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1. The materials price variance is computed by multiplying the difference between the
actual price and the standard price by the actual quantity of materials used in production.
2. In general, the purchasing agent is responsible for the materials price variance.
3. A materials price variance is favorable if the actual price exceeds the standard price.
4. Generally speaking, it is the responsibility of the production department to see that
material usage is kept in line with standards.
5. When more hours of labor time are necessary to complete a job than the standard allows,
the labor rate variance is unfavorable.
6. Standard costs should generally be based on the actual costs of prior periods.
7. The standard quantity per unit for direct materials should not include an allowance for
waste.
8. Ideal standards should be used for forecasting and planning.
9. The standard cost per unit is computed by multiplying the standard quantity or hours by
the standard price or rate.
10. Standard costs greatly increase the complexity of the bookkeeping process.
11. When computing standard cost variances, the difference between actual and standard
price multiplied by actual quantity yields a(n):
12. The general model for calculating a price variance is:
13. The purchasing agent of the Clampett Company ordered materials of lower quality in an
effort to economize on price and in response to the demands of the production manager due to a
mistake in production scheduling. The materials were shipped by airfreight at a rate higher than
that ordinarily charged for shipment by truck, resulting in an unfavorable materials price variance.
The lower quality material proved to be unsuitable on the production line and resulted in
excessive waste. In this situation, who should be held responsible for the materials price and
quantity variances?
14. Todco planned to produce 3,000 units of its single product, Teragram, during November.
The standard specifications for one unit of Teragram include six pounds of material at $0.30 per
pound. Actual production in November was 3,100 units of Teragram. The accountant computed a
favorable materials purchase price variance of $380 and an unfavorable materials quantity
variance of $120. Based on these variances, one could conclude that:
15. The materials quantity variance should be computed:
16. Which department should usually be held responsible for an unfavorable materials price
variance?
17. Tower Company planned to produce 3,000 units of its single product, Titactium, during
November. The standards for one unit of Titactium specify six pounds of materials at $0.30 per
pound. Actual production in November was 3,100 units of Titactium. There was an unfavorable
materials price variance of $380 and a favorable materials quantity variance of $120. Based on
these variances, one could conclude that:
18. If the labor efficiency variance is unfavorable, then
19. A labor efficiency variance resulting from the use of poor quality materials should be
charged to:
20. An unfavorable direct labor efficiency variance could be caused by:
21. Variable manufacturing overhead is applied to products on the basis of standard direct
labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency
variance will be:
22. Which of the following statements concerning ideal standards is incorrect?
23. The Porter Company has a standard cost system. In July the company purchased and
used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity
variance was $1,875 Unfavorable; and the standard quantity of materials allowed for July
production was 21,750 pounds. The materials price variance for July was:
24. Last month 75,000 pounds of direct material were purchased and 71,000 pounds were
used. If the actual purchase price per pound was $0.50 more than the standard purchase price
per pound, then the materials price variance was:
25. The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the materials quantity variance for the month?
26. The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the materials price variance for the month?
27. The Wright Company has a standard costing system. The following data are available for
September:
The actual price per pound of direct materials purchased in September is:
28. The Cox Company uses standard costing. The following data are available for April:
The standard quantity of material allowed for April production is:
29. The standard cost card for a product shows that the product should use 4 kilograms of
material B per finished unit and that the standard price of material B is $4.50 per kilogram.
During April, when the budgeted production level was 1,000 units, 1,040 units were actually
made. A total of 4,100 kilograms of material B were used in production and the inventories of
material B were reduced by 300 kilograms during April. The total cost of material B purchased
during April was $14,400. The material variances for material B during April were:
30. The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the labor efficiency variance for the month?
31. The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the labor rate variance for the month?
