Which of the following would not lend itself to applying direct labor variances?

Standard Costs

Student: ___________________________________________________________________________

1. A variable cost system is an accounting system where standards are set for each manufacturing cost element. True False

2. One reason not to depend solely on historical records to set standards is that there may be inefficiencies contained in past costs. True False

3. Standard costs serve as a device for measuring efficiency. True False

4. The standard cost is how much a product should cost to manufacture. True False

5. Standard costs can be used with both the process cost and job order cost systems. True False

6. Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called standard cost systems. True False

7. Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called budgeted cost systems. True False

8. Normally standard costs should be revised when labor rates change to incorporate new union contracts. True False

9. Standard costs should always be revised when they differ from actual costs. True False

10. Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs. True False

11. In most businesses, cost standards are established principally by accountants. True False

12. It is correct to rely exclusively on past cost data when establishing standards. True False

13. Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage. True False

14. Currently attainable standards do not allow for reasonable production difficulties. True False

15. If employees are given bonuses for exceeding normal standards, the standards may be very effective in motivating employees. True False

16. The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard. True False

17. Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards. True False

18. Standards are designed to evaluate price and quantity variances separately. True False

19. If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $5,200 favorable. True False

20. If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $2,200 unfavorable. True False

21. If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable. True False

22. If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable. True False

23. If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $1,000 unfavorable. True False

24. If the standard to produce a given amount of product is 600 direct labor hours at $17 and the actual was 500 hours at $15, the time variance was $1,500 unfavorable. True False

25. If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 500 hours at $17, the time variance was $1,700 unfavorable. True False

26. If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 unfavorable. True False

27. If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable. True False

28. Standard costs are determined by multiplying expected price by expected quantity. True False

29. The direct labor time variance measures the efficiency of the direct labor force. True False

30. The variance from standard for factory overhead cost resulting from operating at a level above or below 100% of normal capacity is termed volume variance. True False

31. The variance from standard for factory overhead resulting from incurring a total amount of factory overhead cost that is greater or less than the amount budgeted for the level of operations achieved is termed controllable variance. True False

32. The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report. True False

33. Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable. True False

34. An unfavorable volume variance may be due to a failure of supervisors to maintain an even flow of work. True False

35. Nonfinancial performance output measures are used to improve the input measures. True False

36. An example of a nonfinancial measure is the number of customer complaints. True False

37. A company should only use nonfinancial performance measures when financial measures cannot be calculated. True False

38. Which of the following conditions normally would not indicate that standard costs should be revised? A. The engineering department has revised product specifications in responding to customer suggestions. B. The company has signed a new union contract which increases the factory wages on average by $5 an hour. C. Actual costs differed from standard costs for the preceding week. D. The world price of raw materials increased.

39. Standards that represent levels of operation that can be attained with reasonable effort are called: A. theoretical standards B. ideal standards C. variable standards D. normal standards

40. Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs? A. Used to indicate where changes in technology and machinery need to be made. B. Used to identify inventory C. Used to plan direct materials, direct labor, and factory factory overhead. D. Used to control costs.

41. The principle of exceptions allows managers to A. focus on correcting variances between standard costs and actual costs. B. focus on correcting variances between variable costs and actual costs. C. focus on correcting variances between competitor’s costs and actual costs. D. focus on correcting variances between competitor’s costs and standard costs.

42. Periodic comparisons between planned objectives and actual performance are reported in: A. zero-base reports B. budget performance reports C. master budgets D. budgets

43. The standard price and quantity of direct materials are separated because: A. GAAP reporting requires this separation B. direct materials prices are controlled by the purchasing department, and quantity used is controlled by the production department C. standard quantities are more difficult to estimate than standard prices D. standard prices change more frequently than standard quantities

44. Standard costs are divided into which of the following components? A. Variance Standard and Quantity Standard B. Materials Standard and Labor Standard C. Quality Standard and Quantity Standard D. Price Standard and Quantity Standard

45. A favorable cost variance occurs when A. Actual costs are more than standard costs. B. Standard costs are more than actual costs. C. Standard costs are less than actual costs. D. None of the above.

46. The total manufacturing cost variance consists of: A. Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance B. Direct materials cost variance, direct labor rate variance, and factory overhead cost variance C. Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance D. Direct materials cost variance, direct labor cost variance, factory overhead cost variance

47. Which of the following is not a reason standard costs are separated in two components? A. the price and quantity variances need to be identified separately to correct the actual major differences. B. identifying variances determines which manager must find a solution to major discrepancies. C. if a negative variance is over-shadowed by a favorable variance, managers may overlook potential corrections. D. variances brings attention to discrepancies in the budget and requires managers to revise budgets closer to actual.

48. The following data relate to direct materials costs for November:

Actual costs 4,700 pounds at $5. Standard costs 4,500 pounds at $6.

What is the direct materials quantity variance? A. $3,600 favorable B. $1,240 favorable C. $3,600 favorable D. $1,240 unfavorable

1. If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed a: A. controllable variance B. price variance C. quantity variance D. rate variance

2. If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed a: A. variable variance B. controllable variance C. price variance D. volume variance

3. The following data is given for the Stringer Company:

Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6. Standard ounces per completed unit 8 Actual ounces purchased and used in production 228, Actual price paid for materials $1,504, Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6. Actual labor hours worked 183, Actual total labor costs $4,020, Overhead: Actual and budgeted fixed overhead $1,029, Standard variable overhead rate $24 per standard labor hour Actual variable overhead costs $4,520,

Overhead is applied on standard labor hours.

The direct material price variance is: A. 22,800U B. 22,800F C. 52,000U D. 52,000F

1. The following data is given for the Stringer Company:

Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6. Standard ounces per completed unit 8 Actual ounces purchased and used in production 228, Actual price paid for materials $1,504, Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6. Actual labor hours worked 183, Actual total labor costs $4,020, Overhead: Actual and budgeted fixed overhead $1,029, Standard variable overhead rate $24 per standard labor hour Actual variable overhead costs $4,520,

Overhead is applied on standard labor hours.

The direct material quantity variance is: A. 22,800F B. 22,800U C. 52,000F D. 52,000U

1. The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5. board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units.

Compute the material price variance. A. 0 B. 59,400U C. 59,400F D. 6,000U

What is the direct labor rate variance? A. $18,000 unfavorable B. $ 4,500 favorable C. $17,100 unfavorable D. $ 3,600 favorable

1. The following data relate to direct labor costs for the current period:

Standard costs 9,000 hours at $5. Actual costs 8,500 hours at $5.

What is the direct labor rate variance? A. $2,250 unfavorable B. $2,125 unfavorable C. $2,250 favorable D. $2,125 favorable

1. The following data relate to direct labor costs for the current period:

Standard costs 36,000 hours at $22. Actual costs 35,000 hours at $23.

What is the direct labor time variance? A. $36,000 unfavorable B. $35,000 unfavorable C. $23,000 favorable D. $22,000 favorable

1. The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows:

Standard Costs Direct labor 7,500 hours @ $11.

Actual Costs Direct labor 7,400 hours @ $11.

The amount of the direct labor rate variance is: A. $2,960 unfavorable B. $4,500 favorable C. $2,960 favorable D. $4,500 unfavorable

1. The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows:

Standard Costs Direct labor 7,500 hours @ $11.

Actual Costs Direct labor 7,400 hours @ $11.

The amount of the direct labor time variance is: A. $1,180 favorable B. $1,140 unfavorable C. $1,180 unfavorable D. $1,140 favorable

1. The following data relate to direct labor costs for February:

Actual costs 7,700 hours at $14. Standard costs 7,000 hours at $16.

What is the direct labor time variance? A. $7,700 favorable B. $7,700 unfavorable C. $11,200 unfavorable D. $11,200 favorable

1. The following data relate to direct labor costs for February:

Actual costs 7,700 hours at $14. Standard costs 7,000 hours at $16.

What is the direct labor rate variance? A. $14,000 favorable B. $14,000 unfavorable C. $15,400 favorable D. $15,400 unfavorable

1. The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7 hours per completed unit at a standard rate of $13 per hour.

Compute the labor rate variance. A. 4,920U B. 4,920F C. 4,560U D. 4,560U

1. The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7 hours per completed unit at a standard rate of $13 per hour.

Compute the labor time variance. A. 9,880F B. 9,880U C. 7,800U D. 7,800F

90.

Standard Actual Material Cost Per Yard $2 $2. Standard Yards per Unit 4 yards 4 yards Units of Production 9,

Calculate the Total Direct Materials cost variance using the above information: A. $9,262 Unfavorable B. $9,262 Favorable C. $3,780 Unfavorable D. $3,562 Favorable

91.

Standard Actual Material Cost Per Yard $2 $2. Standard Yards per Unit 4 yards 4 yards Units of Production 9,

Calculate the Direct Materials Price variance using the above information: A. $1,795 Favorable B. $378 Favorable C. $4,512 Unfavorable D. $378 Unfavorable

92.

Standard Actual Material Cost Per Yard $2 $2. Standard Yards per Unit 4 yards 4 yards Units of Production 9,

Calculate the Direct Materials Quantity variance using the above information: A. $4,512 Unfavorable B. $4,512 Favorable C. $4,750 Unfavorable D. $4,750 Favorable

93.

Standard Actual Rate $12 $12. Hours 18,500 17, Units of Production 9,

Calculate the Total Direct Labor Variance using the above information A. $2,051 Favorable B. $2,051 Unfavorable C. $2,362 Unfavorable D. $2,362 Favorable

94.

Standard Actual Rate $12 $12. Hours 18,500 17, Units of Production 9,

Calculate the Direct Labor Time Variance using the above information A. $2,362 Favorable B. $2,362,50 Unfavorable C. $6,540 Favorable D. $6,540 Unfavorable

1. The formula to compute direct material quantity variance is to calculate the difference between A. actual costs - standard costs B. standard costs - actual costs C. (actual quantity * standard price) - standard costs D. actual costs - (standard price * standard costs)

2. Which of the following would not lend itself to applying direct labor variances? A. Help desk B. Research and development scientist C. Customer service personnel D. Telemarketer

3. The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

Standard Costs Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour Variable overhead 3 hours @ $2 per hour

Actual Costs Total variable cost, $18, Total fixed cost, $8,

The amount of the factory overhead volume variance is: A. $2,000 favorable B. $2,000 unfavorable C. $2,500 unfavorable D. $

1. The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

Standard Costs Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour Variable overhead 3 hours @ $2 per hour

Actual Costs Total variable cost, $18, Total fixed cost, $8,

The amount of the total factory overhead cost variance is: A. $2,000 favorable B. $5,000 unfavorable C. $2,500 unfavorable D. $

1. The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows:

Standard Costs Fixed overhead (based on 10,000 hours) 3 hours @ $.80 per hour Variable overhead 3 hours @ $2 per hour

Actual Costs Total variable cost, $18, Total fixed cost, $8,

The amount of the factory overhead controllable variance is: A. $2,000 unfavorable B. $3,000 favorable C. $ D. $3,000 unfavorable

1. The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows:

Standard: 25,000 hours at $10 $250,

Actual: Variable factory overhead $202, Fixed factory overhead 60,

What is the amount of the factory overhead volume variance? A. $12,500 favorable B. $10,000 unfavorable C. $12,500 unfavorable D. $10,000 favorable