Ch ap t e r1 0 St a nd a r dCo s t sa ndt h eBa l a nc e dSc o r e c a r d
True/False
1. F Easy
Standard costs should generally be based on the actual costs of prior periods.
2. F Easy
The standard direct labor rate should not include fringe benefits.
3. F Medium
From a standpoint of cost control, the most effective time to recognie material price variances is !hen the materials are placed into production.
". F Medium
The material #uantity variance is computed based on the #uantity of all materials purchased during the period.
$. F Medium
%urchase of poor #uality materials !ill generally result in a favorable materials price variance and an unfavorable labor rate variance.
&. T Easy
' balanced scorecard is an integrated set of performance measures that support management(s strategy throughout the organiation.
). F Medium
The performance measures on a balanced scorecard tend to fall into four groups* financial measures, customer measures, internal business process measures, and e+ternal business process measures.
. T Easy
The emphasis in the balanced scorecard is on improvement rather than meeting a preset standard.
-. F Medium
' balanced scorecard should contain every performance measure that can be e+pected to influence a company(s profits.
1. T Easy
%rocess Time is the only value/added component of Throughput Time.
Managerial Accounting, 9/e
102
11. T Medium
0'ppendi+ ' favorable labor efficiency efficiency variance !ould result in a credit balance in the labor efficiency variance account.
12. T Easy
Management by e+ception means that a manager(s attention is directed to!ard those parts of the organiation !here things are not proceeding according to plans.
13. T Easy
The production manager is usually held responsible for the labor efficiency variance.
1". T Easy
uantity standards indicate ho! much of an input should be used for manufacturing a unit of product or in providing a unit of service. service.
1$. F Easy
'll cost variances should be considered e+ceptions that re#uire the attention of management.
Multiple hoice 1&. Easy
The standards that allo! for no machine brea4do!ns or other !or4 interruptions and that re#uire pea4 efficiency at all times are referred to as* a. normal standards. b. practical standards. standards. c. ideal standards. d. budgeted standards.
1). Medium %' adapted
To measure controllable production inefficiencies, inefficiencies, !hich of the follo!ing is the best basis for a company to use in establishing the standard hours allo!ed for the output of one unit of product5 a. 'verage 'verage historical performance for the last several years. b. Engineering estimates estimates based on ideal ideal performance. c. Engineering estimates based on attainable performance. d. The hours per unit that !ould be re#uired for the present !or4force to satisfy e+pected demand demand over the long run.
1. Easy M' adapted
6hich of the follo!ing statements concerning practical standards standards is incorrect5 a. %ractical standards can be used for product costing and cash budgeting. b. %ractical standards can be attained attained by the average average !or4er. c. 6hen practical practical standards are are used, there is no reason to ad7ust standards if an old machine is replaced by a ne!er, faster machine. d. 8nder practical standards, large large variances are less less li4ely than under ideal standards.
1-. 9 Easy %' adapted
:f a company follo!s a practice of isolating variances at the earliest point in time, !hat !ould be the appropriate time to isolate and recognie a direct material price variance5 a. 6hen material is issued. b. 6hen material material is purchased. c. 6hen material is used in production. d. 6hen production is completed.
2. Medium %' adapted
'n unfavorable labor efficiency variance indicates that* a. The actual labor labor rate !as !as higher than the the standard labor rate. b. The labor rate rate variance must must also be unfavorable. c. 'ctual labor hours !or4ed e+ceeded standard labor hours for the production level achieved. d. ;vertime labor !as used during the period.
103Managerial
Accounting, 9/e
21. < Easy
' favorable labor rate variance indicates that a. actual hours e+ceed standard hours. b. standard hours e+ceed e+ceed actual hours. c. the actual rate e+ceeds the standard rate. d. the standard rate e+ceeds the actual rate.
22. 9 =ard %' adapted
0'ppendi+ 6hat does a credit balance in a direct labor efficiency variance account indicate5 a. the average !age rate paid to direct labor employees !as less than the standard rate. b. the standard hours allo!ed allo!ed for the units produced !ere greater than actual actual direct labor labor hours used. c. actual total direct labor costs incurred !ere less than standard direct labor costs allo!ed for the units produced. d. the number of units produced !as less than the number of units budgeted for the period.
23. Easy
:f the actual labor hours !or4ed e+ceed the standard labor hours allo!ed, !hat type of variance !ill occur5 a. Favorable labor efficiency variance. b. Favorable labor rate rate variance. c. 8nfavorable labor efficiency efficiency variance. d. 8nfavorable labor rate variance.
Managerial Accounting, 9/e
104
2". ' Medium %' adapted
6hich of the follo!ing is the most probable reason a company !ould e+perience an unfavorable labor rate variance and a favorable labor efficiency efficiency variance5 a. The mi+ of !or4ers assigned to the particular 7ob !as heavily !eighted to!ards the use of higher higher paid, e+perienced e+perienced individuals. b. The mi+ of !or4ers !or4ers assigned to the particular particular 7ob !as heavily heavily !eighted to!ards the use of ne! relatively lo! paid, uns4illed !or4ers. c. 9ecause of the production schedule, schedule, !or4ers from other production areas !ere assigned to assist assist this particular process. d.
2$. < Easy %' adapted
6hich department is usually held responsible for an unfavorable materials #uantity variance5 a. Mar4eting b. %urchasing c. Engineering d. %roduction
2&. 9 Easy M' adapted
' favorable material price variance coupled !ith an unfavorable material usage variance !ould M;ST li4ely result from* a. problems !ith processing machines. b. the purchase of lo! #uality #uality materials. materials. c. problems !ith labor efficiency. d. changes in the product mi+.
2). Medium M' adapted
To!er To!er ompany planned to produce 3, units of its single product, Titactium, Titactium, during >ovember. The standards for one unit of Titactium specify si+ pounds of materials at %.3 per pound. 'ctual production in >ovember !as 3,1 units of Titactium. Titactium. There !as a favorable materials materials price variance of %3 and an unfavorable materials #uantity variance of %12. 9ased on these variances, one could conclude that* a. more materials !ere purchased than !ere used. b. more materials materials !ere used than !ere !ere purchased. c. the actual actual cost per pound for materials materials !as less than the standard cost per pound. d. the actual usage of materials !as less less than the standard allo!ed.
2. 9 Medium
' labor efficiency variance resulting from the use of poor #uality materials should be charged to* a. the produ ction manager. b. the purchasing agent. agent. c. manufacturing overhead. d. the engineering department.
2-. < Easy
6hich of the follo!ing represents value/added time in the manufacturing cycle5 a. :nspection time. b. ueue time. c. Move time. d. %rocess time.
3. < Medium
Throughput time consists of* a. %rocess time. b. :nspection time time and move time. c. %rocess time, inspection time, and move time. d. %rocess time, inspection time, move time, and #ueue time.
31. Easy
Manufacturing ycle Efficiency 0ME is computed as* a. Throughput Time ?
105Managerial
Accounting, 9/e
32. < Medium
0'ppendi+
33. ' Medium
0'ppendi+ 6hich of the follo!ing entries !ould correctly record the charging of direct labor costs to 6or4 in %rocess given an unfavorable labor efficiency variance and a favorable labor rate variance5 a. 6or4 in %rocess Babor Efficiency @ariance @ariance Babor Aate @ariance @ariance 6ages %ayable b. 6or4 6or4 in %rocess 6ages %ayable c. 6or4 in %rocess Babor Efficiency @ariance @ariance Babor Aate @ariance @ariance 6ages %ayable d. 6or4 in %rocess Babor Aate @ariance @ariance Babor Efficiency @ariance @ariance 6ages %ayable
Managerial Accounting, 9/e
106
3". Easy M' adapted
8nder a standard cost system, the material price variances are usually the responsibility of the* a. production manager. b. sales manager. manager. c. purchasing manager. d. engineering manager.
3$. Medium
The terms Cstandard #uantity allo!edC or Cstandard hours allo!edC mean* a. the actual output in units multiplied by the standard output allo!ed. b. the actual input in units multiplied multiplied by the standard standard output allo!ed. c. the actual output in units multiplied by the standard input allo!ed. d. the standard output in units multiplied by the standard input allo!ed.
3&. < Medium %' adapted
3). =ard
o+ ompany(s direct material costs for the month of anuary !ere as follo!s* 'ctual #uantity purchased ............. 1, 4ilograms 'ctual unit purchase purchase price ............ % 3.& per 4ilogram Materials price variance// unfavorable 0based on purchases .... % 3,& Standard #uantity allo!ed for actual production ............... ............... 1&, 4ilograms 'ctual #uantity used .................. .................. 1$, 4ilograms For anuary there !as a favorable direct material #uantity variance of* a. %3,3&. b. %3,3)$. c. %3,". d. %3,.
3. =ard
The %orter ompany has a standard cost system. :n uly the company purchased and used 22,$ pounds of direct material at an actual cost of %$3, the materials #uantity variance !as %1,)$ 8nfavorable and the standard #uantity of materials allo!ed for uly production !as 21,)$ pounds. The materials price variance for uly !as* a. %2,)2$ F. b. %2,)2$ 8. c. %3,2$ F. d. %3,2$ 8.
3-. Medium %' adapted
:nformation on Fleming ompany(s direct material costs follo!s* 'ctual amount amount of direct materials used ...... ...... 2, pounds 'ctual direct material costs ................ %", Standard price of direct materials materials .......... .......... %2.1 per pound
107Managerial
Accounting, 9/e
". Easy
Bast month )$, pounds of direct material material !ere purchased and )1, pounds !ere used. :f the actual purchase price per pound !as !as %.$ more than the standard standard purchase price per per pound, then the material material price variance !as* a. %2, F. b. %3),$ F. c. %3),$ 8. d. %3$,$ 8.
"1. ' Medium %' adapted
Managerial Accounting, 9/e
108
"2. 9 Easy
The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. 1.) meters Standard price ........................ ........................ %1-. per meter
The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ $, meters 'ctual cost of materials materials purchased .... %113,& 'ctual materials used in production ... $,1 meters 'ctual output ......................... ......................... 3,2 units 6hat is the materials #uantity variance for the month5 a. %13,)2 8 b. %&,)32 F c. %13,& 8 d. %&,&&" F "3. ' Easy
The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. .3 grams Standard price ........................ ........................ %1-.1$ per gram The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ ),$ grams 'ctual cost of materials materials purchased .... %1"1,3)$ 'ctual materials used in production ... ),1 grams 'ctual output ......................... ......................... ) units 6hat is the materials price variance for the month5 a. %2,2$ F b. %),$" 8 c. %2",31) 8 d. %),&& 8
109Managerial
Accounting, 9/e
"". =ard %' adapted
:nformation on Hennedy ompany(s direct material costs follo!s* Standard price per pound of ra! materials ....... ....... %3.& 'ctual #uantity of ra! materials materials purchased ...... 1,& 1,& pounds Standard #uantity allo!ed allo!ed for actual production.. production.. 1,"$ pounds Materials purchase price variance//favorable variance//favorable .... % 2" 6hat !as the actual purchase price per unit, rounded to the nearest penny5 a. %3.&. b. %3.11. c. %3."$. d. %3.)$.
"$. 9 =ard
The Fletcher ompany uses standard costing. The follo!ing data are available for ;ctober* 'ctual #uantity of direct direct materials materials used ... 23,$ pounds Standard price of direct materials ......... %2 per pound Material #uantity variance variance ................. ................. %1, favorable The standard #uantity of material allo!ed for ;ctober production is* a. 23, lbs. b. 2", lbs. c. 2",$ lbs. d. 2$, lbs.
"&. 9 Easy %' adapted
Gola Gola ompany manufactures a product !ith standards for direct labor of " direct labor/hours per unit at a cost of %12. per direct labor/hour.
"). < Easy
The follo!ing labor standards have been established for a particular product* Standard labor hours per unit of output .. .3 hours Standard labor rate ...................... ...................... %12.1 per hour The follo!ing data pertain to operations concerning the product for the last month* 'ctual hours !or4ed ...................... ...................... &,1 hours 'ctual total labor cost .................. .................. %)1,3) 'ctual output .......................... ............................ .. - units 6hat is the labor efficiency efficiency variance for the month5 a. %1-,1) F b. %1-,1) 8 c. %1&,2- F d. %1&,$)) F
Managerial Accounting, 9/e
110
". ' Easy
The follo!ing labor standards have been established for a particular product* Standard labor hours per unit of output .. 1.) hours Standard labor rate ...................... ...................... %1".$ per hour The follo!ing data pertain to operations concerning the product for the last month* 'ctual hours !or4ed ...................... ...................... 3,) hours 'ctual total labor cost .................. .................. %$,&- 'ctual output .......................... ............................ .. 2,3 units 6hat is the labor rate variance for the month5 a. %1,2-$ F b. %2,)) F c. %",2"& F d. %",2"& 8
"-. < =ard %' adapted
Bab orp. uses a standard cost system.
$. < =ard
The standards for direct labor for a prod uct are 2.$ hours at % per hour. Bast month, -, units of the product !ere made and the labor efficiency efficiency variance !as !as %, F. The actual number of hours !or4ed during the past period !as* a. 23,$. b. 22,$. c. 2,$. d. 21,$.
$1. =ard
:n a certain standard costing system the follo!ing results occurred last period* labor rate variance, %1, 8 labor efficiency variance, %2, F and the actual labor rate !as %.2 more per hour than the standard labor rate. The number of actual direct labor hours used last period !as* a. -,. b. $,". c. $,. d. ",.
$2. ' =ard
The Aeedy ompany uses a standard costing system. The follo!ing data are available for >ovember* 'ctual direct labor labor hours !or4ed ... $, hours Standard direct labor rate ......... %- per hour Babor rate variance ................ ................ %1,1& favorable favorable The actual direct labor rate for >ovember is* a. %.. b. %.-. c. %-.. d. %-.2.
111Managerial
Accounting, 9/e
$3. ' =ard %' adapted
For the month of 'pril, Thorp o.(s records disclosed the follo!ing data relating to direct labor* 'ctual cost ............... ............... %1, Aate variance ............. % 1, favorable Efficiency Efficiency variance ....... % 1,$ unfavorable For the month of 'pril, actual direct labor hours amounted to 2,. :n 'pril, Thorp(s standard direct labor rate per hour !as* a. %$.$. b. %$.. c. %".)$. d. %".$.
$". 9 =ard
9orden Enterprises uses standard costing. For the month of 'pril, the company reported the follo!ing data* I Standard direct labor labor rate* %1 per hour I Standard hours allo!ed allo!ed for actual actual production* , I 'ctual 'ctual direct direct labor rate* %-.$ per hour I Babor efficiency variance* %", F The labor rate variance for 'pril is* a. %3,)& 8. b. %3,)& F. c. %2,$ F. d. %2,$ 8.
$$. 9 Easy
The follo!ing standards for variable manufacturing overhead have been established for a company that ma4es only one product* Standard hours per unit of output ...... ). hours Standard variable overhead rate ........ %12.$$ per hour The follo!ing data pertain to operations for the last month* 'ctual hours .......................... ............................ 2,- hours 'ctual total variable overhead cost .... %3&,-)$ 'ctual output .......................... .......................... 2 units 6hat is the variable overhead efficiency variance for the month5 a. %1),3-) 8 b. %1&,1) 8 c. %312 F d. %1),$ 8
$&. 9 Easy
The follo!ing standards for variable manufacturing overhead have been established for a company that ma4es only one product* Standard hours per unit of output ...... $.& hours Standard variable overhead rate ........ %12. per hour The follo!ing data pertain to operations for the last month* 'ctual hours .......................... ............................ 2,& hours 'ctual total variable overhead cost .... %31,33 'ctual output .......................... .......................... " units 6hat is the variable overhead spending variance for the month5 a. %112 F b. %13 8 c. %","$ 8 d. %",33 8
Managerial Accounting, 9/e
112
113Managerial
Accounting, 9/e
Aeference* 1/1 9ryan ompany employs a standard cost system in !hich direct materials inventory is carried at standard cost. 9ryan has established the follo!ing standards for the prime costs of one unit of product* Standard Standard Standard uantity %rice ost
The price variance for the direct material ac#uired by the company during March is* a. %),$$ favorable. b. %,2$ unfavorable. c. %),$$ unfavorable. d. %,2$ favorable.
$. ' Medium Aefer To* 1/1 1 /1
The direct material #uantity variance for March is* a. %3,$ unfavorable. b. %3,$$ favorable. c. %3,$ favorable. d. %3,$$ unfavorable.
$-. Medium Aefer To* 1/1
The direct labor rate variance for March is* a. % , favorable. b. %", unfavorable. c. % , unfavorable. d. %", favorable.
&. 9 Medium Aefer To* 1/1 1 /1
The direct labor efficiency variance for March is* a. %$,&2$ unfavorable. b. %$,$ favorable. c. %$,&2$ favorable. d. %$,$ unfavorable.
Managerial Accounting, 9/e
114
Aeference* 1/2 The Bitton ompany has established standards as follo!s*
The materials price variance is* a. %" 8. b. %" F. c. %& F. d. %& 8.
&2. ' Easy Aefer To* 1/2 1 /2
The materials #uantity variance is* a. % 8. b. %", 8. c. %)& 8. d. %)& F.
&3. < Easy Aefer To* 1/2
The labor rate variance is* a. %" F. b. %" 8. c. %"" F. d. %"" 8.
&". ' Easy Aefer To* 1/2 1 /2
The labor efficiency variance is* a. % F. b. % 8. c. %" F. d. %" 8.
&$. 9 Easy Aefer To* 1/2 1 /2
The variable overhead spending variance is* a. %2" 8. b. %22 8. c. %22 F. d. %2" F.
115Managerial
Accounting, 9/e
&&. < Easy Aefer To* 1/2 1 /2
The variable overhead efficiency variance is* a. %$2 F. b. %$2 8. c. %$ 8. d. %$ F.
Aeference* 1/3 The 'lbright ompany uses standard costing and has established the follo!ing standards for its single product* ovember, the company made ", units and incurred the follo!ing costs*
The material price variance for >ovember !as* a. %2,31 8. b. %2,31 F. c. %1 8. d. %1 F.
&. 9 Easy Aefer To* 1/3 1 /3
The material #uantity variance for >ovember !as* a. %1,2 8. b. %1,2 F. c. %3 8. d. %1,$ F.
&-. 9 Easy Aefer To* 1/3 1 /3
The labor rate variance for >ovember !as* a. %1,$ 8. b. %$$ 8. c. %2,1$ 8. d. %2,1$ F.
). < Easy Aefer To* 1/3 1 /3
The labor efficiency variance for >ovember !as* a. %1,$ 8. b. %$$ 8. c. %1,& F. d. %1,& 8.
)1. ' Medium Aefer To* 1/3 1 /3
The total variable overhead variance for >ovember !as* a. %1)$ 8. b. %22$ F. c. %22$ 8. d. %" 8.
Aeference* 1/" ole laboratories ma4es and sells a la!n fertilier fertilier called Fastgro. The company has developed standard costs for one bag o f Fastgro as follo!s*
Standard Standard uantity ost per 9ag
Managerial Accounting, 9/e
116
1.1 ."
The company had no beginning inventories of any 4ind on an. 1. @ariable @ariable manufacturing overhead is applied to production on the basis of direct labor hours.
The materials price variance for anuary is* a. %1,&" F. b. %1,&" 8. c. %1,) F. d. %1,3 8.
)3. ' Medium Aefer To* 1/" 1 /"
The materials #uantity variance for anuary is* a. % 8. b. %3 8. c. %3 F. d. %)$ F.
)". < Medium Aefer To* 1/" 1 /"
The labor rate variance for anuary is* a. %")$ F. b. %")$ 8. c. %$$ F. d. %$$ 8.
)$. < Medium Aefer To* 1/" 1 /"
The labor efficiency variance for anuary is* a. %")$ F. b. %3$ 8. c. %13 8. d. %11 F.
)&. < Medium Aefer To* 1/" 1 /"
The total variance for variable overhead for anuary is* a. %$ F. b. %" F. c. %1 8. d. %12$ F.
Aeference* 1/$ 0'ppendi+ The
117Managerial
Accounting, 9/e
)). 9 Medium Aefer To* 1/$ 1 /$
To record the purchase of direct materials, the general ledger !ould include !hat entry to the Materials %rice @ariance 'ccount5 a. %1,$ credit b. %1,$ debit c. %&, credit d. %&, debit
). < Medium Aefer To* 1/$ 1 /$
To record the use of direct materials in production, the general ledger !ould include !hat entry to the Materials uantity @ariance account5 a. %3,& debit b. %3,& credit. c. %- debit d. %- credit
)-. < Medium Aefer To* 1/$ 1 /$
To record the incurrence of direct labor cost and its use in production, the general ledger !ould include !hat entry to the Babor Aate @ariance account5 a. %2" credit b. %2" debit c. %3" debit d. %3" credit
Managerial Accounting, 9/e
118
. 9 Medium Aefer To* 1/$ 1 /$
To record the incurrence of direct labor costs and its use in production, the general ledger !ould include !hat entry to the Babor Efficiency @ariance @ariance account5 a. %" credit b. %2" debit c. %1,2 debit d. %1,2 credit
Aeference* 1/& The 'lpha ompany produces toys for national distribution. Standards for a particular toy are* Materials* 12 ounces per unit at $& per ounce. Babor* 2 hours per unit at at %2.)$ per hour. hour.
The materials price variance is* a. %) 8. b. %"2 8. c. %"2 F. d. %) F.
2. ' Easy Aefer To* 1/& 1 /&
The materials #uantity variance is* a. %1,12 8. b. %1,2 F. c. %1,2 8. d. %1,12 F.
3. Easy Aefer To* 1/& 1 /&
The labor rate variance is* a. %2,$ F. b. %1,12$ F. c. %1,12$ 8. d. %2,$ 8.
". 9 Easy Aefer To* 1/& 1 /&
The labor efficiency variance is* a. %1,& 8. b. %1,3)$ 8. c. %1,3)$ F. d. %1,& F.
119Managerial
Accounting, 9/e
Aeference* 1/) The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. "." pounds Standard price ........................ ........................ %13.2 per pound The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ ", pounds 'ctual cost of materials purchased .... %&2, 'ctual materials used in production ... ",3 pounds 'ctual output ......................... ......................... ) units $. ' Easy Aefer To* 1/) 1 /)
6hat is the materials price variance for the month5 a. %" F b. %"3 F c. %"3 8 d. %" 8
&. Easy Aefer To* 1/) 1 /)
6hat is the materials #uantity variance for the month5 a. %&,$$ 8 b. %1$,-2 8 c. %1&,1" 8 d. %&,& 8
Aeference* 1/ The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. 1.- grams Standard price ........................ ........................ %1. per gram The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ $, grams 'ctual cost of materials purchased .... %1,"& 'ctual materials used in production ... $,2 grams 'ctual output ......................... ......................... 2,) units ). ' Easy Aefer To* 1/ 1 /
6hat is the materials price variance for the month5 a. %",& 8 b. %3,&" F c. %3,&" 8 d. %",& F
Managerial Accounting, 9/e
120
. ' Easy Aefer To* 1/ 1 /
6hat is the materials #uantity variance for the month5 a. %1,2& 8 b. %1,3- 8 c. %11,22 8 d. %1, 8
Aeference* 1/The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. &. meters Standard price ........................ ........................ %1).1 per meter The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ -, meters 'ctual cost of materials purchased .... %1$&,& 'ctual materials used in production ... ,$ meters 'ctual output ......................... ......................... 1,2 units -. < Easy Aefer To* 1/1 /-. ' Easy Aefer To* 1/-
6hat is the materials price variance for the month5 a. %2,) F b. %2,$$ 8 c. %2,$$ F d. %2,) 8 6hat is the materials #uantity variance for the month5 a. %$,1" 8 b. %,) 8 c. %$,-1& 8 d. %,$$ 8
Aeference* 1/1 The follo!ing labor standards have been established for a particular product* Standard labor hours per unit of output .. ).$ hours Standard labor rate ...................... ...................... %1$.2$ per hour The follo!ing data pertain to operations concerning the product for the last month* 'ctual hours !or4ed ...................... ...................... -,& hours 'ctual total labor cost cost .............. .................. .... %1""," 'ctual output .......................... ............................ .. 1,2 units
121Managerial
Accounting, 9/e
-1. ' Easy Aefer To* 1/ 1 -2. < Easy Aefer To* 1/ 1
6hat is the labor rate variance for the month5 a. %1,-2 F b. %2" 8 c. %1,-2 8 d. %2" F 6hat is the labor efficiency efficiency variance for the month5 a. %),23 8 b. %-,3 8 c. %),23 F d. %-,1$ 8
Aeference* 1/11 The lar4 ompany ma4es a single product and uses standard costing. Some data concerning this product for the month of May follo!* Babor rate variance*.................. variance*................................ ................ .. % ), F Babor efficiency variance*............. variance*........................... ................ %12, F @ariable @ariable overhead efficiency variance*................ variance*................ % ", F >umber of units produced*.............. produced*............................ ................ 1, Standard labor rate per direct labor hour*............ hour*............ %12 Standard variable overhead rate per direct labor hour* % " 'ctual labor hours used*....................... used*.............................. ....... 1", 'ctual variable variable manufacturing overhead costs*......... costs*......... %$,2- -3. 9 Medium Aefer To* 1/11 1 /11 -". < =ard Aefer To* 1/11 1 /11 -$. 9 =ard Aefer To* 1/11 1 /11 -&. =ard Aefer To* 1/11 1 /11 -). =ard Aefer To* 1/11 1 /11
The variable overhead spending variance for May !as* a. %2,2- F. b. %2,2- 8. c. %1,)1 F. d. %1,)1 8. The actual direct labor rate for May in %esos per hour !as* a. %12.$. b. %12.. c. %11.)$. d. %11.$. The total standard cost for direct labor for May !as* a. %1&,. b. %1,. c. %12,. d. %1&1,. The total standard cost for variable overhead for May !as* a. %$&,. b. %",. c. %&,. d. %$,. The standard hours allo!ed to ma4e one unit of finished product are* a. 1.. b. 1.2. c. 1.$. d. 2..
Aeference* 1/12 The follo!ing standards for variable manufacturing overhead have been established for a company that ma4es only one product* Standard hours per unit of output ...... 1.& hours Standard variable overhead rate ........ %11.$$ per hour The follo!ing data pertain to operations for the last month* 'ctual hours .......................... ............................ ",- hours 'ctual total variable overhead cost .... %$,31 'ctual output .......................... .......................... 3, units
Managerial Accounting, 9/e
122
-. =ard Aefer To* 1/11 --. Easy Aefer To* 1/ 12
6hat is the variable overhead spending variance for the month5 a. %2,) 8 b. %2,) F c. %1,)1$ 8 d. %1,)1$ F 6hat is the variable overhead efficiency variance for the month5 a. %1,& F b. %1,1- 8 c. %1,1$$ 8 d. %1,1- F
Aeference* 1/13 The 8pton ompany employs a standard costing system in !hich variable overhead is assigned to production on the basis of direct labor hours.
The standard variable overhead rate per direct labor hour is* a. %&.-1. b. %&.-$. c. %).. d. %).12.
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11. 9 =ard Aefer To* 1/ 13 12. =ard Aefer To* 1/ 13
The variable overhead spending variance is* a. %2 F. b. %2 8. c. %)" F. d. %)" 8. The variable overhead efficiency variance is* a. %"3 8. b. %)" F. c. %1,12 F. d. %-$ 8.
Aeference* 1/1" Aicric orporation has provided the follo!ing data for one of its prod ucts* %rocess time ........ 3 days ueue time .......... " days :nspection time ..... .) days Move time ........... .3 days 6ait 6ait time ........... ......... .. - days 13. ' Easy Aefer To* 1/ 1" 1". 9 Easy Aefer To* 1/ 1" 1$. ' Medium Aefer To* 1/ 1"
The throughput time for this operation !ould be* a. days. b. 3 days. c. 1) days. d. ).) days. The delivery cycle time for this operation !ould be* a. days. b. 1) days. c. -.3 days. d. ).) days. The manufacturing cycle efficiency for this operation !ould be closest to* a. .3)$. b. ."$. c. .1. d. .33.
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Essay 1&. =ard
0'ppendi+ 'lbert Manufacturing ompany manufactures a single product. The standard cost of one unit of this product is*
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'ns!er* a. Materials %rice @ariance* 'ctual uantity of :nputs, :nputs, at 'ctual 'ctual %rice* %rice* &, feet K %1."3 per foot ............ %$, 'ctual uantity of :nputs, at Standard %rice* %rice* &, feet K %1.$ ..................... ..................... -, Materials %rice @ariance @ariance .................. ......... ......... % ",2 F Materials uantity @ariance* @ariance* 'ctual uantity of :nputs, at Standard %rice* %rice* 3, feet K %1.$ per foot ............ %$), Standard uantity uantity of :nputs, at Standard %rice* %rice* &, units K & feet per unit + %1.$ per ft $", Materials uantity @ariance @ariance ............... ............ ... % 3, 8
ournal entries* Aa! Materials Materials 0&, feet K %1.$ ....... -, Materials %rice @ariance @ariance 0&, feet K %.) %.) F ................ ................ ",2 'ccounts %ayable 0&, feet K %1."3 .. $, 6or4 6or4 in %rocess 03&, feet K %1.$ ..... $", Materials uantity @ariance @ariance 02, feet 8 K %1.$ ................ ................ 3, Aa! Materials 03, feet K %1.$ ..... $), b. The actual actual hours !or4ed during the period can can be computed efficiency variance, as follo!s*
through the variable overhead overhead
SA0'= / S= L @ariable @ariable ;verhead Efficiency @ariance @ariance %".$0'= / 0&, units K 1 hr. hr. per unitL unitL %2,2$ 8 %".$'= / %2), L %2,2$ 8 %".$'= L %2-,2$ '= L &,$ hours Babor Aate @ariance* @ariance* 'ctual =ours of :nput, at the 'ctual 'ctual Aate* Aate* &,$ hours K %&."$ .................... .................... %"-,$& 'ctual =ours of :nput, :nput, at the the Standard Aate* &,$ hours K %&.)$ per hour ........... "3,)$ Babor Aate @ariance @ariance ...................... .......... ............ % 1,-$ F Babor Efficiency @ariance* @ariance* 'ctual =ours of :nput, :nput, at the the Standard Aate* &,$ hours K %&.)$ per hour ........... %"3,)$ Standard =ours of :nput, at the Standard Aate* &, K 1 hour per unit K %&.)$ per hour ",$ Babor Efficiency @ariance @ariance ................ ......... ....... % 3,3)$ 8 ournal entry* 6or4 6or4 in %rocess 0&, hours K %&.)$ ..... ",$ Babor Efficiency Efficiency @ariance @ariance 0$ hrs. 8 K %&.)$ 3,&-& Babor Aate @ariance @ariance 0&,$ hrs. K %.3 F &," 6ages 6ages %ayable 0&,$ hrs. K %&."$ ..... "1,-2$
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c. @ariable ;verhead Spending @ariance* 'ctual =ours of :nput, at the 'ctual Aate %3,)13 'ctual =ours of :nput, :nput, at the the Standard Aate* &,$ hours K %".$ per hour ........... 2-,2$ @ariable @ariable ;verhead Spending Spendi ng @ariance @ariance ...... % 1,"&3 8 @ariable @ariable ;verhead Efficiency @ariance* @ariance* 'ctual =ours of :nput, :nput, at the the Standard Aate* &,$ hours K %".$ per hour ........... % 2-,2$ Standard =ours of :nput, at the Standard Aate* &, hours K %".$ per hour ........... 2), Babor Efficiency @ariance @ariance ................ ......... ....... % 2,2$ 8 1). =ard
0'ppendi+ @ernon @ernon Mills, :nc. is a large producer of men(s and !omen(s clothing. The company uses standard costs for all of its products. The standard costs and actual costs per unit of product for a recent period are given belo! for one of the company(s company(s product lines* Standard 'ctual ost ost Standard* ". yards at %$." per yard yard ...... %21.& 'ctual* 'ctual* "." yards at %$.$ per yard ......... %22.22
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ournal entries* Aa! Materials Materials 021,12 yards K %$." .......... 11"," Materials %rice @ariance @ariance 021,12 yards K %.3$ F .................. .................. ),3-2 'ccounts %ayable 021,12 yards K %$.$ ..... 1&,&$& 6or4 6or4 in %rocess 01-,2 yards K %$." ........ 13,& Materials uantity @ariance @ariance 01,-2 yards yards K %$." 1,3& Aa! Materials 021,12 yards K %$." ........ 11","
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b. Babor Aate @ariance* @ariance* 'ctual =ours of :nput, at the 'ctual 'ctual Aate* Aate* ", units, 1." hours, %).3 per hour ...... %"-,$& 'ctual =ours of :nput, :nput, at the the Standard Aate* ", units, 1." hours, %&.)$ per hour ...... "$,3& Babor Aate @ariance @ariance ...................... .......... ................. ..... % 3,&-& 8 Babor Efficiency @ariance* @ariance* 'ctual =ours of :nput, :nput, at the the Standard Aate* ", units, 1." hours, %&.)$ per hour ...... %"$,3& Standard =ours of :nput, at the Standard Aate* ", units, 1.& hours, %&.)$ per hour ...... $1," Babor Efficiency @ariance @ariance ..................... ......... ............ % &," F ournal entry* 6or4 6or4 in %rocess 0),& hours K %&.)$ ......... $1," Babor Aate @ariance @ariance 0&,)2 K %.$$ 8 ......... 3,&-& Babor Efficiency @ariance @ariance 0-& hrs. F K %&.)$ &," 6ages 6ages %ayable 0&,)2 hrs. K %).3 .......... "-,$& c. @ariable ;verhead Spending @ariance* 'ctual =ours of :nput, at the 'ctual 'ctual Aate* Aate* ", units, 1." hours, %3.2$ per hour ...... % 21," 'ctual =ours of :nput, :nput, at the the Standard Aate* ", units, 1." hours, %2.) per hour ...... 1,1"" @ariable @ariable ;verhead Spending Spendi ng @ariance @ariance ........... ......... .. % 3,&-& 8 @ariable @ariable ;verhead Efficiency @ariance* @ariance* 'ctual =ours of :nput, :nput, at the the Standard Aate* ", units, 1." hours, %2.) per hour ...... % 1,1"" Standard =ours of :nput, at the Standard Aate* ", units, 1.& hours, %2.) per hour ...... 2,)3& Babor Efficiency @ariance @ariance ..................... ......... ............ % 2,$-2 F 1. Medium
Bido ompanyOs standard and actual costs per unit for the most recent period, during !hich " units !ere actually produced, are given belo!* Standard 'ctual Materials* Standard* 2 ft. ft. at %1.$ per ft. ........ % 3. 'ctual* 2.1 ft. at %1.& per ft. ........ % 3.3&
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'ns!er* a. Material price variance L '0'%/S% L 02.1+"+0%1.&/%1.$ L %" 8 b. Material #uantity variance L S%0'/S L %1.$02.1+" / 2.+" L %& 8 c.
0'ppendi+ The Bahn ompany produces and sells a single product. Standards have been established for the product as follo!s*
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Ae#uired* %repare 7ournal entries to record* a. The purchase of ra ! materials. b. The usage of ra! materials in in production. c. The incurrence of direct labor cost. 'ns!er* a. Aa! materials inventory ................. ................. 1$,)$P Materials price variance .............. .............. 1,3$PP 'ccounts payable ...................... ...................... 1"," P %3.$ per lb. + ",$ lbs. L %1$,)$ PP '0'% / S% L ",$00%1","J",$ lbs / %3.$ L %1,3$ F b. 6or4 6or4 in process .................... ......................... ..... 13,12$P Materials #uantity variance ............. )$PP Aa! materials inventory ............... ............... 1",PPP P %3.$ per lb. + $ lbs per unit + )$ units L %13,12$ PP S%0' / S L %3.$0", / 0$ + )$ L %)$ 8 PPP %3.$ + ", L %1", c. 6or4 in process ......................... ......................... 12,3)$P Babor rate variance ..................... ..................... 2PP Babor efficiency variance ............. ............. 1,3)$PPP 'ccrued !ages payable ................. ................. 11,2 P %$.$ per hr. hr. + 3 hrs per unit + )$ units L %12,3)$ PP '=0'A / SA L 2,00%11,2J2, / %$.$ L %2 8 PPP SA0'= / S= L %$.$02, / 03 + )$ L %1,3)$ F 11. Easy
The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. -.2 grams Standard price ........................ ........................ %1".) per gram The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ $,$ grams 'ctual cost of materials purchased .... %)&,"$ 'ctual materials used in production ... $,1 grams 'ctual output ......................... ......................... $" units Ae#uired* a. 6hat is the materials price variance for the month5 b. 6hat is the the materials materials #uantity variance for the month5
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'ns!er* Solution* Materials price variance variance L 0' + '% / 0' + S% L %)&,"$ Q 0$,$ + %1".) L %"," F S L Standard #uantity per unit + 'ctual output L -.2 + $" L ",-& Materials #uantity variance L S%0' / S L %1".) 0$,1 Q ",-& L %1,-" 8 111. Easy
The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. -." pounds Standard price ........................ ........................ %1&.- per pound The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ ),3 pounds 'ctual cost of materials materials purchased .... %11&,"3$ 'ctual materials used in production ... ),1 pounds 'ctual output ......................... ......................... )" units Ae#uired* a. 6hat is the materials price variance for the month5 b. 6hat is the the materials materials #uantity variance for the month5 'ns!er* Materials price variance variance L 0' + '% / 0' + S% L %11&,"3$ Q 0),3 + %1&.- L %&,-3$ F S L Standard #uantity per unit + 'ctual output L -." + )" L &,-$& Materials #uantity variance L S%0' / S L %1&.-0),1 Q &,-$& L %2,"3" 8
112. Easy
The follo!ing materials standards have been established for a particular product* Standard #uantity per unit of output .. 3.& feet Standard price ........................ ........................ %1.2 per feet The follo!ing data pertain to operations concerning the product for the last month* 'ctual materials purchased ............ ),1 feet 'ctual cost of materials purchased .... %&,$1$ 'ctual materials used in production ... &,& feet 'ctual output ......................... ......................... 1,) units
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Ae#uired* a. 6hat is the materials price variance for the month5 b. 6hat is the the materials materials #uantity variance for the month5 'ns!er* Materials price variance variance L 0' + '% / 0' + S% L %&,$1$ Q 0),1 + %1.2 L %3,-$ F S L Standard #uantity per unit + 'ctual output L 3.& + 1,) L &," Materials #uantity variance L S%0' / S L %1.20&,& Q &," L %1,-$ 8 113. =ard
'ns!er* a. The actual cost of material per pound for the month !as* %2&,$ ÷ ), pounds L %3.)$ per pound. ' 0'% / S% L Materials %rice @ariance @ariance ), pounds 0%3.)$ 0%3.)$ / S% L %1,)$ F %2&,2$ / ), S% L %1,)$ F ), S% L %2, S% L %". S% 0' / S L Materials uantity @ariance @ariance %".0), lbs. / S L %2, 8 %2, / %". S L %2, %2, 8 %". S L %2&, S L &,$ lbs. &,$ lbs. ÷ 1,3 units L $ lbs. per unit.
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b. SA 0'= / S= L Babor Babor Efficiency @arianc @ariancee %1$ 0'= / 001,3 units + 3 hours L %&, F %1$ '= '= / %$,$ L %&, F %1$ '= L %$2,$ '= L 3,$ hours Therefore, %$$,12$ total actual labor cost ÷ 3,$ hours L %1$.)$ per hour. '= 0'A / SA L Babor Aate @ariance @ariance 3,$ hours 0%1$.)$ / %1$. L %2,&2$ 8. 11". =ard
The supervisor of the cost department has 7ust conferred !ith you concerning the variance analysis of direct labor for the month 7ust ended. 's she tal4ed, you !rote feverishly, but you !eren(t able to record all the information she gave you before she dashed off muttering something about Canother brush fire to put out.C Gour Gour efforts are sho!n belo!* ", hours + %).2 NNNN hours + %NNNN
NNNN hours + %NNNN
NNNNNNNNNNNNNNNNN NNNNNNNNNNNNNNNNNN NNNNNNNNNNNNNNNNNN R R R R R R R R R R R Efficiency variance R R R %2,2$ 8 R R R R NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN Total variance, %1 8 NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN Ae#uired* a. To redeem yourself, complete the form above, adding numbers S=, 'A, SA, etc., may be used !here appropriate. b. :f you 4no! that 1 minutes minutes of labor is standard per unit of produced5
and labels. 0The usual notations, '=, production, ho! many units !ere !ere
'ns!er* a. '= 'A '= SA S= SA ", hours %).2 ", hours %).$ ",$ hours %).$ %3",$& %3&, %33,)$ Aate variance, %1,"" F
Efficiency variance, %2,2$ 8
Total variance, %1 8 omputations // in this order* Aate variance L Total Total variance / Efficiency Efficiency variance L %18 / %2,2$8 L %1 / %2,2$ L /%1,"" L %1,""F '= 'A L ", + %).2 L %3",$& '= SA L '= 'A / Aate variance L %3",$& / %1,""F L %3",$& / 0/%1,"" L %3&,
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SA L 0'= SA ? '= L %3&, ? ", L %).$ S= SA L '= SA / Efficiency variance L %3&, / %2,2$8 L %3&, / %2,2$ L %33,)$ S= L 0S= SA ? SA L %33,)$ ? %).$ L ",$ b. Standard hours allo!ed for units units produced .......... ",$
The follo!ing labor standards have been established for a particular product* Standard labor hours per unit of output .. 2. hours Standard labor rate ...................... ...................... %11.$ per hour The follo!ing data pertain to operations concerning the product for the last month* 'ctual hours !or4ed ...................... ...................... &,- hours 'ctual total labor cost .................. .................. %,3$ 'ctual output .......................... ............................ .. 2,3 units Ae#uired* a. 6hat is the labor rate variance for the month5 b. 6hat is the the labor efficiency efficiency variance for the month5 'ns!er* Babor rate variance L 0'= + 'A / 0'= + SA L %,3$ Q 0&,- + %11.$ L %1,3$ 8 S= L Standard hours per u nit + 'ctual output L 2. + 2,3 L &,"" Babor efficiency variance L SA0'= / S= L %11.$0&,- Q &,"" L %$,2- 8
11&. Easy
The follo!ing standards for variable manufacturing overhead have been established for a company that ma4es only one product* Standard hours per unit of output ...... &.- hours Standard variable overhead rate ........ %1$. per hour The follo!ing data pertain to operations for the last month* 'ctual hours .......................... ............................ &,1 hours 'ctual total variable overhead cost .... %-),& 'ctual output .......................... .......................... units
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Ae#uired* a. 6hat is the variable variable overhead spending variance for the month5 b. 6hat is the the variable overhead overhead efficiency variance variance for the month5 'ns!er* @ariable @ariable overhead spending variance L 0'= + 'A / 0'= + SA L %-),& Q 0&,1 + %1$. L %1,22 8 S= L Standard hours per u nit + 'ctual output L &.- + L $,$2 @ariable @ariable overhead efficiency variance L SA0'= / S= L %1$.0&,1 Q $,$2 L %-,1&" 8
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