Marshall’s
Toy Shop produces and sells small baseballs for children. During the production
process, the producer uses twelve ounces of special glue for each baseball,
including an allowance for normal amounts of spoilage and waste. The manager
can purchase the glue for $.75 per ounce.
What
is the standard cost of glue for each baseball?
ANSWER
INCORRECT
·
$0.75
·
YOU WERE SURE AND INCORRECT
$7.50
·
THE CORRECT ANSWER
$9.00
·
$12.00
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The standard cost of glue for each baseball
is $9.00. The other answers are not correct.
12
oz. × $.75/oz. = $9.00
Which
of the following is the calculation to compute the Direct Materials (DM) Price
Variance?
ANSWER
INCORRECT
·
Actual Quantity × Actual Price
·
YOU WERE SURE AND INCORRECT
Standard Price × (Actual
Quantity Uses – Standard Quantity Allowed)
·
THE CORRECT ANSWER
Actual Quantity Purchased ×
(Actual Price – Standard Price)
·
Standard Quantity Allowed ×
Standard Price
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Actual Quantity Purchased × (Actual Price –
Standard Price) = Direct Materials Price Variance is the calculation to compute
the Direct Materials (DM) Price Variance.
Standard Price × (Actual Quantity Uses –
Standard Quantity Allowed) = Direct Materials (DM) Quantity Variance
Actual Quantity × Actual Price = Actual Cost
Standard
Quantity Allowed × Standard Price = Standard Cost Allowed
Frames,
Inc. provided a report of standard and actual total cost for direct labor
during the month. Based on the following report, what is the direct labor
efficiency variance?
|
|
||
|
Frames, Inc.
Labor Report
January
|
||
|
|
Standard Total Cost
|
Actual Total Cost
|
|
Direct
labor
|
|
|
|
Standard:
650 hours @ $8.50/hr.
|
$5,525
|
|
|
Actual:
625 hours @ $8.20/hr.
|
|
$5,125
|
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$212.50 F
·
YOU WERE SURE AND INCORRECT
$212.50 U
·
$21,250 U
·
$21,250 F
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct labor efficiency variance is $212.50
F.
Direct Labor Efficiency
Variance = (Actual Hours – Standard Hours Allowed) × Standard Rate
(625 – 650) × $8.50 = 25 × $8.50 =
$212.50 F
The
actual hours is less than the standard hours allowed. Therefore, the
variance is favorable. The other answers are not correct.
Terry’s
Tree Service produces parts for saws. The managerial accountant reported the
labor data as outlined below. What is the direct labor rate variance for the
period?
|
|
|
|
Terry’s Tree Service
Labor Report
|
|
|
Actual
direct labor hours used
|
38,000
|
|
Actual
rate per hour
|
$15.00
|
|
Standard
rate per hour
|
$15.05
|
|
Standard
hours for units produced
|
34,500
|
ANSWER
INCORRECT
·
$190 U
·
YOU WERE SURE AND INCORRECT
$1,900 U
·
$190 F
·
THE CORRECT ANSWER
$1,900 F
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct labor rate variance is $1,900
F.
Direct Labor Rate Variance = (Actual Rate per
Hour – Standard Rate per Hour) × Actual Hours
($15.00 - $15.05) × 38,000 = $0.05 × 38,000 =
$1,900 F
The
analysis shows the overall dollar impact of paying an average wage rate that
was lower than anticipated. Therefore, the direct labor rate variance was
favorable. The other answers are not correct.
Actual
Hours × (Actual Rate – Standard Rate) is the formula to compute the ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
direct labor rate variance
·
YOU WERE SURE AND INCORRECT
direct material price variance
·
direct material quantity
variance
·
direct labor efficiency
variance
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Actual Hours × (Actual Rate – Standard Rate)
is the formula to compute the direct labor rate variance.
Standard Rate × (Actual Hours – Standard Hours
Allowed) is the formula to compute the direct labor efficiency variance.
Actual Quantity Purchased × (Actual Price –
Standard Price) is the formula to compute the direct material price variance.
Standard
Price × (Actual Quantity Used – Standard Quantity Allowed) is the formula to
compute the direct material quantity variance.
Marty’s
Motors reported the actual cost of direct materials is $12.75 per pound. The
standard cost per pound is $12.25. During the current period, the production manager
used 10,200 pounds of direct materials and purchased 21,000 pounds. The
standard quantity of direct materials for actual units produced is 16,000
pounds.
How
much is the direct materials quantity variance?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$71,050 F
·
YOU WERE SURE AND INCORRECT
$7,105 F
·
$7,105 U
·
$71,050 U
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct materials quantity variance
is $71,050 F.
Material Quantity Variance = (Actual Quantity
(AQ) – Standard Quantity Allowed (SQA)) × Standard Price (SP)
(10,200 – 16,000) × $12.25 = 5,800 × $12.25 =
$71,050 F
The
direct materials quantity variance is favorable because the quantity used is
less than standard quantity of direct materials for actual units produced. The
other answers are not correct.
The
unintended behavioral consequence, a disadvantage of standard costing, occurs
when ________.
ANSWER
INCORRECT
·
a manager fails to compute
updated variance costs
·
costs become outdated or
inaccurate during changes in the production process
·
YOU WERE SURE AND INCORRECT
a manager fails to provide
accurate data to promote operational standards and visual tools which might
increase operational performance of front-line workers
·
THE CORRECT ANSWER
the production manager
purchases a large quantity of raw materials which results in the production
manager overproducing to obtain a favorable fixed overhead variance
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The unintended behavioral consequence is a
disadvantage of standard costing which occurs when the use of traditional
standards produce unintended behavioral results. This could include a situation
where a production manager purchases a large quantity of raw materials
which results in the production manager overproducing to obtain a favorable
fixed overhead variance.
An outdated or inaccurate standard is a
disadvantage when costs become outdated or inaccurate during changes in the
production process.
Lack of timeliness is a disadvantage when a
manager fails to compute updated variance costs.
A
focus on operational performance measures and visual management is a
disadvantage when a manager fails to provide accurate data to promote
operational standards and visual tools, which might increase operational
performance of front-line workers.
The
unintended behavioral consequence, a disadvantage of standard costing, occurs
when ________.
ANSWER
INCORRECT
·
THE CORRECT ANSWER
the production manager
purchases a large quantity of raw materials which results in the production
manager overproducing to obtain a favorable fixed overhead variance
·
YOU WERE SURE AND INCORRECT
a manager fails to provide
accurate data to promote operational standards and visual tools which might
increase operational performance of front-line workers
·
a manager fails to compute updated
variance costs
·
costs become outdated or
inaccurate during changes in the production process
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The unintended behavioral consequence is a
disadvantage of standard costing which occurs when the use of traditional
standards produce unintended behavioral results. This could include a situation
where a production manager purchases a large quantity of raw materials
which results in the production manager overproducing to obtain a favorable
fixed overhead variance.
An outdated or inaccurate standard is a
disadvantage when costs become outdated or inaccurate during changes in the
production process.
Lack of timeliness is a disadvantage when a
manager fails to compute updated variance costs.
A
focus on operational performance measures and visual management is a
disadvantage when a manager fails to provide accurate data to promote
operational standards and visual tools, which might increase operational
performance of front-line workers.
Terry’s
Tree Service produces parts for saws. The managerial accountant reported the
labor data as outlined below. What is the direct labor rate variance for the
period?
|
|
|
|
Terry’s Tree Service
Labor Report
|
|
|
Actual
direct labor hours used
|
38,000
|
|
Actual
rate per hour
|
$15.00
|
|
Standard
rate per hour
|
$15.05
|
|
Standard
hours for units produced
|
34,500
|
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$1,900 F
·
YOU WERE SURE AND INCORRECT
$190 F
·
$190 U
·
$1,900 U
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct labor rate variance is $1,900
F.
Direct Labor Rate Variance = (Actual Rate per
Hour – Standard Rate per Hour) × Actual Hours
($15.00 - $15.05) × 38,000 = $0.05 × 38,000 =
$1,900 F
The
analysis shows the overall dollar impact of paying an average wage rate that
was lower than anticipated. Therefore, the direct labor rate variance was
favorable. The other answers are not correct.
Terry’s Tree Service produces
parts for saws. The managerial accountant reported the labor data as outlined
below. What is the direct labor rate variance for the period?
|
|
|
|
Terry’s Tree Service
Labor Report
|
|
|
Actual
direct labor hours used
|
38,000
|
|
Actual
rate per hour
|
$15.00
|
|
Standard
rate per hour
|
$15.05
|
|
Standard
hours for units produced
|
34,500
|
ANSWER
INCORRECT
·
THE CORRECT ANSWER
$1,900
F
·
$190
F
·
YOU WERE SURE AND INCORRECT
$190
U
·
$1,900
U
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct labor rate variance
is $1,900 F.
Direct Labor Rate Variance =
(Actual Rate per Hour – Standard Rate per Hour) × Actual Hours
($15.00 - $15.05) × 38,000 =
$0.05 × 38,000 = $1,900 F
The analysis shows the overall dollar impact of paying an average
wage rate that was lower than anticipated. Therefore, the direct labor rate
variance was favorable. The other answers are not correct.
Hillen
Enterprises produces wheat and flour for the baking industry. The managerial
accountant reported the following information at the end of the first quarter.
What is the direct materials price variance? Is the direct materials price
variance favorable or unfavorable?
|
|
|
|
Hillen Enterprises
Direct Materials Price Report
Quarter Ending March 31
|
|
|
Direct
materials standard (10 lbs. per unit @$0.75/lb.)
|
$7.50
per finished good
|
|
Actual
direct materials purchased
|
40,000
pounds
|
|
Actual
Direct Materials Used (AQU)
|
37,000
pounds
|
|
Actual
Price (AP) paid per pound
|
$0.85
|
ANSWER
INCORRECT
·
$400 unfavorable
·
THE CORRECT ANSWER
$4,000 unfavorable
·
YOU WERE SURE AND INCORRECT
$4,000 favorable
·
$400 favorable
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The direct materials price variance is $4,000
unfavorable.
AQP × (AP – SP)
40,000 × ($0.85 - $0.75) = 40,000 × $0.10 =
$4,000 unfavorable
The
actual direct material cost per pound was more than the standard direct
material cost per pound, so the variance is unfavorable. The other answers are
not correct.
Which
of the following is the calculation to compute the standard cost of direct
labor?
ANSWER
INCORRECT
·
Standard Quantity of Direct
Materials × Standard Price of Direct Materials
·
Standard Quantity of Machine
Hours × Variable Manufacturing Overhead Rate
·
YOU WERE SURE AND INCORRECT
Total estimated variable
Manufacturing Overhead / Total estimated amount of the allocation base
·
THE CORRECT ANSWER
Standard Quantity of Direct
Labor × Standard Price of Direct Labor
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Standard Quantity of Direct Labor × Standard
Price of Direct Labor is the calculation to compute the Standard Cost of direct
labor.
Total Estimated Variable Manufacturing
Overhead / Total estimated amount of the allocation base = Variable
Manufacturing Overhead rate
Standard Quantity of Machine Hours × Variable
Manufacturing Overhead rate = Standard Variable Manufacturing Overhead
Standard
Quantity of Direct Materials × Standard Price of Direct Materials is
the calculation to compute the Standard Cost of Direct Materials.
Which
of the following represents the order and flow of manufacturing costs through
the inventory accounts?
ANSWER
INCORRECT
·
THE CORRECT ANSWER
Raw materials; Work in process;
Finished goods; Cost of goods sold
·
Cost of goods sold; Raw
materials; Work in process; Finished goods
·
YOU WERE SURE AND INCORRECT
Work in process; Raw materials;
Finished goods; Cost of goods sold
·
Work in process; Finished
goods; Cost of goods sold;, Raw materials
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
The
flow of manufacturing costs through the inventory accounts is raw
materials; Work in process; Finished goods; Cost of goods sold. The
other answers are not correct.
Which
of the following is the calculation to compute the standard cost of direct
labor?
ANSWER
INCORRECT
·
Total estimated variable
Manufacturing Overhead / Total estimated amount of the allocation base
·
THE CORRECT ANSWER
Standard Quantity of Direct
Labor × Standard Price of Direct Labor
·
Standard Quantity of Machine
Hours × Variable Manufacturing Overhead Rate
·
YOU WERE SURE AND INCORRECT
Standard Quantity of Direct
Materials × Standard Price of Direct Materials
·
I DON'T KNOW YET
WHAT
YOU NEED TO KNOW
Standard Quantity of Direct Labor × Standard Price
of Direct Labor is the calculation to compute the Standard Cost of direct
labor.
Total Estimated Variable Manufacturing
Overhead / Total estimated amount of the allocation base = Variable
Manufacturing Overhead rate
Standard Quantity of Machine Hours × Variable
Manufacturing Overhead rate = Standard Variable Manufacturing Overhead
Standard
Quantity of Direct Materials × Standard Price of Direct Materials is
the calculation to compute the Standard Cost of Direct Materials.
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