Chapter 10
Materials: Standard Actual
Standard: 300 pounds at $2.00 per pound $ 600
Actual: 200 pounds at $3.00 per pound $ 600
Direct labor:
Standard: 350 hours at $10.00 per hour 3,500
Actual: 300 hours at $12.00 per hour 3,600
What is the labor efficiency variance for Benzyne Corporation?
a. $810 U
b. $540 F
c. $602 U
d. $500 F
109. Alkyl Fliers Company produces model airplanes. During the month of November, it produced 3,000 planes. The
actual labor hours were 5 hours per plane. Its standard labor hours are 10 hours per plane. The standard labor rate is $8 per
hour. At the end of November, Alkyl Fliers found that it had a favorable labor rate variance of $12,000.
What was Alkyl Fliers’ actual cost per labor hour?
a. $12.75
b. $7.60
c. $9.50
d. $7.20
Chapter 10
110. Tetrene Fliers Company produces model airplanes. During the month of November, it produced 2,500 planes. The
actual labor hours were 9 hours per plane. Its standard labor hours are 12 hours per plane. The standard labor rate is $8 per
hour. At the end of November, Tetrene Fliers found that it had a favorable labor rate variance of $9,000.
What was Tetrene Fliers’ total labor variance?
a. $610,000 F
b. $69,000 F
c. $723,500 U
d. $41,500 U
Chapter 10
111. Extreme Builders constructs houses. The standard labor rate is $25 per hour and the standard number of hours is
15,000 hours per home. During the year, it constructed 12 homes using 18,000 labor hours per home and a rate of $28 per
hour
Calculate the Extreme Builders’ labor rate variance.
a. $540,000 U
b. $540,000 F
c. $648,000 U
d. $648,000 F
112. Ethene Builders constructs houses. The standard labor rate is $20 per hour and the standard number of hours is
13,000 hours per home. During the year, it constructed 12 homes using 15,000 labor hours per home and a rate of $23 per
hour.
Calculate the labor efficiency variance.
a. $540,000 F
b. $480,000 U
c. $540,000 U
d. $480,000 F
Chapter 10
113. Assume that SQ = Standard Quantity, SP = Standard Price, AQ = Actual Quantity, and AP = Actual Price. Which of
the following is the correct entry along with the equation to record the issuance and usage of materials?
a. debit Work in Process, SQ × SP
credit Materials Usage Variance, (AQ – SQ) × SP
credit Materials, AQ × SP
b. debit Work in Process, SP × AP
debit Materials Usage Variance, (SP – SQ) × SP
credit Materials, AQ × AP
c. debit Work in Process, SQ × SP
credit Materials Usage Variance, (AP – SP) × AP
credit Materials, AQ × SP
d. debit Work in Process, SQ × SP
debit Materials Usage Variance, (AQ – SQ) × AP
credit Materials, AQ × SP
e. None of these
Chapter 10
114. Which of the following is true regarding the disposition of materials and labor variances?
a. The variances for materials and labor are closed directly to Cost of Goods Sold regardless of materiality.
b. If the materials price variance is material, it is prorated among Materials Inventory, Materials Usage Variance,
Work in Process, and Finished Goods.
c. The materials usage variance and the labor variances, if material, are prorated among Work in Process, Finished
Goods, and Cost of Goods Sold.
d. The materials usage variance and the labor variances are always prorated among Work in Process, Finished
Goods, and Cost of Goods Sold.
e. The materials usage variance and the labor variances are always closed to Cost of Goods Sold.
115. During September, a small roofing company purchased 200 bundles of a certain type of shingle at a price of $25 per
bundle, $5 less than the standard price. Its standard quantity of this type of shingle is 400 bundles. What is the journal
entry to record the purchase of materials?
a. debit Materials, 6,000
credit Materials Price Variance, 1,000
credit Accounts Payable, 5,000
b. debit Materials, 5,000
debit Materials Price Variance, 3,500
credit Accounts Payable, 21,500
c. debit Materials, 18,000
credit Materials Price Variance, 2,000
credit Accounts Payable, 15,000
Chapter 10
d. debit Materials, 2,500
debit Materials Price Variance, 2,600
credit Accounts Payable, 1,720
116. During June, Propene Company produced 20,000 chainsaw blades. The standard quantity of material allowed per
unit was 2 pounds of steel per blade at a standard cost of $4 per pound. The actual purchase price was $5 per pound.
Propene determined that it had a favorable materials usage variance of $2,000 for June. What is the journal entry to record
the issuance and usage of materials?
a. debit Work in Process, 160,000
credit Materials Usage Variance, 2,000
credit Materials, 158,000
b. debit Work in Process, 120,000
debit Materials Usage Variance, 2,000
credit Materials, 120,000
c. debit Work in Process, 120,500
debit Materials Usage Variance, 2,000
credit Materials, 100,000
d. debit Work in Process, 130,000
credit Materials Usage Variance, 2,000
credit Materials, 130,000
Chapter 10
117. During April, a small roofing company purchased 500 bundles of a certain type of shingle at a price of $20 per
bundle, $5 more than the standard price. The standard quantity of this type of shingle is 550 bundles.
What is the journal entry to record the issuance and usage of materials assuming that the roofing company purchased and
used 500 bundles?
a. debit Work in Process, 10,100
debit Materials Usage Variance, 500
credit Materials, 15,400
b. debit Work in Process, 8,250
credit Materials Usage Variance, 750
credit Materials, 7,500
c. debit Work in Process, 21,200
debit Materials Usage Variance, 700
credit Materials, 25,600
d. debit Work in Process, 24,365
credit Materials Usage Variance, 500
credit Materials, 21,200
Chapter 10
118. During April, a small roofing company purchased 400 bundles of a certain type of shingle at a price of $40 per
bundle, $5 more than the standard price. The standard quantity of this type of shingle is 440 bundles.
What is the journal entry to record the purchase of materials?
a. debit Materials, 19,575
debit Materials Price Variance, 5,800
credit Accounts Payable, 25,375
b. debit Materials, 24,500
credit Materials Price Variance, 5,600
credit Accounts Payable, 18,900
c. debit Materials, 14,000
debit Materials Price Variance, 2,000
credit Accounts Payable, 16,000
d. debit Materials, 20,000
credit Materials Price Variance, 5,200
credit Accounts Payable, 13,200
Chapter 10
119. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year. It took 1.5 hours
of labor per blade at a rate of $8.50 per hour. However, its standard labor rate is $8.00. Its labor efficiency variance was
an unfavorable $40,000.
What is Perfect’s standard hours allowed for a volume of 80,000 blades?
a. 210,000 hours
b. 189,000 hours
c. 115,000 hours
d. 125,000 hours
120. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year. It took 1.5 hours
of labor per blade at a rate of $8.50 per hour. However, its standard labor rate is $8.00. Its labor efficiency variance was
an unfavorable $40,000.
What is Perfect’s labor rate variance?
a. $57,500 U
b. $57,500 F
c. $60,000 U
d. $60,000 F
Chapter 10
121. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year. It took 1.5 hours
of labor per blade at a rate of $8.50 per hour. However, its standard labor rate is $8.00. Its labor efficiency variance was
an unfavorable $40,000.
What is the journal entry to record both labor variances?
a. debit Work In Process, 920,000
debit Labor Rate Variance, 60,000
debit Labor Efficiency Variance, 40.000
credit Accrued Payroll, 1,020,000
b. debit Work In Process, 960,000
debit Labor Rate Variance, 57,500
debit Labor Efficiency Variance, 40,000
credit Accrued Payroll, 1,057,500
c. debit Work In Process, 920,000
debit Labor Rate Variance, 60,000
credit Labor Efficiency Variance, 40,000
credit Accrued Payroll, 940,000
d. debit Work In Process, 960,000
debit Labor Rate Variance, 57,500
credit Labor Efficiency Variance, 40,000
credit Accrued Payroll, 977,500
Chapter 10
122. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
What is James’ materials price variance assuming that materials purchased equals materials used?
a. $750,000 F
b. $700,000 F
c. $700,000 U
d. $750,00 U
Chapter 10
123. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is James’ materials usage variance?
a. $250,000 F
b. $300,000 F
c. $300,000 U
d. $250,000 U
124. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is James’ labor rate variance?
a. $190,625 F
Chapter 10
b. $250,000 F
c. $250,000 U
d. $193,750 U
125. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is James’ labor efficiency variance?
a. $800,000 U
b. $850,000 F
c. $800,000 F
d. $850,000 U
Chapter 10
126. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is the entry to record the purchase of materials?
a. debit Materials, 3,500,000
debit Materials Price Variance, 750,000
credit Accounts Payable, 4,250,000
b. debit Materials, 4,200,000
debit Materials Price Variance, 750,000
credit Accounts Payable, 4,950,000
c. debit Materials, 4,200,000
credit Materials Price Variance, 700,000
credit Accounts Payable, 3,500,000
d. debit Materials, 3,500,000
credit Materials Price Variance, 700,000
credit Accounts Payable, 4,200,000
Chapter 10
127. Pentyl Company manufactures t-shirts. During the year, it manufactured 100,000 t-shirts, using 3 hours of direct
labor at a rate of $7 per hour. The materials and labor standards for manufacturing the t-shirts are as follows:
Direct materials (5 yards of fabric @ $4 per yard) $20
Direct labor (2 hours @ $8.00 per hour) 16
It took Pentyl 600,000 yards at $3.50 per yard to make the 100,000 t-shirts.
What is the entry to record the issuance and usage of materials?
a. debit Work in Process, 6,500,000
debit Materials Usage Variance, 250,000
credit Materials, 5,400,000
b. debit Work in Process, 8,100,000
debit Materials Usage Variance, 400,000
credit Materials, 1,500,000
c. debit Work in Process, 3,200,000
credit Materials Usage Variance, 430,000
credit Materials, 3,560,000
d. debit Work in Process, 2,000,000
debit Materials Usage Variance, 400,000
credit Materials, 2,400,000
Chapter 10
128. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct
labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are:
Direct materials (6 yards of fabric @ $3 per yard) $18
Direct labor (2.4 hours @ $8.00 per hour) 17
It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts.
What is the entry to close the variances of labor and materials?
a. debit Materials Price Variance, 700,000
debit Materials Usage Variance, 300,000
debit Labor Efficiency Variance, 800,000
credit Cost of Goods Sold, 1,800,000
debit Cost of Goods Sold, 250,000
credit Labor Rate Variance, 250,000
b. debit Materials Price Variance, 750,000
debit Materials Usage Variance, 250,000
debit Labor Efficiency Variance, 850,000
credit Cost of Goods Sold, 1,850,000
debit Cost of Goods Sold, 300,000
credit Labor Rate Variance, 300,000
c. debit Cost of Goods Sold, 1,800,000
credit Materials Price Variance, 700,000
credit Materials Usage Variance, 300,000
credit Labor Efficiency Variance, 800,000
debit Labor Rate Variance, 250,000
credit Cost of Goods Sold, 250,000
d. debit Cost of Goods Sold, 1,850,000
credit Materials Price Variance, 750,000
credit Materials Usage Variance, 250,000
credit Labor Efficiency Variance, 850,000
debit Labor Rate Variance, 300,000
credit Cost of Goods Sold, 300,000
Chapter 10
129. Which of the following is used to calculate total variable overhead variance where VOH = Variable Overhead, SVOR =
Standard Variable Overhead Rate, SH = Standard Hour Allowed, and AH = Actual Direct Labor Hours Used?
a. Total VOH Variance = Standard VOH – SVOR × SH
b. Total VOH Variance = Fixed VOH – SVOR × AH
c. Total VOH Variance = Actual VOH – SVOR × SH
d. Total VOH Variance = Variable VOH – SVOR × AH
e. None of these
130. In a standard cost system, variable overhead is applied
a. using actual direct labor hours.
b. using budgeted indirect labor hours.
c. using direct labor hours at practical capacity.
d. using standard direct labor hours.
e. All of these.
Chapter 10
131. The variable overhead spending variance is expressed as the difference between:
a. the standard variable overhead and the budgeted variable overhead based on actual hours used to produce the
actual output.
b. the actual variable overhead and the budgeted variable overhead based on actual hours used to produce the
budgeted output.
c. the actual variable overhead and the budgeted variable overhead based on actual hours used to produce the actual
output.
d. the actual variable overhead and the standard variable overhead based on actual hours used to produce the
standard output.
e. None of these
132. The variable overhead efficiency variance claims to measure
Chapter 10
a. changes in spending efficiency.
b. productive efficiency.
c. changes in variable overhead costs because of the efficient (inefficient) use of the cost driver.
d. changes in variable overhead costs attributable to inefficient purchase of variable inputs.
e. None of these.
133. The formula for calculating the variable overhead efficiency variance is
a. (AVOR × AH) − (SVOR × AH).
b. (AVOR − SVOR) × SH.
c. (AH − SH) × SVOR.
d. (AH − SH) × AVOR.
e. None of these.
Chapter 10
134. The two variances for variable overhead are
a. spending and efficiency variances.
b. spending and budget variances.
c. budget and volume variances.
d. spending and volume variances.
e. volume and efficiency variances.
135. Inefficient usage of labor implies a(n)
a. unfavorable variable overhead efficiency variance and an unfavorable variable overhead spending variance.
b. favorable variable overhead efficiency variance.
c. unfavorable variable overhead spending variance.
d. favorable variable overhead spending variance.
e. unfavorable variable overhead efficiency variance.