with processing machines. B. the 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? 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 U; labour efficiency variance, $2,800 F; and the actual labour rate was $0.20 more per hour than the standard labour rate. The number of actual direct labour hours used last period was? A. 4,800. B. 5,000. C. 5,400. D. 9,000.
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 F. The actual number of hours worked during the past period was? A. 20,500. B. 21,500. C. 22,500. D. 23,500.
b
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. 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
An unfavourable labour efficiency variance indicates that? 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
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 F The labour rate variance for April is? A. $2,850 U. B. $2,850 F. C. $3,760 F. D. $3,760 U.
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
Last month 75,000 grams of direct material were purchased and 71,000 grams were used. If the actual purchase price per gram was $0.50 more than the standard purchase price per gram, then the material price variance was? A. $2,000 F B. $35,500 U C. $37,500 U D. $37,500 F
c
The Porter Company has a standard cost system. In July the company purchased and used 22,500 grams 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 grams. The materials price variance for July was? A. $2,725 F. B. $2,725 U. C. $3,250 F. D. $3,250 U.
c
The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as? A. normal standards. B. practical standards. C. ideal standards. D. budgeted standards.
c
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
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 grams of materials at $0.30 per gram. 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, one could conclude that? A. more materials were purchased than were used. B. more materials were used than were purchased. C. the actual cost per gram for materials was less than the standard cost per gram. D. the actual usage of materials was less than the standard allowed.
c
Under a standard cost system, the material price variances are usually the responsibility of the? A. production manager. B. sales manager. C. purchasing manager. D. engineering manager.
c
Which of the following statements concerning practical standards is incorrect? 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
A favourable labour rate variance indicates that? 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
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. The standard direct material cost for cloth per unit of finished product is? A. $4.80. B. $6.00. C. $7.20. D. $7.50.
d
Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per gram from a supplier at $1.60 per gram would include a: A. credit to raw materials inventory. B. debit to work in process. C. credit to materials price variance. D. debit to materials price variance.
d
Which department is usually held responsible for an unfavourable materials quantity variance? A. marketing. B. purchasing. C. engineering. D. production.
d