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Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
103.
Which of the following would not lend itself to applying direct labor variances?
a.
help desk assistant
b.
research and development scientist
c.
customer service personnel
d.
telemarketer
The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production
are
as follows:
Standard Costs
Fixed overhead (based on 10,000 hours)
3 hours per unit @ $0.80 per hour
Variable overhead
3 hours per unit @ $2.00 per hour
Actual Costs
Total variable cost, $18,000
Total fixed cost, $8,000
104.
The amount of the fixed factory overhead volume variance is
a.
$2,000 favorable
b.
$2,000 unfavorable
c.
$2,500 unfavorable
d.
$0
105.
The amount of the total factory overhead cost variance is
a.
$2,000 favorable
b.
$5,000 unfavorable
c.
$2,500 unfavorable
d.
$5,000 favorable
106.
The amount of the variable factory overhead controllable variance is
a.
$2,000 unfavorable
b.
$3,000 favorable
c.
$0
d.
$3,000 unfavorable
Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed
factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual
cost of factory overhead for the production of 5,000 units during May were as follows:
Standard:
25,000 hours at $10
$250,000
Actual:
Variable factory overhead
$202,500
Fixed factory overhead
60,000
107.
What is the amount of the fixed factory overhead volume variance?
a.
$12,500 favorable
b.
$10,000 unfavorable
c.
$12,500 unfavorable
d.
$10,000 favorable
108.
What is the amount of the variable factory overhead controllable variance?
a.
$10,000 favorable
b.
$2,500 unfavorable
c.
$10,000 unfavorable
d.
$2,500 favorable
109.
Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused
productive
capacity is indicated by the
a.
fixed factory overhead volume variance
b.
direct labor time variance
c.
direct labor rate variance
d.
variable factory overhead controllable variance
The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for
fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the
actual
cost of factory overhead for the production of 15,000 units during August were as follows:
Actual:
Variable factory overhead
$360,000
Standard hours allowed for units produced:
Fixed factory overhead
60,000 hours
104,000
110.
What is the amount of the fixed factory overhead volume variance?
a.
$12,000 unfavorable
b.
$12,000 favorable
c.
$14,000 unfavorable
d.
$26,000 unfavorable
111.
What is the amount of the variable factory overhead controllable variance?
a.
$12,000 unfavorable
b.
$12,000 favorable
c.
$14,000 unfavorable
d.
$26,000 unfavorable
112.
Incurring actual indirect factory wages in excess of budgeted amounts for actual production results in a
a.
quantity variance
b.
controllable variance
c.
volume variance
d.
rate variance
113.
The controllable variance measures
a.
operating results at less than normal capacity
b.
the efficiency of using variable overhead resources
c.
operating results at more than normal capacity
d.
control over fixed overhead costs
114.
The unfavorable volume variance may be due to all of the following factors except
a.
failure to maintain an even flow of work
b.
machine breakdowns
c.
unexpected increases in the cost of utilities
d.
failure to obtain enough sales orders
115.
Favorable volume variances may be harmful when
a.
machine repairs cause work stoppages
b.
supervisors fail to maintain an even flow of work
c.
production in excess of normal capacity cannot be sold
d.
all of the answers are correct
116.
The following data is given for the Bahia Company:
Budgeted production
1,000 units
Actual production
980 units
Materials:
Standard price per pound
$2.00
Standard pounds per completed unit
12
Actual pounds purchased and used in production
11,800
Actual price paid for materials
$23,000
Labor:
Standard hourly labor rate
$14 per hour
Standard hours allowed per completed unit
4.5
Actual labor hours worked
4,560
Actual total labor costs
$62,928
Overhead:
Actual and budgeted fixed overhead
$27,000
Standard variable overhead rate
$3.50 per standard direct labor hour
Actual variable overhead costs
$15,500
Overhead is applied on standard labor hours.
The fixed factory overhead controllable variance is
a.
$65 unfavorable
b.
$65 favorable
c.
$540 unfavorable
d.
$540 favorable
117.
The following data is given for the Bahia Company:
Budgeted production (at 100% of normal capacity)
1,000 units
Actual production
980 units
Materials:
Standard price per pound
$2.00
Standard pounds per completed unit
12
Actual pounds purchased and used in production
11,800
Actual price paid for materials
$23,000
Labor:
Standard hourly labor rate
$14 per hour
Standard hours allowed per completed unit
4.5
Actual labor hours worked
4,560
Actual total labor costs
$62,928
Overhead:
Actual and budgeted fixed overhead
$27,000
Standard variable overhead rate
$3.50 per standard labor hour
Actual variable overhead costs
$15,500
Overhead is applied on standard labor hours.
The fixed factory overhead volume variance is
a.
$65 unfavorable
b.
$65favorable
c.
$540 unfavorable
d.
$540 favorable
Chapter 22(7): Performance Evaluation Using Variances from Standard Costs
The following data is given for the Zoyza Company:
Budgeted production (at 100% of normal capacity)
26,000 units
Actual production
27,500 units
Materials:
Standard price per ounce
$6.50
Standard ounces per completed unit
8
Actual ounces purchased and used in production
228,000
Actual price paid for materials
$1,504,800
Labor:
Standard hourly labor rate
$22 per hour
Standard hours allowed per completed unit
6.6
Actual labor hours worked
183,000
Actual total labor costs
$4,020,000
Overhead:
Actual and budgeted fixed overhead
$1,029,600
Standard variable overhead rate
$24.50 per standard labor hour
Actual variable overhead costs
$4,520,000
Overhead is applied on standard labor hours.
118.
The fixed factory overhead controllable variance is
a.
$73,250 favorable
b.
$73,250 unfavorable
c.
$59,400 favorable
d.
$59,400 unfavorable
119.
The fixed factory overhead volume variance is
a.
$73,250 unfavorable
b.
$73,250 favorable
c.
$59,400 favorable
d.
$59,400 unfavorable
The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% normal production
capacity. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit.
The
variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead
was
$170,000. Actual production was 11,700 units.
120.
The fixed factory overhead controllable variance is
a.
$9,000 favorable
b.
$9,000 unfavorable
c.
$5,500 favorable
d.
$5,500 unfavorable
121.
The fixed factory overhead volume variance is
a.
$9,000 favorable
b.
$9,000 unfavorable
c.
$5,500 favorable
d.
$5,500 unfavorable
Standard
Actual
Variable OH rate
$3.35
Fixed OH rate
$1.80
Hours
18,900
17,955*
Fixed overhead
$46,000
Actual variable overhead
$67,430
Total factory overhead
$101,450
*Actual hours are equal to standard hours for units produced.
122.
The total factory overhead cost variance is
a.
$4,866.75 unfavorable
b.
$4,866.75 favorable
c.
$8,981.75 favorable
d.
$8,981.75 unfavorable
123.
The fixed factory overhead volume variance is
a.
$1,701.00 favorable
b.
$4,866.75 unfavorable
c.
$1,701.00 unfavorable
d.
$4,866.75 favorable
124.
The variable factory overhead controllable variance is
a.
$8,981.75 favorable
b.
$7,280.75 unfavorable
c.
$8,981.75 unfavorable
d.
$7,280.75 favorable
125.
A negative fixed overhead volume variance can be caused due to the following except
a.
sales orders at a low level
b.
machine breakdowns
c.
employee inexperience
d.
increase in utility costs
126.
At the end of the fiscal year, variances from standard costs are usually transferred to the
a.
direct labor account
b.
factory overhead account
c.
cost of goods sold account
d.
direct materials account
127.
Variances from standard costs are reported to
a.
suppliers
b.
stockholders
c.
management
d.
creditors
128.
If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to
the
a.
work in process account
b.
cost of goods sold account
c.
finished goods account
d.
work in process, cost of goods sold, and finished goods accounts
129.
Morocco Desk Co. purchases 6,000 feet of lumber at $6.00 per foot. The standard price for direct materials is $5.00.
The entry to record the purchase and unfavorable direct materials price variance is
a. Direct Materials
30,000
Direct Materials Price Variance
Accounts Payable
6,000
36,000
b. Direct Materials
Accounts Payable
30,000
30,000
c. Direct Materials
Direct Materials Price Variance
36,000
6,000
Accounts Payable
30,000
d. Work in Process
Direct Materials Price Variance
36,000
6,000
Accounts Payable
30,000
130.
A company records its inventory purchases at standard cost but also records purchase price variances. The
company
purchased 5,000 widgets at $8.00 each, and the standard cost for the widgets is $7.60. Which of the
following would
be included in the journal entry?
a.
debit Accounts Payable, $38,000
b.
credit Direct Materials Price Variance, $2,000
c.
debit Accounts Payable, $2,000
d.
debit Direct Materials Price Variance, $2,000
131.
Define ideal and currently attainable standards. Which type of standard should be used and why?
132.
Compute the standard cost for one pair of boots, based on the following standards for each pair of boots:
Standard material quantity: 1.25 yards of leather at $35.00 per yard
Standard labor: 9 hours at $25.75 per hour
Factory overhead: $1.75 per direct labor hour
133.
Compute the standard cost for one hat, based on the following standards for each hat:
Standard material quantity: 3/4 yard of fabric at $5.00 per yard
Standard labor: 2 hours at $5.75 per hour
Factory overhead: $3.20 per direct labor hour
134.
Sally’s Chocolate Company makes gourmet cupcakes which are sold by the dozen. Compute the standard cost for
one dozen cupcakes, based on the following standards:
Standard materials quantity: 4.25 cups of ingredients at $0.56 per cup
Standard labor: 1.10 hours at $8.30 per hour
Factory overhead: $3.80 per direct labor hour
135.
Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of
material
is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per
yard.
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
136.
Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of
material
is $7.50. During the month, 8,400 chairs were manufactured, using 43,700 yards at a cost of $7.30 per
yard.
Determine the (a) price variance, (b) quantity variance, and (c) total cost variance.
137.
Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of
material
is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50.
Determine the (a) price variance, (b) quantity variance, and (c) total cost variance.
138.
Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour.
Production of 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour.
What is the direct labor (a) rate variance, (b) time variance, and (c) total cost variance?
139.
Tippi Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour.
Production of 7,700 units required 17,550 hours at an hourly rate of $15.20 per hour.
What is the direct labor (a) rate variance, (b) time variance, and (c) total cost variance?
140.
Hsu Company produces a part with a standard of 5 yards of material per unit. The standard price of one yard of
material is $8.50. During the month, 8,800 parts were manufactured, using 45,700 yards of material at a cost of
$8.30.
Determine the (a) price variance, (b) quantity variance, and (c) cost variance.
141.
Aquatic Corp.’s standard material requirement to produce one Model 2000 is 15 pounds of material @ $110.00 per
pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000
pounds to produce 10,000 units of Model 2000.
Calculate the materials price variance and materials quantity variance, and indicate whether each variance is
favorable or unfavorable.
The following data is given for the Taylor Company:
Budgeted production
1,000 units
Actual production
980 units
Materials:
Standard price per pound
$2.00
Standard pounds per completed unit
12
Actual pounds purchased and used in production
11,800
Actual price paid for materials
$23,000
Labor:
Standard hourly labor rate
$14 per hour
Standard hours allowed per completed unit
4.5
Actual labor hours worked
4,560
Actual total labor costs
$62,928
Overhead:
Actual and budgeted fixed overhead
$27,000
Standard variable overhead rate
$3.50 per standard labor hour
Actual variable overhead costs
$15,500
Overhead is applied based on standard labor hours.
142.
Compute the direct materials price and quantity variances for Taylor Company.
