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Exam 10: Standard Costing and Analysis of Direct Costs

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Question 41

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The absolute size of a variance is more important than the relative size when trying to decide what variances to investigate.

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Question 42

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Variances are computed by taking the difference between which of the following?

A) Product cost and period cost.
B) Actual cost and differential cost.
C) Price factors and rate factors.
D) Actual cost and standard cost.
E) Product cost and standard cost.

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Question 43

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Vito, Inc.had an unfavorable labor efficiency variance and an unfavorable materials quantity variance.Which department might be held accountable for these variances?

A direct-material quantity variance can be caused by all of the following except:

Too-Jay Enterprises recently experienced a fire, forcing the company to use incomplete information to analyze operations.Consider the following data and assume that all materials purchased during the period were used in production: Direct materials: Standard price per pound: $9 Actual price per pound: $8 Price variance: $20,000F Total of direct-material variances: $2,000F Direct labor: Actual hours worked: 40,000 Actual rate per hour: $15 Efficiency variance: $28,000F Total of direct-labor variances: $12,000U Halo completed 12,000 units. Required: Determine the following: (1) actual materials used, (2) direct-material quantity variance, (3) direct-labor rate variance, (4) standard labor rate per hour, and (5) standard labor time per finished unit.

Which department would normally begin an investigation regarding an unfavorable materials quantity variance?

A favorable labor efficiency variance is created when:

An unfavorable labor efficiency variance is created when:

Due to evaporation during production, X-treme Building Styrofoam Company requires 5 pounds of material input for every 4 pounds of styrofoam sheets manufactured.During March, the company produced 3,800 pounds of good sheets. Required: Compute the total standard allowed input quantity, given the good output produced.

The term "management by exception" is best defined as:

Consider the following statements about variance investigation: BOLDariance investigation involves a look at only unfavorable variances. II.Variance investigation is typically based on a cost-benefit analysis. III.Variance investigation is often performed by establishing guidelines similar to the following: Investigate variances that are greater than $X or greater than Y% of standard cost. Which of the above statements is (are) true?

Which of the following choices correctly indicates the use of the standard price per unit of direct material when calculating the materials price variance and the material quantity variance?

When the quantity of materials purchased is not equal to the quantity of material used, most companies base the calculation of the material quantity variance on the:

Consider the following statements: I.Behavioral scientists find that perfection standards often discourage employees and result in low worker morale. II.Practical standards are also known as attainable standards. III.Practical standards incorporate a certain amount of inefficiency such as that caused by an occasional machine breakdown. Which of the above statements is (are) true?

Enrique Industries purchased and consumed 50,000 gallons of direct material that was used in the production of 11,000 finished units of product.According to engineering specifications, each finished unit had a manufacturing standard of five gallons.If a review of Enrique's accounting records at the end of the period disclosed a material price variance of $5,000U and a material quantity variance of $3,000F, what is the actual price paid for a gallon of direct material?

Rickett Corporation had a favorable direct-labor efficiency variance of $6,000 for the period just ended.The actual wage rate was $0.50 more than the standard rate of $12.00.If the company's standard hours allowed for actual production totaled 9,500, how many hours did the firm actually work?

Most companies base the calculation of the material price variance on the:

Airon Company recently completed 10,600 units of its single product, consuming 32,000 labor hours that cost the firm $480,000.According to manufacturing specifications, each unit should have required 3 hours of labor time at $15.40 per hour. On the basis of this information, determine Airon's total labor variance.