braun3 11 tif

Managerial Accounting, 3e (Braun/Tietz)

Chapter 11 Standard Costs and Variances

1) Ideal standards allow for a normal amount of waste and inefficiency.

Answer: FALSE

Diff: 1

LO: 11-1

EOC: E11-25

AACSB: Reflective Thinking

Learning Outcome: Discuss standard costing and variance analysis

2) A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Answer: TRUE

Diff: 1

LO: 11-1

EOC: E11-25



3) If a company produces many different products, it will develop a standard cost for each type of product.

Answer: TRUE

Diff: 1

LO: 11-1

EOC: S11-6



4) Standard costs for production inputs are used to develop flexible budgets.

Answer: TRUE

Diff: 1

LO: 11-1

EOC: S11-6



5) The standard for the direct labor rate per hour does not include fringe benefits such as health care insurance and vacations.

Answer: FALSE

Diff: 1

LO: 11-1

EOC: E11-25



6) Perfection standards do not allow for any poor quality raw materials, waste in the production process, machine-breakdown, or other inefficiencies.

Answer: TRUE

Diff: 1

LO: 11-1

EOC: S11-6



7) A sales volume variance will occur when the number of units actually sold differs from the volume originally planned for in the master budget.

Answer: TRUE

Diff: 1

LO: 11-1

EOC: E11-25



8) A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.

A) allocated cost

B) applied cost

C) standard cost

D) flexible cost

Answer: C

Diff: 1

LO: 11-1

EOC: E11-14



9) The type of standard that provides allowances for normal waste and inefficiency in the production process is referred to as a(n)

A) ideal standard.

B) perfection standard.

C) realistic standard.

D) practical standard.

Answer: D

Diff: 1

LO: 11-1

EOC: E11-14



10) What standard(s) do(es) direct materials and direct labor have when calculating standard costs?

A) Quantity/Efficiency standard

B) Price standard

C) Flexible standard

D) Both A and B

Answer: D

Diff: 1

LO: 11-1

EOC: E11-14



11) Kalanja Designs, which produces earrings, is developing direct material standards. Each earring requires 0.52 kilograms of a special metal. The allowance for waste is 0.03 kilograms per earring, while the allowance for rejects is 0.02 kilograms per earring. What is the standard quantity of metal per earring?

A) 0.52 kilograms

B) 0.55 kilograms

C) 0.57 kilograms

D) 0.54 kilograms

Answer: C

Explanation: C) .52kg + .03 kg + .02kg = .57 kg

Diff: 3

LO: 11-1

EOC: E11-14

AACSB: Analytical Thinking


12) Piper Corporation, which manufactures dog toys, is developing direct labor standards. The basic direct labor rate is $12.00 per hour. Payroll taxes are 13% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $6.00 per hour. What is the standard rate per direct labor hour?

A) $19.56

B) $18.00

C) $12.00

D) $13.56

Answer: A

Explanation: A) $12.00 1.13 % = $13.56; Fringe benefits 6.00

Total $19.56

Diff: 3

LO: 11-1

EOC: E11-14



13) Sandy's Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of sauce requires 0.70 kilograms of base. The allowance for waste is 0.05 kilograms per bottle, while the allowance for rejects is 0.09 kilograms per bottle. What is the standard quantity of base per bottle?

A) 0.70 kilograms

B) 0.79 kilograms

C) 0.75 kilograms

D) 0.84 kilograms

Answer: D

Explanation: D) .70kg + .05 + .09 = .84 kg

Diff: 3

LO: 11-1

EOC: E11-14



14) Theresa Corporation, which manufactures baskets, is developing direct labor standards. The basic direct labor rate is $23.00 per hour. Payroll taxes are 10% of the basic direct labor rate, while fringe benefits such as vacation and health care insurance, are $8.00 per hour. What is the standard rate per direct labor hour?

A) $33.30

B) $23.00

C) $25.30

D) $31.00

Answer: A

Explanation: A)

$23.00 110 % = $25.30

Fringe benefits 8.00

Total$33.30

Diff: 3

LO: 11-1

EOC: E11-14



15) DOT Safety Systems manufactures motorcycle helmets. What is the standard quantity of material used to manufacture each helmet if the material required is 1.2 pounds, and DOT allows for .25 pounds of waste and .35 pounds of rejected material?

A) 1.80 pounds

B) 1.45 pounds

C) 1.55 pounds

D) 1.20 pounds

Answer: A

Explanation: A) 1.2 + .25 + .35 = 1.8

Diff: 3

LO: 11-1

EOC: E11-14



16) Happy Helpers Maid Service is calculating its standard direct labor rate. The direct labor rate is $12 per hour. Happy Helpers incurs payroll tax expense of 15% of the direct labor rate and incurs costs for sick-days and vacation days of $3 per hour. What is the standard rate per direct labor hour?

A) $15.00

B) $16.80

C) $12.00

D) $13.80

Answer: B

Explanation: B)

$12.00 115% = $13.80

Fringe benefits3.00

Total$16.80

Diff: 3

LO: 11-1

EOC: E11-14



17) Price variances for direct materials shows how much of the total variance is due to paying higher or lower prices than expected for the direct materials purchased.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-25


Learning Outcome: Discuss and calculate direct material, direct labor and overhead variances

18) It is possible to have a situation where the direct materials price variance is favorable and the direct materials quantity variance is unfavorable.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-25



19) 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.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-20


Learning Outcome: Discuss standard costing and variance analysis. Discuss and calculate direct material, direct labor and overhead variances.

20) A price variance for direct materials measures how well a company keeps unit prices of material within standards.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-25



21) If the standard quantity allowed for direct materials is greater than the actual quantity used, the quantity variance is unfavorable.

Answer: FALSE

Diff: 1

LO: 11-2

EOC: E11-25



22) A quantity variance for production inputs is the difference between the actual quantity of input and the standard quantity of input, multiplied by the standard unit price of input.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-20



23) The direct materials price variance is (actual price-standard price) times actual quantity purchased.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-16



24) A direct materials flexible budget variance can be broken down into a price variance and a quantity variance.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-16



25) Raw material, ruined through mistakes during production, will result in a materials quantity variance.

Answer: TRUE

Diff: 1

LO: 11-2

EOC: E11-16



26) If the purchasing manager purchased a greater quantity of raw materials than budgeted, but paid the standard price, which variance would be affected?

A) Materials price variance

B) Materials quantity variance

C) Both of the variances would be affected

D) Neither of the variances would be affected

Answer: D

Diff: 2

LO: 11-2

EOC: E11-16



27) Which variance is directly impacted if a worker drops the raw material during production and the raw material must be discarded?

A) Materials quantity variance

B) Materials price variance

C) Labor rate variance

D) Labor efficiency variance

Answer: A

Diff: 2

LO: 11-2

EOC: E11-16



28) A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted?





Answer: B

Diff: 2

LO: 11-2

EOC: E11-16



29) 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?





Answer: B

Diff: 1

LO: 11-2

EOC: E11-19



30) Which of the following situations would lead to a favorable direct materials price variance?

A) The purchasing manager was able to negotiate a lower purchase price for raw materials.

B) A vendor shipped a greater quantity of raw materials than ordered.

C) The purchasing manager paid a premium price for a higher quality of raw materials.

D) Raw materials waste was substantially reduced in the factory.

Answer: A

Diff: 1

LO: 11-2

EOC: E11-19



31) The direct materials price variance is calculated as

A) the difference in quantities multiplied by the actual price of the input.

B) the actual amount of direct materials purchased divided by the actual quantity.

C) the difference in prices multiplied by the actual quantity of the input purchased.

D) the actual quantity of direct materials purchased divided by the per unit price.

Answer: C

Diff: 1

LO: 11-2

EOC: E11-19



32) The standard quantity of direct materials is calculated as

A) the budgeted quantity of units less the standard quantity of units.

B) the standard quantity of input per unit times the number of units budgeted.

C) the number of units actually made times the direct materials price standard.

D) the standard quantity of input per unit times the number of units actually made.

Answer: D

Diff: 1

LO: 11-2

EOC: E11-19



33) A favorable direct materials quantity variance indicates which of the following?

A) The actual cost of direct materials was less than the standard cost of direct materials.

B) The standard quantity of direct materials for actual output was less than the actual quantity of direct materials used.

C) The actual quantity of direct materials used was less than the standard quantity for actual output.

D) The actual quantity of direct materials used was greater than the standard quantity for budgeted output.

Answer: C

Diff: 2

LO: 11-2

EOC: E11-19



34) A favorable direct materials price variance indicates which of the following?

A) The actual cost of materials purchased was greater than the standard cost of materials purchased.

B) The standard cost of materials purchased was less than the actual cost of materials purchased.

C) The actual quantity of materials used was less than the standard quantity of materials used for actual production.

D) The standard cost of materials purchased was greater than the actual cost of materials purchased.

Answer: D

Diff: 2

LO: 11-2

EOC: E11-19



35) The direct materials flexible budget variance can be divided into two variancesthe

A) price variance and the rate variance.

B) price variance and the standard variance.

C) price variance and the quantity variance.

D) quantity variance and the efficiency variance.

Answer: C

Diff: 1

LO: 11-2

EOC: E11-19



36) A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?

A) Less expensive, inferior materials requiring less than the standard amount were used in production.

B) Less expensive, inferior materials requiring more than the standard amount were used in production.

C) More expensive, superior materials requiring more than the standard amount were used in production.

D) More expensive, superior materials requiring less than the standard amount were used in production.

Answer: B

Diff: 2

LO: 11-2

EOC: E11-20



37) The ________ "measures how well the business keeps unit prices of direct materials within standards."

A) production volume variance

B) overhead flexible budget variance

C) price variance

D) quantity variance

Answer: C

Diff: 1

LO: 11-2

EOC: E11-20



38) The ________ "measures whether the quantity of direct materials used to make the actual number of outputs is within the standard allowed for that number of outputs."

A) production volume variance

B) overhead flexible budget variance

C) price variance

D) quantity variance

Answer: D

Diff: 1

LO: 11-2

EOC: E11-19



39) The ________ "shows how well management has controlled overhead costs."

A) overhead flexible budget variance

B) production volume variance

C) quantity variance

D) price variance

Answer: A

Diff: 1

LO: 11-2

EOC: E11-19



40) Jackson Industries has collected the following data for one of its products:

Direct materials standard (6 pounds per unit @ $0.55/lb.)$3.30 per finished good

Direct materials flexible budget variance-unfavorable$12,000

Actual direct materials used35,000 pounds

Actual finished goods produced26,000 units

What is the total actual cost of the direct materials used?

A) $19,250

B) $73,800

C) $97,800

D) $85,800

Answer: C

Explanation: C)

26,000 units $3.30 per unit= $85,800

Mat'l budget variance12,000

Total$97,800

Diff: 2

LO: 11-2

EOC: E11-16








What is the actual cost of the direct materials used per pound?

A) $2.79

B) $2.45

C) $2.11

D) $0.55

Answer: A

Explanation: A)

26,000 units $3.30 per unit= $85,800

Mat'l budget variance12,000

Total$97,800 / 35,000 lbs used = $2.79 per lb

Diff: 2

LO: 11-2

EOC: E11-16








How much is the direct materials quantity variance?

A) $78,550 favorable

B) $27,940 unfavorable

C) $66,550 favorable

D) $78,550 unfavorable

Answer: C

Explanation: C) Mat'l quantity var = (Actual quantity - (Std Quantity actual units)) Std price

$66,550 fav = (35,000 - (6 26,000 )) .$0.55

Diff: 2

LO: 11-2

EOC: E11-16





Actual direct materials purchased$38,000 pounds


Actual price paid per pound$0.60

How much is the direct materials price variance?

A) $1,750 favorable


C) $1,900 favorable


Answer: D

Explanation: D) ($0.60 - 0.55) 38,000 = 1,900 unfavorable

Diff: 2

LO: 11-2

EOC: E11-16



44) Hushovd Iron Works has collected the following data for its Thunderbolt line of products:

Direct materials standard10 pounds per unit

Direct materials standard cost$0.75 per pound


Actual finished goods purchased4,500 units

What is the direct materials quantity variance?

A) $3,750 unfavorable

B) $3,750 favorable

C) $6,750 unfavorable

D) $6,750 favorable

Answer: B

Explanation: B) DM Quantity Variance = (Actual quantity - (Std quantity actual units)) Std price

$3,750 fav = (40,000 - (10 4,500 )) $0.75

Diff: 2

LO: 11-2

EOC: E11-16



45) Hushovd Iron Works has collected the following data for its Thunderbolt line of products:

Direct materials standard 10 pounds per unit

Direct materials standard cost$0.75 per pound

Actual material purchased cost$0.85 per pound

Actual direct materials purchased40,000 pounds

Actual quantity of direct materials used35,000 pounds


What is the direct material price variance?

A) $4,000 favorable


C) $3,500 favorable


Answer: B

Explanation: B) Mat'l price var. = (Actual price per unit-Std price per unit) Actual quantity Purchased

$4,000 U = ($.85 - $0.75) 40,000 pounds

Diff: 2

LO: 11-2

EOC: E11-16



46) The actual cost of direct materials is $50.25 per pound. The standard cost per pound is $56.00. During the current period, 6,800 pounds were used in production. The standard quantity for actual units produced is 6.500 pounds. How much is the direct materials price variance?





Answer: C

Explanation: C)

Actual direct material cost per pound$50.25

Standard direct material cost per pound$56.00

Difference between actual and standard cost per pound$5.75

Actual direct material quantity6,800

Direct material price variance$39,100

If actual direct material cost per pound is less than standard direct material cost per pound, then favorable, else unfavorableFavorable

Diff: 2

LO: 11-2

EOC: E11-20



47) The actual cost of direct materials is $10.50 per pound. The standard cost per pound is $10.25. During the current period, 9,100 pounds of direct materials were used in production and 17,500 pounds were purchased. The standard quantity of direct materials for actual units produced is 17,300 pounds. How much is the direct materials quantity variance?




D) $86,100 favorable

Answer: A

Explanation: A)

Mat'l quantity var = (Actual quantity - Std quantity allowed) Std price

$84,050 F = (9,100 - 17,300) $10.25

Diff: 2

LO: 11-2

EOC: E11-19



48) Farrar Industries reported the following results from its most recent quarter:

Actual direct material used15,750

Actual direct material cost per pound$5.50


Standard direct material quantity15,250

Direct material purchases20,000

What is Farrar's direct material quantity variance?

A) $2,750 favorable



D) $2,875 favorable

Answer: C

Explanation: C) Mat'l quantity var = (Actual quantity used - Std quantity allowed) Std price

$2,875 U = (15,750 - 15,250) $5.75

Diff: 2

LO: 11-2

EOC: E11-19



49) Dorsey Corporation Company budgeted 600 pounds of direct materials costing $28.00 per pound to make 7,000 units of product. The company actually used 630 pounds of direct materials costing $30.00 per pound to make the 7,000 units. What is the direct materials quantity variance?

A) $900 favorable

B) $840 favorable

C) $900 unfavorable

D) $840 unfavorable

Answer: D

Explanation: D) Mat'l quantity var = (Actual quantity - Std Quantity) Std price

$840 U = (630 - 600) $ 28

Diff: 2

LO: 11-2

EOC: E11-20



50) The Southside Corporation budgeted 4,400 pounds of direct materials to make 2,600 units of product. The company actually used 4,800 pounds of direct materials to make the 2,600 units. The direct materials quantity variance is $1,500 unfavorable. What is the standard price per pound of direct materials?

A) $0.59

B) $2.22

C) $6.35

D) $3.75

Answer: D

Explanation: D) Mat'l quantity var = (Actual quantity used - Std quantity allowed) Std price

$1500 = (4,800 - 4,400 ) Std price

Std price = 1500 / 400 = $3.75

Diff: 2

LO: 11-2

EOC: E11-20



51) Myles Company budgeted 10,500 pounds of direct materials costing $23.50 per pound to make 5,300 units of product. The company actually purchased 11,000 pounds of direct materials costing $25.00 per pound to make the 5,300 units. What is the direct materials price variance?





Answer: B

Explanation: B) Mat'l price var. = (Actual price per unit - Std price per unit) Actual quantity Purchased

$16,500 U = ($25 - 23.50) 11,000

Diff: 2

LO: 11-2

EOC: E11-20



52) Myles Company budgeted 10,500 pounds of direct materials costing $23.50 per pound to make 5,300 units of product. The company actually purchased 11,000 pounds of direct materials costing $25.00 per pound to make the 5,300 units. What is the direct materials quantity variance?


B) $11,750 favorable



Answer: C

Explanation: C) Mat'l quantity var = (Actual quantity - Standard Quantity Allowed) Std price

$11,750 U = (11,000 - 10,500) 23.50

Diff: 2

LO: 11-2

EOC: E11-20



53) The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $18 per pound to produce 12,000 units of finished product. Armstrong actually purchased 18,000 pounds and used 17,000 pounds of direct material with a cost of $21 per pound to produce 12,000 units of finished product.

Given these results, what is Armstrong's direct material price variance?





Answer: C

Explanation: C) Mat'l price var. = (Actual price per unit - Std price per unit) Actual quantity purchased

$54,000 U = ($21 - 18) 18,000

Diff: 2

LO: 11-2

EOC: E11-20



54) The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 16,000 pounds of direct material with a standard cost of $18 per pound to produce 12,000 units of finished product. Armstrong actually purchased 18,000 pounds and used 17,000 pounds of direct material with a cost of $21 per pound to produce 12,000 units of finished product.

Given these results, what is Armstrong's direct material quantity variance?





Answer: D

Explanation: D) Mat'l quantity var = (Actual quantity used - Std quantity allowed) Std price

$18,000 U = (17,000 - 16,000) 18.00

Diff: 2

LO: 11-2

EOC: E11-20



55) Active Lifestyle Beverages gathered the following information for Job #928:

Standard Total CostActual Total Cost

Direct materials:

Standard: 2,200 pints at $4.75/pint$10,450

Actual: 2,450 pints at $5.00/pint$12,250

What is the direct materials price variance?

A) $612.50 favorable

B) $612.50 unfavorable

C) $550.00 favorable

D) $550.00 unfavorable

Answer: B

Explanation: B) Mat'l price var. = (Actual price per unit - Std price per unit) Actual quantity Purchased

$612.50 U = ($5.00 - $4.75) 2,450

Diff: 2

LO: 11-2

EOC: E11-20





Direct materials:

Standard: 2,200 pints at $4.75/pint$10,450

Actual: 2,450 pints at $5.00/pint$12,250


A) $1,250.00 favorable

B) $1,250.00 unfavorable

C) $1,187.50 unfavorable

D) $1,187.50 favorable

Answer: C

Explanation: C) Mat'l quantity var = (Actual quantity used - Std quantity allowed) Std price

$ 1,187.50 U = (2,450 - 2,200) $4.75

Diff: 2

LO: 11-2

EOC: E11-20



57) Razzle Baking Company gathered the following actual results for the current month:

Actual amounts:5,500

Units produced

Direct materials purchased and used (7,500 lbs.)$25,000

Budgeted production and standard costs were:

Budgeted production5,000 units

Direct materials1.5 lbs./unit at $3/lb.

What is the direct materials price variance?


B) $2,500 favorable

C) $2,750 favorable


Answer: A

Explanation: A) Mat'l price var. = (Actual price per unit - Std price per unit) Actual quantity

$2,500 U = ({$25,000 / 7,500} - 3) 7,500

Diff: 2

LO: 11-2

EOC: E11-20



58) Razzle Baking Company gathered the following actual results for the current month:

Actual amounts:5,500

Units produced

Direct materials purchased and used (7,500 lbs.)$25,000

Budgeted production and standard costs were:

Budgeted production5,000 units

Direct materials1.5 lbs./unit at $3/lb.




C) $2,500 favorable

D) $2,250 favorable

Answer: D

Explanation: D)

Actual units produced5,500

Standard direct material per finished good (pounds)1.5

Total standard direct material8,250

Pounds of direct material purchased and used7,500

Difference between actual and standard quantity750


Direct material quantity variance$2,250

If actual direct materials used is less than the standard direct materials used, then favorable, else unfavorableFavorable

Diff: 2

LO: 11-2

EOC: E11-20



59) Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies):

Flour (Direct Materials)

CupcakesButter (Direct Materials)

Cookies

Standard quantity per batch2 lbs.3 lbs.

Standard price per pound of sugar$2.50/lb?

Actual quantity purchased and used per batch (pounds)?4 lbs.

Actual price paid $3.00/lb.$5.50/lb.

Price variance$300 U$500 F

Quantity variance$500 F?

Flexible budget variance?$2,400 F

Number of units produced350400

The actual direct material quantity used per batch for Cupcakes would be closest to

A) 2.9 lb.

B) 1.7 lbs.

C) 2.0 lbs.

D) 0.4 lbs.

Answer: B

Explanation: B) Price variance$300

Actual price paid for material$3.00

Standard price per pound$2.50

Difference between actual and standard price per pound$0.50

Actual total quantity of direct material (variance/difference

between actual and standard price per pound)600


Actual quantity of direct material per unit1.7

Diff: 2

LO: 11-2

EOC: E11-20






Cookies









What is the direct materials flexible budget variance for the flour in cupcakes?

A) $200 favorable

B) $800 unfavorable

C) $800 favorable

D) $200 unfavorable

Answer: A

Explanation: A) Price variance$300Unfavorable

Quantity variance

Favorable

Direct material flexible budget variance

F

Diff: 3

LO: 11-2

EOC: E11-20






Cookies









What is the standard direct material price per pound for the butter in the cookies?

A) $7.25/lb.

B) $6.00/lb.

C) $5.50/lb.

D) $4.75/lb.

Answer: D

Explanation: D)

Price variance$500Favorable

Flexible budget variance$2,400Favorable

Quantity variance (If both price variance and flexible budget variance are favorable, then take the difference; if both are unfavorable, take the difference; if one is favorable and one is unfavorable, then add)$1,900

Actual quantity used per unit4


Actual quantity of direct material used1,600

Standard pounds per unit3


Standard quantity of direct material allowed1,200

Quantity variance$1,900

Difference between standard quantity and actual quantity400

Standard price per pound$4.75

Diff: 2

LO: 11-2

EOC: E11-20






Cookies









What is the direct material quantity variance for butter in the cookies?

A) $2,900 favorable

B) $1,900 favorable



Answer: B

Explanation: B)

Price variance $500 Favorable

Flexible budget variance $2,400 Favorable

Quantity variance (If both price variance and flexible budget variance are favorable, then take the difference; if both are unfavorable, take the difference; if one is favorable and one is unfavorable, then add) $1,900 F

Diff: 3

LO: 11-2

EOC: E11-20



63) Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows:

Product NamesSteelPlastic

Direct materials information

Standard pounds per unit1 lb.0.5 lb.

Standard price per pound$1.50?

Actual quantity used per unit1.5 lbs.0.75 lbs.

Actual price paid for material$1.25$2.00

Actual quantity purchased and used2,500 lbs.1,200 lbs.

Price variance?$900 F

Quantity variance$206 U?

Flexible budgent variance?$522 F


What is the price variance for steel used to manufacture the trains?

A) $625 favorable

B) $103 favorable

C) $625 unfavorable

D) $103 unfavorable

Answer: A

Explanation: A) DM Price Variance = (standard price - actual price) actual amount purchased

$625 F = ($1.50 - $1.25) 2,500

Diff: 2

LO: 11-2

EOC: E11-20















What is the direct materials flexible budget variance for steel used to manufacture the trains?

A) $419 unfavorable

B) $419 favorable

C) $831 unfavorable

D) $831 favorable

Answer: B

Explanation: B) DM Price Variance = (standard price - actual price) actual amount purchased

$625 F = ($1.50 - $1.25) 2,500

Price variance $625 Favorable

Quantity variance $206 Unfavorable

Direct material flexible budget variance (If both variances are favorable, add them; if both variances are unfavorable, add them; if one variance is favorable and the other is unfavorable, take the difference) $419 F

Diff: 3

LO: 11-2

EOC: E11-20















What is the standard direct material price per pound for the plastic in the dolls?

A) $2.75/lb.

B) $4.18/lb.

C) $5.27/lb.

D) $2.44/lb.

Answer: A

Explanation: A) Price Variance = (Standard Price - Actual Price) Actual Quantity Purchased

900 = (2.75 - 2.00) 1,200

Diff: 2

LO: 11-2

EOC: E11-20















What is the direct material quantity variance for plastic in the dolls?

A) $378 favorable

B) $1,422 favorable

C) $378 unfavorable


Answer: C

Explanation: C) Flexible Budget Variance = Price Variance + Quantity Variance

$522 F = $900 F + $378 U

522 = 900 - 378

Diff: 3

LO: 11-2

EOC: E11-20



67) Sherwin Chemicals produces commercial strength cleansing supplies. Two of its main products are window cleanser that uses ammonia, and floor cleanser that uses bleach. Information for the most recent period follows:

Product NamesWindow Cleaner (ammonia)Floor Cleaner (bleach)


Standard ounces per unit16 oz.24 oz.

Standard price per ounce$0.75?

Actual quantity used per unit20 oz.22 oz.


Actual quantity purchased and used1,500 oz.2,800 oz..

Price variance?$300 U

Quantity variance$1,500 U?



What is the direct materials price variance for ammonia?

A) $2,500 favorable


C) $375 favorable

D) $375 unfavorable

Answer: D

Explanation: D) DM Price Variance = (standard price - actual price) actual amount purchased

$375 U = ($.75 - $1) 1,500

Diff: 2

LO: 11-2

EOC: E11-20















What is the direct materials flexible budget variance for ammonia?



C) $1,125 favorable

D) $1,875 favorable

Answer: B

Explanation: B) DM Price Variance = (standard price - actual price) actual amount purchased

$375 U = ($.75 - $1) 1,500

Price variance $375 unfavorable

Quantity variance $1,500 Unfavorable

Direct material flexible budget variance (If both variances are favorable, add them; if both variances are unfavorable, add them; if one variance is favorable and the other is unfavorable, take the difference) $1,875 U

Diff: 3

LO: 11-2

EOC: E11-20















What is the standard price for bleach?

A) $0.79/oz.

B) $0.88/oz.

C) $0.92/oz.

D) $1.14/oz.

Answer: A

Explanation: A) Price Variance = (Standard Price - Actual Price) Actual Quantity Purchased

- 300 = (.79 - .9) 2,800

Diff: 2

LO: 11-2

EOC: E11-20















What is the direct material quantity variance for the bleach?

A) $378 favorable

B) $378 unfavorable

C) $978 favorable

D) $978 unfavorable

Answer: C

Explanation: C)

Price variance $300 Unfavorable

Flexible budget variance $678 Favorable

Quantity variance (If both price variance and flexible budget variance are favorable, then take the difference; if both are unfavorable, take the difference; if one is favorable and one is unfavorable, then add) $978 favorable

Diff: 3

LO: 11-2

EOC: E11-20



71) Puget Company has gathered the following information about its purchase and use of raw materials for December:

Standard price per pound of raw material$ 12.00

Actual purchase price per pound of raw material$ 11.50

Standard quantity allowed for actual production (pounds)1,000

Actual quantity of raw materials purchased (pounds)1,150

Puget Company uses a standard cost system. What is the materials price variance?

A) $ 575 favorable

B) $ 575 unfavorable

C) $ 500 favorable

D) $ 500 unfavorable

Answer: A

Explanation: A)

Actual purchase price per pound of raw material$11.50

Standard price per pound of raw material$(12.00)

Difference between actual and standard price per pound$(0.50)

Actual quantity of raw materials purchased (pounds)1,150

Materials purchase price variance $(575.00)

Diff: 2

LO: 11-2

EOC: E11-20



72) Culinary Kitchen Supply produces bamboo cutting boards. The standard material cost for the bamboo used in each lamp is $18 per square foot. Each board requires 3 square feet of bamboo. In August, the company produced 1,200 cutting boards. There were 3,400 square feet of bamboo used during the month. The bamboo used had an actual cost $20 per square foot. What was the materials quantity variance in August for bamboo?

A) $3,600 favorable


C) $4,000 favorable


Answer: A

Explanation: A) Mat'l quantity var = (Actual quantity - (Std quantity actual units)) Std price

$3,600 F = (3,400 - (1,200 3)) $18

Diff: 2

LO: 11-2

EOC: E11-20



73) Kahn Performance Nutrition produces a protein shake which contains whey protein as one of its ingredients. The whey protein (materials) standards for each batch of protein shake produced are 12 pounds of whey protein at a standard cost of $3.00 per pound. During July, Kahn Performance Nutrition purchased and used 54,000 pounds of whey protein at a total of $170,000 to make a total of 4,300 batches of protein shake. What is the materials quantity variance for whey protein in July?


B) $7,200 favorable



Answer: A

Explanation: A) Mat'l quantity var = (Actual quantity - (Std quantity actual units)) Std price

$7,200 U = (54,000 - (12 $ 4.300)) $3

Diff: 2

LO: 11-2

EOC: E11-20



74) Sole Purpose manufactures beach shoes that use a canvas as the main raw material. Data related to the shoes for June follows:

Standard quantity per unit of output (yards)4.5

Standard price per yard$10.50

Actual materials purchased in yards16,500

Actual cost of materials purchased$90,450

Actual materials used in production (yards)16,000

Actual outputs in units3,600

What is the materials quantity variance for canvas for June?

A) $1,645 favorable

B) $2,100 favorable



Answer: B

Explanation: B) Mat'l quantity var = (Actual quantity - (Std quantity actual units)) Std price

$2,100 F = (16,000 - (4.5 3,600)) $10.50

Diff: 2

LO: 11-2

EOC: E11-19



75) Rzepka Corporation manufactures jeweled cell phone cases. The following materials standards have been established for the jewels used to decorate the cell phone cases.

Standard quantity per case (grams)3.5

Standard price per gram of jewels$ 3.00

The following data relates to the production of the cell phone cases during June:

Actual jewels purchased and used (grams)1,400

Actual cost of jewels purchased$ 4,100

Actual number of cases produced500

What is the materials price variance for jewels in June?

A) $100 favorable

B) $100 unfavorable

C) $4,200 favorable


Answer: A

Explanation: A) Mat'l price var. = (Actual price per unit - Std price per unit) Actual quantity

$100 F = ({4,100 / 1,400} - $3.00) 1,400

Diff: 2

LO: 11-2

EOC: E11-29



76) An LCD screen is purchased to be used in the manufacturing of a digital watch. The standard price for the LCD screen used is $40.00. During the month of February, 3,400 screens were purchased and used. The materials price variance was $6,000 unfavorable. The standard number of screens allowed for the actual number of watches manufactured during the period was 25,000 screens. The actual purchase price of each LCD screen would be closest to

A) $39.76 per LCD screen.

B) $40.24 per LCD screen.

C) $38.24 per LCD screen.

D) $41.76 per LCD screen.

Answer: D

Explanation: D)

Materials price varianceunfavorable $6,000

Divide byDivide by

Actual quantity purchased, in units3,400

$1.76

Standard price, per unit $40.00

Actual price, per unit $41.76

Diff: 3

LO: 11-2

EOC: E11-19



77) Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows:

Standard direct materials cost per yard$ 8

Standard direct materials quantity per t-shirt (yards)1.5

During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows:

Actual yards of direct material purchased1,400

Actual direct materials total cost$ 15,500

What is the direct materials price variance for the month?


B) $4,300 favorable

C) $3,800 favorable


Answer: A

Explanation: A)


Standard direct materials cost per yard $8

Standard direct materials total cost $11,200

Actual direct materials total cost $15,500

Standard direct materials total cost $(11,200)

Materials price variance $4,300 unfavorable

Diff: 3

LO: 11-2

EOC: E11-20



78) Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows:

Standard direct materials cost per yard$ 8


During the month of May, the company produced 1,250 t-shirts. Related production data for the month follows:



What is the direct materials quantity variance for the month?

A) $ 4,300 favorable

B) $ 4,300 unfavorable

C) $ 3,800 favorable

D) $ 3,800 unfavorable

Answer: C

Explanation: C)


Actual units produced1,250

Standard direct materials quantity, in yards1,875

Actual direct materials used in production (yards)1,400

Standard direct materials quantity, in yards(1,875)

Difference between actual and standard quantity(475)

Standard direct materials cost per yard $8

Materials quantity variance $(3,800)favorable

Diff: 3

LO: 11-2

EOC: E11-20



79) Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:

Standard tons of direct material (steel) per car4

Standard cost per ton of steel$ 17.00

During the month of March, the company produced 1,650 cars. Related production data for the month follows:

Actual materials purchased and used (tons)6,650


What is the direct materials price variance for the month?

A) $ 850 favorable




Answer: D

Explanation: D)


Standard cost per ton of steel$17.00

Standard materials cost$113,050

Actual direct materials total cost$115,000

Standard materials cost$(113,050)

Material price variance$1,950unfavorable

Diff: 3

LO: 11-2

EOC: E11-20



80) Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:

Standard tons of direct material (steel) per car4

Standard cost per ton of steel$ 17.00

During the month of March, the company produced 1,650 cars. Related production data for the month follows:



What is the direct materials quantity variance for the month?

A) $ 850 favorable




Answer: B

Explanation: B)

Standard tons of direct material (steel) per container4

Actual containers produced 1,650

Standard materials quantity6,600


Standard materials quantity(6,600)

Difference between actual and standard quantity50

Standard cost per ton of steel$17.00

Material quantity variance$850unfavorable

Diff: 3

LO: 11-2

EOC: E11-20



81) On the line in front of each variance, enter the letters of the items needed to compute that variance. You will enter more than one item on each line.

A.Actual price

B.Actual quantity

C.Standard price

D.Standard quantity

______Direct materials price variance

______Direct materials quantity variance

Answer: A, B, CDirect material price variance

B, C, DDirect materials quantity variance

Diff: 2

LO: 11-2

EOC: E11-20



82) McNabb Corporation makes shoe polish. The standard direct materials quantity is .5 pounds per container at a cost of $2.25 per pound. The actual usage for the production of 33,000 containers was .55 pounds per cushion at an actual cost of $2.20 per pound. Calculate the direct materials price variance and the direct materials quantity variance.

Answer:

Actual material price per pound$2.20

Standard material price per pound$2.25

Difference between actual and standard price$0.05

Actual production33,000

Actual material pounds per unit0.55

Actual quantity of materials18,150

Direct material price variance$907

If actual price per pound is less than standard price per pound, then favorable, else unfavorableFavorable


Actual material pounds per unit0.55

Actual quantity of materials18,150


Standard material pounds per unit0.50

Standard quantity of materials16,500

Difference between standard quantity and actual quantity1,650

Standard material price per pound$2.25


If actual quantity is less than standard quantity, then favorable, else unfavorableUnfavorable

Diff: 2

LO: 11-2

EOC: E11-20



83) Ayers Company reports the following standards for direct materials for the year:

Standard cost per pound$4.75

Standard amount per finished good8.5 pounds

During the year, 460,000 finished goods were produced. The direct materials price variance was $14,200 unfavorable. The direct materials flexible budget variance was $980 favorable.

Calculate the following items regarding direct materials for Ayers Company for the year:

a.Direct materials quantity variance

b.Standard quantity of direct materials for actual production

c.Actual pounds of direct materials used for actual production

Answer: part a.

Direct material price variance - unfavorable$14,200

Direct material flexible budget variance - favorable$980


If the unfavorable material price variance is larger than the favorable flexible budget variance, then the material quantity variance must be favorable.Favorable

part b.

Standard amount of direct material per finished good8.50

Actual finished goods produced460,000

Standard quantity of direct material for actual production3,910,000

part c.

Direct material quantity variance (enter as a negative)$(15,180)


Variance expressed in pounds(3,196)

Standard quantity of direct material for actual production3,910,000

Actual pounds of direct material incurred for actual production3,906,804

Diff: 3

LO: 11-2

EOC: E11-20



84) Miller Manufacturing Corporation has the following information regarding direct materials:

Actual pounds of direct materials

purchased and used47,000

Standard quantity of direct materials2.5 pounds per finished good

Actual production20,000 finished goods

Direct materials quantity variance$11,500 F

Direct materials price variance$ 9,400 U

Compute Miller's standard price per pound and actual price per pound of direct materials.

Answer:


Standard quantity of direct material per good2.5


Standard quantity of direct material 50,000

Actual pounds of direct material purchased and used47,000

Difference between standard and actual3,000

Standard price per pound (quantity variance / difference between standard and actual)$3.83

Direct material price variance$9,400

Actual pounds of direct material purchased and used47,000

Price variance on a per pound basis (positive if price variance is unfavorable, negative if the price variance is favorable)$0.20

Actual price per pound (standard price per pound + price variance on per pound basis)$4.03

Diff: 2

LO: 11-2

EOC: E11-20



85) The following direct materials variance computations are incomplete. Fill in the missing values, and identify the direct materials flexible budget variance as favorable or unfavorable.Direct materials price variance = ($? - $12.50) 7,000 pounds = $3,500 U

Direct materials quantity variance = (? - 6,700 pounds) $12.50 = ? U

Direct materials flexible budget variance = $?

Answer:

Direct material price variance$3,500Unfavorable


Price variance on a per unit basis (positive for unfavorable price variance, negative for favorable price variance)$0.50

Standard direct material price$12.50

Actual direct material price per pound$13.00


Standard direct material quantity6,700

Difference between actual and standard300

Standard direct material price$12.50


If actual direct material quantity is less than standard direct material quantity, then favorable, else unfavorableUnfavorable

Direct material price variance$3,500Unfavorable

Direct material quantity variance$3,750Unfavorable

Direct material flexible budget variance (if the price and quantity variances are both favorable, add them; if both are unfavorable, add them; if one is favorable and the other is unfavorable, then take the difference)$7,250Unfavorable

Diff: 3

LO: 11-2

EOC: E11-20



86) Efficiency variances for direct labor show how changes in the usage of labor affect a company's profits.

Answer: TRUE

Diff: 1

LO: 11-3

EOC: S11-5



87) The total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

Answer: TRUE

Diff: 1

LO: 11-3

EOC: S11-5



88) The direct labor rate variance describes differences in the anticipated (standard) labor rate and the actual labor rate paid.

Answer: TRUE

Diff: 1

LO: 11-3

EOC: S11-5



89) The direct labor rate variance is calculated by multiplying the standard hours that should have been worked for the actual output by the difference between the standard labor rate and the actual labor rate.

Answer: FALSE

Diff: 1

LO: 11-3

EOC: S11-5



90) It is possible to encounter a situation where the direct labor rate variance is favorable and the direct labor efficiency variance is unfavorable.

Answer: TRUE

Diff: 1

LO: 11-3

EOC: S11-5



91) A rate variance for direct labor measures how well a company keeps unit prices of labor inputs within standards.

Answer: TRUE

Diff: 1

LO: 11-3

EOC: E11-25



92) If the standard quantity allowed for direct labor is less than the actual quantity used, the efficiency variance is favorable.

Answer: FALSE

Diff: 1

LO: 11-3

EOC: S11-5



93) Which variance is directly impacted if the employees who build the product go on strike and temporary workers who are slower and not as skilled are hired?



C) Labor efficiency variance

D) Labor rate variance

Answer: C

Diff: 2

LO: 11-3

EOC: S11-5



94) How is the direct labor rate variance calculated?

A) The difference between the standard labor rate and the actual labor rate multiplied by the actual labor hours used

B) The difference between the standard labor rate and the actual labor rate multiplied by the standard allowable hours

C) The difference between the standard labor hours and the allowable labor hours

D) The difference between the standard labor rate and the actual labor rate

Answer: A

Diff: 2

LO: 11-3

EOC: S11-5



95) How is the direct labor efficiency variance calculated?

A) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate.

B) The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate

C) The difference between the standard labor hours and the actual labor hours used.

D) The difference between the standard labor rate and the actual labor rate.

Answer: B

Diff: 2

LO: 11-3

EOC: S11-5



96) The direct labor flexible budget variance can be divided into two variances:

A) rate variance and price variance.

B) price variance and usage variance.

C) rate variance and efficiency variance.

D) price variance and efficiency variance.

Answer: C

Diff: 2

LO: 11-3

EOC: S11-5



97) A favorable direct labor efficiency variance might indicate that

A) higher skilled workers were used that performed the task slower than expected.

B) higher skilled workers were used that performed the task faster than expected.

C) lower skilled workers were paid a higher wage than expected.

D) lower skilled workers were paid a lower wage than expected.

Answer: B

Diff: 2

LO: 11-3

EOC: S11-5



98) The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which variance would be directly impacted?





Answer: D

Diff: 2

LO: 11-3

EOC: E11-19



99) A company receives an unusually high number of orders in a month. To produce all of the orders within the scheduled dates of delivery, the company pays employees an extra $8 per hour for every hour of overtime the employees work. Which variance would be directly impacted?





Answer: D

Diff: 2

LO: 11-3

EOC: E11-19



100) An unfavorable direct labor rate variance indicates which of the following?

A) Both actual quantity and actual cost of direct labor hours exceeded standard quantity and standard cost of hours for actual output.

B) The actual quantity of direct labor hours worked exceeded the standard quantity of hours for actual output.

C) The actual direct labor cost per hour exceeded the standard direct labor cost per hour for actual quantity of direct labor hours.

D) The actual cost of direct labor per hour was less than the standard cost of direct labor per hour.

Answer: C

Diff: 2

LO: 11-3

EOC: E11-20



101) A favorable direct labor efficiency variance and an unfavorable direct labor rate variance might indicate which of the following?

A) Unskilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate

B) Unskilled workers using less actual hours than standard, paid a lesser rate per hour than the standard rate

C) Skilled workers using less actual hours than standard, paid at a higher rate per hour than the standard rate

D) Skilled workers using more actual hours than standard, paid at a higher rate per hour than the standard rate

Answer: C

Diff: 2

LO: 11-3

EOC: E11-20



102) The ________ variance "measures how well the business keeps prices of direct labor inputs within standards".

A) production volume

B) overhead flexible budget

C) rate

D) efficiency

Answer: C

Diff: 1

LO: 11-3

EOC: E11-20



103) The ________ variance "measures whether the quantity of direct labor used to make the actual number of outputs is within the standard allowed for that number of outputs".

A) production volume

B) overhead flexible budget

C) rate

D) efficiency

Answer: D

Diff: 1

LO: 11-3

EOC: E11-19



104) The Davidson Corporation produces clocks. According to company standards, it should take 2 hours of direct labor to produce a clock. Davidson's standard labor cost is $19 per hour. During June, Thomas produced 6,200 stopwatches and used 13,500 hours of direct labor at a total cost of $260,000. What is Thomas' direct labor rate variance for June?

A) $1,607 favorable


C) $3,500 favorable


Answer: D

Explanation: D) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$3,500 U = ({260,000/13,500} - $19) 13,500

Diff: 3

LO: 11-3

EOC: E11-20



105) The following information describes a company's usage of direct labor in a recent period:

Actual direct labor hours used34,000

Actual rate per hour$17.00

Standard rate per hour$16.75

Standard hours for units produced33,500

How much is the direct labor efficiency variance?

A) $8,375 favorable



D) $8,500 favorable

Answer: B

Explanation: B) Labor efficiency var = (Actual hours - Std hours for actual units ) Std rate

$8,375 U = (34,000 - 33,500) 16.75

Diff: 2

LO: 11-3

EOC: E11-19



106) The following information describes a company's usage of direct labor in a recent period:

Actual direct labor hours used34,000

Actual rate per hour$17.00

Standard rate per hour$16.75

Standard hours for units produced33,500

How much is the direct labor rate variance?

A) $8,375 favorable

B) $8,500 favorable



Answer: D

Explanation: D) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$8,500 U = (17.00 - $16.75) 34,000

Diff: 2

LO: 11-3

EOC: E11-19



107) The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $15.50. The direct labor hours allowed per finished unit is 0.5 hour. During the current period, 5,500 units of finished goods were produced using 3,000 direct labor hours. How much is the direct labor rate variance?

A) $1,500 favorable

B) $2,750 favorable



Answer: C

Explanation: C) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$1,500 U = (16.00 - $15.50) 3,000

Diff: 2

LO: 11-3

EOC: E11-19



108) The actual cost of direct labor per hour is $16.00 and the standard cost of direct labor per hour is $15.50. The direct labor hours allowed per finished unit is 0.5 hour. During the current period, 5,500 units of finished goods were produced using 3,000 direct labor hours. How much is the direct labor efficiency variance?


B) $3,875 favorable

C) $4,000 favorable


Answer: A

Explanation: A) Labor efficiency var = (Actual hours - Std hours for actual units) Std rate

$3,875 U = (3,000 - (5,500 units 0.5 std hrs)) $15.50

Diff: 2

LO: 11-3

EOC: E11-19



109) When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car. What is the direct labor rate variance for the Rolls-Royce division?

A) $4,000 favorable




Answer: B

Explanation: B) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$15,000 F = (25 - 27) 7,500

Diff: 2

LO: 11-3

EOC: E11-19



110) When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $25 per hour, worked a total of 7,500 hours, and produced 2,000 cars. BMW budgeted for a standard labor rate of $27 per hour and 1.25 direct labor hours per car. What is the direct labor efficiency variance for the Rolls-Royce division?





Answer: D

Explanation: D) Labor efficiency var = (Actual hours - Std hours for act units ) Std rate

$135,000 U= (7,500 - (2,000 units 1.25 std hrs)) $27

Diff: 2

LO: 11-3

EOC: E11-19



111) The actual cost of direct labor per hour is $14.75. Two and one half standard direct labor hours are allowed per unit of finished goods. During the current period, 2,700 units were produced using 6,500 direct labor hours. The direct labor efficiency variance is $2,500 favorable. Calculate the standard direct labor rate per hour.

A) $14.75

B) $10.00

C) $36.88

D) $10.80

Answer: B

Explanation: B) Labor efficiency var = (Actual hours - Std hours for act units) Std price

$2,500 = (6,500 - (2,700 2.5)) Std rate

Std rate = $2,500 / 250 = $ 10.00

Diff: 2

LO: 11-3

EOC: E11-19



112) The standard cost of direct labor per hour is $12.50. One and one half standard direct labor hours are allowed per unit of finished goods. During the current period, 560 units were produced using 1,250 direct labor hours. The direct labor rate variance is $1,000 unfavorable. Calculate the actual cost of direct labor per hour.

A) $12.50

B) $32.80

C) $13.30

D) $18.75

Answer: C

Explanation: C) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$1,000 = (Actual rate per hour - $12.50) 1,250 hrs

Act rate = $16,625 / 1,250

= $13.30

Diff: 2

LO: 11-3

EOC: E11-20



113) Historic Restoration Company budgeted 2.5 hours of direct labor per unit at $14.75 per hour to produce 600 replica door knobs. The 600 knobs were completed using 1,200 hours of direct labor at $14.00 per hour. What is the direct labor rate variance?

A) $900 favorable

B) $1,125 favorable

C) $900 unfavorable


Answer: A

Explanation: A) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$900 F = (14.00 - $14.75) 1,200 hrs

Diff: 2

LO: 11-3

EOC: E11-20



114) Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor efficiency variance?


B) $1,469 favorable


D) $1,563 favorable

Answer: A

Explanation: A) Labor efficiency var = (Actual hours - Std hours for act units) Std rate

$ 1,469 U = (1,750 - (650 2.5)) $11.75

Diff: 2

LO: 11-3

EOC: E11-20



115) Chemical Supply Incorporated budgeted two and one half hours of direct labor per unit at $11.75 per hour to produce 650 units of product. The 650 units were completed using 1,750 hours of direct labor at $12.50 per hour. What is the direct labor rate variance?

A) $1,219 favorable

B) $1,313 favorable



Answer: D

Explanation: D) Labor rate var. = (Actual rate per hour - Std rate per hour for actual output) actual hours

$ 1,313 U = ($12.50 - $11.75) 1,750

Diff: 2

LO: 11-3

EOC: E11-20





Direct labor:

Standard: 540 hours at $6.75/hr.3,645

Actual: 500 hours at $6.50/hr.3,250

What is the direct labor rate variance?

A) $125 favorable

B) $125 unfavorable

C) $135 favorable

D) $135 unfavorable

Answer: A

Explanation: A) Labor rate var. = (Actual rate per hour - Std rate per hour) actual hours

$125 F = ($6.50 - $6.75) 500

Diff: 2

LO: 11-3

EOC: E11-20





Direct labor:

Standard: 540 hours at $6.75/hr.3,645

Actual: 500 hours at $6.50/hr.3,250

What is the direct labor efficiency variance?

A) $260 favorable

B) $260 unfavorable

C) $270 favorable

D) $270 unfavorable

Answer: C

Explanation: C) Labor efficiency var = (Actual hours - Std hours for act units) Std rate

$270 F = (500 - 540) 6.75

Diff: 2

LO: 11-3

EOC: E11-20


Learning Outcome: Discuss and calcu

braun3 11 tif

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