86) The Shum Company makes a product, Z, from two materials: X and Y. The standard prices
and quantities are as follows:
X Y
Price per pound $ 6 $ 9
Pounds per unit of product Z 10 5
In May, 21,000 units of Z were produced by Shum Company, with the following actual prices
and quantities of materials used:
X Y
Price per pound $ 5.70 $ 8.40
Pounds used 216,000 114,000
What is the total direct material yield variance for May?
A) $45,000.
B) $81,000.
C) $109,800.
D) $117,000.
87) The Shum Company makes a product, Z, from two materials: X and Y. The standard prices
and quantities are as follows:
X Y
Price per pound $ 6 $ 9
Pounds per unit of product Z 10 5
In May, 21,000 units of Z were produced by Shum Company, with the following actual prices
and quantities of materials used:
X Y
Price per pound $ 5.70 $ 8.40
Pounds used 216,000 114,000
Is the total direct material yield variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
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88) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
If BE recognizes all variances at the earliest possible moment, what is the total material price
variance?
A) $160.
B) $540.
C) $890.
D) $1,270.
89) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
64
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
Is the total material price variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
90) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
65
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
What is the total material yield variance?
A) $388.50.
B) $294.50.
C) $280.00.
D) $94.50.
91) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
Is the material yield variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
67
92) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
What is the total material mix variance?
A) $476.00.
B) $420.00.
C) $388.50.
D) $280.00.
93) The Becton Enterprises (BE) produces a gasoline additive, Charger Power. This product
increases engine efficiency and improves gasoline mileage by creating a more complete burn in
the combustion process. Careful controls are required during the production process to ensure
that the proper mix of input chemicals is achieved and that evaporation is controlled. Loss of
output and efficiency may result if the controls are not effective.
The standard cost of producing a 500-liter batch of Charger Power is $135. The standard
materials mix and related standard cost of each chemical used in a 500-liter batch are:
The quantities of chemicals purchased and used during the current production period are shown
in the schedule below. A total of 140 batches of Charger Power were manufactured during the
current production period. The controller of BE has determined its costs and chemical usage
variations at the end of the production period.
Is the material mix variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
94) A company makes a product using two materials, one of which is interchangeable with a
third material. The standards for producing one 200-pound batch are presented below. The last
200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was
$0.03 per pound and the actual price of O was $0.10.
Material Standard Quantity (lbs) Standard
Cost/lb. Total Cost
O 0 $ 0.10 $ 0
H 80 0.08 6.40
M 120 0.02 2.40
200 $ 8.80
What is the material mix variance?
A) $1.68.
B) $3.00.
C) $1.32.
D) $0.84.
95) A company makes a product using two materials, one of which is interchangeable with a
third material. The standards for producing one 200-pound batch are presented below. The last
200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was
$0.03 per pound and the actual price of O was $0.10.
Material Standard Quantity (lbs) Standard
Cost/lb. Total Cost
O 0 $ 0.10 $ 0
H 80 0.08 6.40
M 120 0.02 2.40
200 $ 8.80
Is the material mix variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
96) A company makes a product using two materials, one of which is interchangeable with a
third material. The standards for producing one 200-pound batch are presented below. The last
200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was
$0.03 per pound and the actual price of O was $0.10.
Material Standard Quantity (lbs) Standard
Cost/lb. Total Cost
O 0 $ 0.10 $ 0
H 80 0.08 6.40
M 120 0.02 2.40
200 $ 8.80
What is the material yield variance?
A) $1.12.
B) $1.68.
C) $3.00.
D) $1.32.
97) A company makes a product using two materials, one of which is interchangeable with a
third material. The standards for producing one 200-pound batch are presented below. The last
200-pound batch was produced using 140 pounds of M and 90 pounds of O. The price of M was
$0.03 per pound and the actual price of O was $0.10.
Material Standard Quantity (lbs) Standard
Cost/lb. Total Cost
O 0 $ 0.10 $ 0
H 80 0.08 6.40
M 120 0.02 2.40
200 $ 8.80
Is the material yield variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
98) Bonner Company’s direct labor cost for March was as follows:
Actual direct labor hours 30,000
Standard direct labor hours 31,500
Rate variance $ 4,500 U
Total payroll $ 189,000
Labor mix variance $ 4,225 U
What was Bonner’s direct labor yield variance?
A) $13,450.
B) $9,675.
C) $9,225.
D) $5,000.
99) Bonner Company’s direct labor cost for March was as follows:
Actual direct labor hours 30,000
Standard direct labor hours 31,500
Rate variance $ 4,500 U
Total payroll $ 189,000
Labor mix variance $ 4,225 U
Is the direct labor yield variance favorable or unfavorable?
A) Favorable.
B) Unfavorable.
100) Prince Inc. has the following information:
Total payroll $ 165,300
Standard direct labor hours 45,000
Labor rate variance $ 8,700 F
Labor mix variance $ 4,000 F
Labor yield variance $ 2,000 F
What was the standard direct labor rate?
A) $3.50.
B) $3.80.
C) $4.00.
D) $5.80.
101) Prince Inc. has the following information:
Total payroll $ 165,300
Standard direct labor hours 45,000
Labor rate variance $ 8,700 F
Labor mix variance $ 4,000 F
Labor yield variance $ 2,000 F
What was Prince’s actual direct labor rate?
A) $3.60.
B) $3.70.
C) $3.80.
D) $3.90.
102) Which of the following statements would be false regarding application of the variance
analysis model to nonmanufacturing costs?
A) The basic framework used for manufacturing is also used for nonmanufacturing costs.
B) Merchandising and service organizations focus on marketing and administrative costs to
measure efficiency and control costs.
C) The need for analysis of price and efficiency variances in nonmanufacturing settings is
increasing.
D) Service organizations are unable to substitute different types of labor.
103) The Foxmoore Company experienced a $100,000 shortfall in sales revenues for the year.
Top management is quite disturbed about this and has decided to use variance analysis in
assigning the responsibility for the decline. Which of the following variances would most likely
be within the control of the marketing department?
A) Sales mix.
B) Market share.
C) Sales quantity.
D) Industry volume.
104) Which of the following factors should not be considered when deciding whether to
investigate a variance?
A) Absolute or relative magnitude of the variance.
B) Trend or pattern of the variance over time.
C) Chance that an “out-of-control” situation can be corrected.
D) Whether the variance is favorable or unfavorable.
105) There are several reasons why actual results differ from standards. Which of the following
does not represent a reason why a variance might occur?
A) Inaccurate information from the accounting system.
B) Increasing the accuracy of a variance report by decreasing its timeliness.
C) Standards which do not reflect the current economic conditions.
D) Operating conditions that are consistently inefficient.
106) Fremont, Inc., builds storage boxes to custom order. Materials include 20 board feet of
lumber at $1.25/board foot. Standards call for 2 hours of labor at $15 per hour.
During March, 4,200 boxes were built. Materials purchased totaled $103,890 for 86,300 board
feet of lumber. Actual lumber usage in production was 82,310 board feet. The March payroll was
$139,360 for 9,150 hours.
Required:
(Be sure to indicate whether the variance is favorable or unfavorable.)
a. Compute the direct material price variance.
b. Compute the direct material efficiency variance.
c. Compute the direct labor rate variance.
d. Compute the direct labor efficiency variance.
107) Malloy Corporation has provided the following data concerning its most important raw
material, compound I51D:
Standard cost $ 30.50 per liter
Standard quantity 4.6 liters per unit of output
Cost of material purchased in October $ 30.70 per liter
Material purchased in October 4,000 liters
Material used in production in October 3,580 liters
Actual output in October 800 units
The raw material was purchased on account.
Required:
a. Record the purchase of the raw material at standard cost in a journal entry.
b. Record the use of the raw material in production in a journal entry.