Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
131) Sanchez Company's output for the current period was assigned a $400,000 standard direct labor
cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a
$4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the
current period?
A) $394,000. B) $414,000. C) $406,000. D) $386,000. E) $410,000.
132) Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars
at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average
price of $16,000. Compute the dealership's sales price variance for the month.
A) $22,000 unfavorable.
B) $22,000 favorable.
C) $32,000 favorable.
D) $32,000 unfavorable.
E) $10,000 favorable.
133) Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars
at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average
price of $16,000. Compute the dealership's sales volume variance for the month.
A) $10,000 favorable.
B) $22,000 unfavorable.
C) $32,000 favorable.
D) $22,000 favorable.
E) $32,000 unfavorable.
134) Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars
at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average
price of $16,000. Compute the dealership's total sales variance for the month.
A) $32,000 favorable.
B) $32,000 unfavorable.
C) $22,000 unfavorable.
D) $10,000 favorable.
E) $22,000 favorable.
135) Claremont Company specializes in selling refurbished copiers. During the month, the company
sold 180 copiers for total sales of $540,000. The budget for the month was to sell 175 copiers at an
average price of $3,200. The sales price variance for the month was:
A) $32,000 unfavorable.
B) $36,000 unfavorable.
C) $20,000 unfavorable.
D) $36,000 favorable.
E) $20,000 favorable.
136) Claremont Company specializes in selling refurbished copiers. During the month, the company
sold 180 copiers at an average price of $3,000 each. The budget for the month was to sell 175
copiers at an average price of $3,200. The expected total sales for 180 copiers were:
A) $576,000. B) $550,000. C) $540,000. D) $560,000. E) $525,000.
137) Fletcher Company collected the following data regarding production of one of its products. Compute
the standard quantity allowed for the actual output.
Direct materials standard (6 lbs. @ $2/lb.)
$ 12
per finished unit
Actual direct materials used
243,000
lbs.
Actual finished units produced
40,000
units
Actual cost of direct materials used
$ 483,570
A) 80,000 pounds.
B) 40,000 pounds.
C) 480,000 pounds.
D) 243,000 pounds.
E) 240,000 pounds.
138) Fletcher Company collected the following data regarding production of one of its products. Compute
the total direct materials cost variance.
Direct materials standard (6 lbs. @ $2/lb.)
$ 12
per finished unit
Actual direct materials used
243,000
lbs.
Actual finished units produced
40,000
units
Actual cost of direct materials used
$ 483,570
A) $2,430 favorable.
B) $6,000 unfavorable.
C) $6,000 favorable.
D) $3,570 favorable.
E) $3,570 unfavorable.
139) Fletcher Company collected the following data regarding production of one of its products. Compute
the direct materials price variance.
Direct materials standard (6 lbs. @ $2/lb.)
$ 12
per finished unit
Actual direct materials used
243,000
lbs.
Actual finished units produced
40,000
units
Actual cost of direct materials used
$ 483,570
A) $3,570 unfavorable.
B) $2,430 unfavorable.
C) $3,570 favorable.
D) $2,430 favorable.
E) $6,000 unfavorable.
140) Fletcher Company collected the following data regarding production of one of its products. Compute
the direct materials quantity variance.
Direct materials standard (6 lbs. @ $2/lb.)
$ 12
per finished unit
Actual direct materials used
243,000
lbs.
Actual finished units produced
40,000
units
Actual cost of direct materials used
$ 483,570
A) $3,570 favorable.
B) $6,000 unfavorable.
C) $2,430 favorable.
D) $3,570 unfavorable.
E) $2,430 unfavorable.
141) Fletcher Company collected the following data regarding production of one of its products. Compute
the total direct labor cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Actual finished units produced
40,000
units
Actual cost of direct labor
$ 1,100,250
A) $19,125 favorable.
B) $61,125 unfavorable.
C) $80,250 favorable.
D) $61,125 favorable.
E) $80,250 unfavorable.
142) Fletcher Company collected the following data regarding production of one of its products. Compute
the direct labor rate variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Actual finished units produced
40,000
units
Actual cost of direct labor
$ 1,100,250
A) $61,125 unfavorable.
B) $19,125 unfavorable.
C) $61,125 favorable.
D) $80,250 unfavorable.
E) $80,250 favorable.
111
143) Fletcher Company collected the following data regarding production of one of its products. Compute
the direct labor efficiency variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Actual finished units produced
40,000
units
Actual cost of direct labor
$ 1,100,250
A) $80,250 unfavorable.
B) $19,125 favorable.
C) $80,250 favorable.
D) $19,125 unfavorable.
E) $61,125 favorable.
144) Fletcher Company collected the following data regarding production of one of its products. Compute
the variable overhead cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$ 28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$ 8.00
per unit
Actual cost of variable overhead costs incurred
$ 1,140,000
Actual cost of fixed overhead costs incurred $ 338,000
A) $18,000 unfavorable.
B) $18,300 favorable.
C) $14,300 unfavorable.
D) $4,000 favorable.
E) $18,000 favorable.
113
145) Fletcher Company collected the following data regarding production of one of its products. Compute
the fixed overhead cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$ 28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$ 8.00
per unit
Actual cost of variable overhead costs incurred
$ 1,140,000
Actual cost of fixed overhead costs incurred
$ 338,000
A) $18,000 unfavorable.
B) $18,000 favorable.
C) $18,300 favorable.
D) $14,300 unfavorable.
E) $18,300 unfavorable.
146) Fletcher Company collected the following data regarding production of one of its products. Compute
the variable overhead spending variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$ 28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$ 8.00
per unit
Actual cost of variable overhead costs incurred
$ 1,140,000
Actual cost of fixed overhead costs incurred
$ 338,000
114
A) $4,000 favorable.
B) $21,450 favorable.
C) $4,000 unfavorable.
D) $21,450 unfavorable..
E) $25,450 favorable.
147) Fletcher Company collected the following data regarding production of one of its products. Compute
the variable overhead efficiency variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$ 25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$ 28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$ 8.00
per unit
Actual cost of variable overhead costs incurred
$ 1,140,000
Actual cost of fixed overhead costs incurred
$ 338,000
A) $21,450 unfavorable.
B) $21,450 favorable.
C) $4,000 favorable.
D) $14,300 unfavorable.
E) $4,000 unfavorable.
148) Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10
per gram and .25 direct labor hours at $12.00 per hour. Overhead is applied at the rate of $18 per
direct labor hour. What is the total standard cost for one unit of product that would appear on a
standard cost card?
A) $11.50. B) $25.00. C) $8.50. D) $7.50. E) $7.00.
117
149) Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct
labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is
the total standard cost for one unit of product that would appear on a standard cost card?
A) $2.40. B) $3.42. C) $11.52. D) $25.02. E) $2.52.
SHORT ANSWER QUESTIONS
150) Presented below are terms preceded by letters a through j and followed by a list of definitions 1
through 10. Enter the letter of the term with the definition, using the space preceding the definition.
(a) Cost variance
(b) Volume variance
(c) Price variance
(d) Quantity variance
(e) Standard costs
(f) Controllable variance
(g) Fixed budget
(h) Flexible budget
118
(i) Variance analysis
(j) Management by exception
________ (1) Occurs when there is a difference between the actual and standard volume of
production.
________ (2) A planning budget based on a single predicted amount of sales or other activity
measure.
(3) Preset costs for delivering a product, or service under normal conditions.
________ (4) A process of examining differences between actual and budgeted sales or costs and
describing them in terms of the price and quantity differences.
________ (5) The difference between actual price per unit of input and standard price per unit of
input.
________ (6) A budget prepared based on several different amounts of sales, often including a best-
case and worst-case scenario.
________ (7) The difference between actual quantity of input used and standard quantity of input
used.
________ (8) The difference between actual overhead costs incurred and the budgeted overhead
costs based on a flexible budget.
________ (9) A management process to focus on significant variances and give less attention to areas
where performance is close to the standard.
________ (10) The difference between actual and standard cost.
151) Presented below are terms preceded by letters a through h and followed by a list of definitions 1
through 8. Enter the letter of the term with the definition, using the space preceding the definition.
(a) Unfavorable variance
(b) Fixed budget performance report
(c) Overhead cost variance
(d) Budgetary control
(e) Spending variance
(f) Flexible budget performance report
(g) Quantity variance
(h) Favorable variance
________ (1) Results from a comparison of actual cost or revenue to budget that contributes to a
lower income.
(2) A report that compares actual results with the results expected under a fixed budget.
________ (3) When management pays an amount different from the standard price to acquire an
item.
________ (4) Results from a comparison of actual cost or revenue to budget that contributes to
higher income.
(5) Management's use of budgets to see that planned objectives are met.
________ (6) Difference between actual quantity of an input and the standard quantity of the input.
________ (7) Difference between the total overhead cost applied to products and the total overhead
cost actually incurred.
________ (8) A report that compares actual performance and budgeted performance based on actual
sales volume or other activity level.
ESSAY QUESTIONS
152) Define standard costs. How do they assist management?
153) Explain variance analysis. Describe how variance analysis assists managers.
154) What are the four steps in the effective management of variance analysis?
155) Should both favorable and unfavorable variances be investigated, or only the unfavorable ones?
Explain.
