Question 1

If fewer units are produced than had been estimated when standard unit costs were determined, there would normally be:

Accepted Answer

A)   A favorable labor efficiency (usage)  variance.
B)   An unfavorable overhead volume variance.
C)   A favorable materials quantity variance.
D)   An unfavorable overhead spending variance.E) A) and B)
F) A) and C)

Question 2

Volume variances
Consider the following statement: "No manager should be held responsible for a volume variance." Briefly explain why a volume variance should not be investigated and viewed as the responsibility of some manager in an organization.

Accepted Answer

As long as the production departments of an organization are producing the desired number of units, the volume variance does not indicate either efficient or inefficient production. The volume variance arises from fluctuations in the level of production from month to month. Such fluctuations may occur for a variety of reasons such as seasonal demand, scheduled vacation time, etc. Unless the producing departments fail to produce the scheduled number of units, no manager should be viewed as responsible for the volume variance.

Question 3

The overhead spending variance:

Accepted Answer

A)   Occurs automatically whenever actual production levels differ from the "normal" production level used to compute the standard overhead cost per unit.
B)   Is the difference between amounts spent for actual manufacturing overhead costs and the amount applied to production.
C)   Is computed as the difference between variable overhead per the flexible budget and actual variable overhead costs incurred.
D)   Is the portion of the total overhead variance that is considered "controllable" by the production manager.E) B) and D)
F) All of the above

Question 4

If the actual number of direct labor hours used exceeds the standard direct labor hours allowed, this indicates:

Accepted Answer

A)   An unfavorable labor efficiency variance.
B)   A favorable labor efficiency variance.
C)   An unfavorable labor rate variance.
D)   An unfavorable total labor variance.E) A) and D)
F) A) and C)

Question 5

The journal entry to record direct labor costs relating to work performed in April includes:

Accepted Answer

A)   A debit to Work-in-Process Inventory for $70,500.
B)   A credit to Labor Rate Variance for $7,500.
C)   A credit to Labor Efficiency Variance for $4,200.
D)   A credit to Direct Labor for $67,200.E) A) and B)
F) C) and D)

Question 6

Using more direct labor hours for units produced than the amount allowed by the standard results in:

Accepted Answer

A)   An unfavorable total labor variance.
B)   An unfavorable labor efficiency variance, regardless of the wage rate paid employees.
C)   An unfavorable labor efficiency variance only if the wage rate is higher than standard cost allowed.
D)   A favorable labor rate variance, because the hourly wage rate is automatically reduced when workers operate less efficiently.E) A) and C)
F) All of the above

Question 7

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit, then the materials price variance is:

Accepted Answer

A)   $2,850 Favorable.
B)   $1,575 Unfavorable.
C)   $1,275 Favorable.
D)   $2,850 Unfavorable.E) A) and B)
F) A) and C)

Question 8

Standard cost system labor variance
The following computations of March labor variances for Sam's Supply Company are incomplete. The missing items are labeled (a) through (d).
Labor rate variance = 4,800 hours x [(a) - $8.50] = $350 favorable
Labor efficiency variance = (b) x [(c) - 5,000 hours] = $(d)
On the appropriately labeled line, identify each missing item by name (a through c) and show the missing value (a through d). Show supporting computations in the space provided.
(a) _________________________ $________________
(b) _________________________ $________________
(c) _________________________ ____________________ hours
(d) $_______________ F or U (Circle the correct term.)
(e) During March, the supervisor left for vacation without arranging for a replacement. Which variances would have been most affected by this situation? _________________________ Computations

Accepted Answer

(a) Standard rate: 8.57
(b) St...

Question 9

Excessive overtime hours worked by direct labor workers often results in:

Accepted Answer

A)   An unfavorable labor rate variance.
B)   A favorable labor rate variance.
C)   A favorable materials price variance.
D)   An unfavorable materials price variance.E) C) and D)
F) A) and D)

Question 10

Which of the following is not an advantage of using a standard cost system?

Accepted Answer

A)   It eliminates the need for analysis of variances.
B)   It facilitates establishing an effective system of responsibility accounting.
C)   It requires an analysis of all aspects of operations.
D)   It helps management control costs.E) B) and D)
F) A) and B) A

Question 11

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

Accepted Answer

A) True 
 B)False

Question 12

A labor efficiency (usage)  variance is most likely to occur if:

Accepted Answer

A)   Employees are paid at an overtime wage rate.
B)   Employees are inefficient and units must be reworked.
C)   Labor cost per unit exceeds materials costs per unit.
D)   Employee turnover rates are low.E) C) and D)
F) A) and D)

Question 13

Standard costs are established only for direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 14

The labor rate variance is determined by multiplying the difference between the actual labor rate and the standard labor rate by:

Accepted Answer

A)   The standard labor hours allowed for a given level of output.
B)   The standard labor rate.
C)   The actual hours worked during the period.
D)   The actual labor rate.E) B) and D)
F) B) and C)

Question 15

An unfavorable labor rate variance could most likely result from all of the following except:

Accepted Answer

A)   Producing at levels of output which exceed normal output levels.
B)   Using highly skilled laborers to perform tasks normally performed by unskilled laborers.
C)   Having laborers work excessive overtime hours.
D)   Using outdated standard cost figures.E) A) and D)
F) B) and C)

Question 16

Which of the following is the most likely explanation for the types of labor variances resulting from Roman's July operations?

Accepted Answer

A)   Management used workers who received a higher wage and worked more efficiently.
B)   Management reduced the wage rates in July, which caused the workers to deliberately slow down productivity.
C)   Management used less experienced workers whose lower wage rate more than offset their lower productivity.
D)   Management paid workers more than standard hourly rates, but the excess pay did not result in increased productivity.E) A) and D)
F) C) and D)

Question 17

A standard cost is predetermined, that is, determined before actual costs of the current period have been computed.

Accepted Answer

A) True 
 B)False

Question 18

There is an unfavorable labor efficiency variance when:

Accepted Answer

A)   Actual hours are greater than standard hours.
B)   Actual hours are less than standard hours.
C)   The standard rate per hour is greater than the actual rate per hour.
D)   The standard rate per hour is less than the actual rate per hour.E) A) and C)
F) A) and B)

Question 19

Standard cost system-overhead variances
Assume the following data for John Company's August operations.
(a) Compute the amount of overhead applied to Work-in-Process during August. $________________
(b) Compute the total manufacturing overhead budgeted based on hours worked during August. $________________
(c) Compute the overhead spending variance for August. Indicate whether favorable (F) or unfavorable (U). $________________
(d) Compute the overhead volume variance for August. Indicate whether favorable (F) or unfavorable (U). $________________

Accepted Answer

The answer of Standard cost system-overhead variances
Assume the following data...

Question 20

A favorable variance would be credited to a cost variance account.

Accepted Answer

A) True 
 B)False

Exam 24: Standard Cost Systems

If fewer units are produced than had been estimated when standard unit costs were determined, there would normally be:

Correct Answer
verified

Volume variances Consider the following statement: "No manager should be held responsible for a volume variance." Briefly explain why a volume variance should not be investigated and viewed as the responsibility of some manager in an organization.

The overhead spending variance:

Correct Answer
verified

If the actual number of direct labor hours used exceeds the standard direct labor hours allowed, this indicates:

Correct Answer
verified

The journal entry to record direct labor costs relating to work performed in April includes:

Correct Answer
verified

Using more direct labor hours for units produced than the amount allowed by the standard results in:

Correct Answer
verified

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit, then the materials price variance is:

Correct Answer
verified

Correct Answer
verified
(a) Standard rate: 8.57
(b) St...
View Answer

Excessive overtime hours worked by direct labor workers often results in:

Correct Answer
verified

Which of the following is not an advantage of using a standard cost system?

Correct Answer
verified
A

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

Correct Answer
verified

A labor efficiency (usage) variance is most likely to occur if:

Correct Answer
verified

Standard costs are established only for direct labor and direct materials.

Correct Answer
verified

The labor rate variance is determined by multiplying the difference between the actual labor rate and the standard labor rate by:

Correct Answer
verified

An unfavorable labor rate variance could most likely result from all of the following except:

Correct Answer
verified

Which of the following is the most likely explanation for the types of labor variances resulting from Roman's July operations?

Correct Answer
verified

A standard cost is predetermined, that is, determined before actual costs of the current period have been computed.

Correct Answer
verified

There is an unfavorable labor efficiency variance when:

Correct Answer
verified

Correct Answer
verified
11ea929a_a272_e8d0_8f20_bfa99144c916_TB6339_00 11ea929a_a272_e8d1_8f20_439f3514b566_TB6339_00

A favorable variance would be credited to a cost variance account.

Correct Answer
verified

Exam 24: Standard Cost Systems

If fewer units are produced than had been estimated when standard unit costs were determined, there would normally be:

Correct AnswerverifiedShow Answer

Volume variances Consider the following statement: "No manager should be held responsible for a volume variance." Briefly explain why a volume variance should not be investigated and viewed as the responsibility of some manager in an organization.

The overhead spending variance:

Correct AnswerverifiedShow Answer

If the actual number of direct labor hours used exceeds the standard direct labor hours allowed, this indicates:

Correct AnswerverifiedShow Answer

The journal entry to record direct labor costs relating to work performed in April includes:

Correct AnswerverifiedShow Answer

Using more direct labor hours for units produced than the amount allowed by the standard results in:

Correct AnswerverifiedShow Answer

If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit, then the materials price variance is:

Correct AnswerverifiedShow Answer

Correct Answerverified(a) Standard rate: 8.57(b) St...View AnswerShow Answer

Excessive overtime hours worked by direct labor workers often results in:

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of using a standard cost system?

Correct AnswerverifiedA

The use of excessive quantities of material in manufacturing a product causes an unfavorable materials quantity variance.

Correct AnswerverifiedShow Answer

A labor efficiency (usage) variance is most likely to occur if:

Correct AnswerverifiedShow Answer

Standard costs are established only for direct labor and direct materials.

Correct AnswerverifiedShow Answer

The labor rate variance is determined by multiplying the difference between the actual labor rate and the standard labor rate by:

Correct AnswerverifiedShow Answer

An unfavorable labor rate variance could most likely result from all of the following except:

Correct AnswerverifiedShow Answer

Which of the following is the most likely explanation for the types of labor variances resulting from Roman's July operations?

Correct AnswerverifiedShow Answer

A standard cost is predetermined, that is, determined before actual costs of the current period have been computed.

Correct AnswerverifiedShow Answer

There is an unfavorable labor efficiency variance when:

Correct AnswerverifiedShow Answer

Correct Answerverified11ea929a_a272_e8d0_8f20_bfa99144c916_TB6339_00 11ea929a_a272_e8d1_8f20_439f3514b566_TB6339_00

A favorable variance would be credited to a cost variance account.

Correct AnswerverifiedShow Answer

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(a) Standard rate: 8.57
(b) St...
View Answer

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Correct Answer
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