test bank chapter10 standard costing

Cox Company's direct material costs for the month of January were as follows: Actual quantity purchased .... 15,000 kilogramsFor January there was a favorable direct material quantity v

a Average historical performance for the last several years.

b Engineering estimates based on ideal performance

c Engineering estimates based on attainable performance

d The hours per unit that would be required for the present workforce to satisfy expected demand over the long run

18

C

Easy

CMA adapted

Which of the following statements concerning practical standards is incorrect?

a Practical standards can be used for product costing and cash budgeting

b Practical standards can be attained by the average worker

c When practical standards are used, there is no reason to adjust standards if an old machine is replaced by

a newer, faster machine

d Under practical standards, large variances are less likely than under ideal standards

a When material is issued

b When material is purchased

c When material is used in production

d When production is completed

20

C

Medium

An unfavorable labor efficiency variance indicates that:

a The actual labor rate was higher than the standard labor rate

b The labor rate variance must also be unfavorable

D

Easy

A favorable labor rate variance indicates that

a actual hours exceed standard hours

b standard hours exceed actual hours

c the actual rate exceeds the standard rate

d the standard rate exceeds the actual rate

22

B

Hard

CPA adapted

(Appendix) What does a credit balance in a direct labor efficiency variance account indicate?

a the average wage rate paid to direct labor employees was less than the standard rate

b the standard hours allowed for the units produced were greater than actual direct labor hours used

c actual total direct labor costs incurred were less than standard direct labor costs allowed for the units produced

d the number of units produced was less than the number of units budgeted for the period

23

C

Easy

If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur?

a Favorable labor efficiency variance

b Favorable labor rate variance

c Unfavorable labor efficiency variance

d Unfavorable labor rate variance

a problems with processing machines.

b the purchase of low quality materials

c problems with labor efficiency

d changes in the product mix

a more materials were purchased than were used

b more materials were used than were purchased

c the actual cost per pound for materials was less than the standard cost per pound

d the actual usage of materials was less than the standard allowed

28

B

Medium

A labor efficiency variance resulting from the use of poor quality materials should be charged to:

a the production manager

b the purchasing agent

b Inspection time and move time

c Process time, inspection time, and move time

d Process time, inspection time, move time, and queue time

31

C

Easy

Manufacturing Cycle Efficiency (MCE) is computed as:

a Throughput Time ÷ Delivery Cycle Time

b Process Time ÷ Delivery Cycle Time

c Value-Added Time ÷ Throughput Time

a credit to Raw Materials Inventory.

b debit to Work in Process

c credit to Materials Price Variance

d debit to Materials Price Variance

33

A

Medium

(Appendix) Which of the following entries would correctly record the charging of direct labor costs to Work

in Process given an unfavorable labor efficiency variance and a favorable labor rate variance?

a Work in Process Labor Efficiency Variance Labor Rate Variance Wages Payable

b Work in Process Wages Payable

c Work in Process Labor Efficiency Variance Labor Rate Variance Wages Payable

d Work in Process Labor Rate Variance Labor Efficiency Variance Wages Payable

The terms "standard quantity allowed" or "standard hours allowed" mean:

a the actual output in units multiplied by the standard output allowed

b the actual input in units multiplied by the standard output allowed

c the actual output in units multiplied by the standard input allowed

d the standard output in units multiplied by the standard input allowed

Cox Company's direct material costs for the month of January were as follows:

Actual quantity purchased 18,000 kilograms Actual unit purchase price P 3.60 per kilogram Materials price variance

unfavorable (based on purchases) P 3,600 Standard quantity allowed

for actual production 16,000 kilograms Actual quantity used 15,000 kilogramsFor January there was a favorable direct material quantity variance of:

Information on Fleming Company's direct material costs follows:

Actual amount of direct materials used 20,000 pounds Actual direct material costs P40,000

Standard price of direct materials P2.10 per pound Direct material efficiency variance favorable P3,000What was the company's direct material price variance?

a P1,000 favorable

b P1,000 unfavorable

During March, Younger Company's direct material costs for product T were as follows:

Actual unit purchase price P6.50 per meter Standard quantity allowed for actual

production 2,100 meters Quantity purchased and used for actual production 2,300 meters Standard unit price P6.25 per meterYounger's material quantity variance for March was:

a P1,250 unfavorable

b P1,250 favorable

c P1,300 unfavorable

d P1,300 favorable

Standard price P19.80 per meter

The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 meters

Actual cost of materials purchased P113,680 Actual materials used in production 5,100 meters Actual output 3,200 units

What is the materials quantity variance for the month?

a P13,720 U

b P6,732 F

c P13,860 U

d P6,664 F43

Actual cost of materials purchased P141,375 Actual materials used in production 7,100 grams Actual output 700 units

What is the materials price variance for the month?

a P2,250 F

b P7,540 U

c P24,317 U

d P7,660 U

C

Hard

CPA adapted

Information on Kennedy Company's direct material costs follows:

Standard price per pound of raw materials P3.60 Actual quantity of raw materials purchased 1,600 pounds Standard quantity allowed for actual production 1,450 pounds Materials purchase price variance favorable P 240What was the actual purchase price per unit, rounded to the nearest penny?

The Fletcher Company uses standard costing The following data are available for October:

Actual quantity of direct materials used 23,500 pounds Standard price of direct materials P2 per pound Material quantity variance P1,000 favorableThe standard quantity of material allowed for October production is:

The following labor standards have been established for a particular product:

Standard labor hours per unit of output 8.3 hours Standard labor rate P12.10 per hourThe following data pertain to operations concerning the product for the last month:

Actual hours worked 6,100 hours Actual total labor cost P71,370 Actual output 900 unitsWhat is the labor efficiency variance for the month?

a P19,017 F

b P19,017 U

c P16,029 F

d P16,577 F

A

Easy

The following labor standards have been established for a particular product:

Standard labor hours per unit of output 1.7 hours Standard labor rate P14.05 per hourThe following data pertain to operations concerning the product for the last month:

Actual hours worked 3,700 hours Actual total labor cost P50,690 Actual output 2,300 unitsWhat is the labor rate variance for the month?

a P1,295 F

b P2,877 F

c P4,246 F

d P4,246 U49

a P8.80

b P8.90

c P9.00

d P9.20

Borden Enterprises uses standard costing For the month of April, the company reported the following data:

• Standard direct labor rate: P10 per hour

• Standard hours allowed for actual production: 8,000

• Actual direct labor rate: P9.50 per hour

• Labor efficiency variance: P4,800 FThe labor rate variance for April is:

Actual hours 2,900 hours Actual total variable overhead cost P36,975 Actual output 200 unitsWhat is the variable overhead efficiency variance for the month?

a P17,397 U

b P16,817 U

c P312 F

d P17,085 U56

Actual hours 2,600 hours Actual total variable overhead cost P31,330 Actual output 400 unitsWhat is the variable overhead spending variance for the month?

a P112 F

b P130 U

c P4,450 U

d P4,338 U

Reference: 10-1

Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost Bryan has established the following standards for the prime costs of one unit of product:

Standard Standard Standard

Quantity Price Cost

Direct materials 6 pounds P 3.50/pound P21.00

Direct labor 1.3 hours P11.00/hour 14.30

P35.30

During March, Bryan purchased 165,000 pounds of direct material at a total cost of P585,750 The total factory wages for March were P400,000, 90 percent of which were for direct labor Bryan manufactured 25,000 units of product during March using 151,000 pounds of direct material and 32,000 direct labor hours

Reference: 10-2

The Litton Company has established standards as follows:

Direct material 3 lbs @ P4/lb = P12 per unit

Direct labor 2 hrs @ P8/hr = P16 per unit

Variable manuf overhead 2 hrs @ P5/hr = P10 per unit

Actual production figures for the past year are given below The company records the materials price variance when materials arepurchased

Units produced 600

Direct material used 2,000 lbs

Direct material purchased (3,000 lbs.) P11,400

Direct labor cost (1,100 hrs.) P 9,240

Variable manuf overhead cost incurred P 5,720

The company applies variable manufacturing overhead to products on the basis of direct labor hours

The Albright Company uses standard costing and has established the following standards for its single product:

Direct materials 2 gallons at P3 per gallon

Direct labor 0.5 hours at P8 per hour

Variable manuf overhead 0.5 hours at P2 per hour

During November, the company made 4,000 units and incurred the following costs:

Direct materials purchased 8,100 gallons at P3.10 per gallon

Direct materials used 7,600 gallons

Direct labor used 2,200 hours at P8.25 per hour

Actual variable manuf overhead P4,175

The company applies variable manufacturing overhead to products on the basis of direct labor hours

Standard Quantity Cost per Bag

Direct material 20 pounds P8.00

Direct labor 0.1 hours 1.10

Variable manuf overhead 0.1 hours .40

The company had no beginning inventories of any kind on Jan 1 Variable manufacturing overhead is applied to production on the basis of direct labor hours During January, the following activity was recorded by the company:

• Production of Fastgro: 4,000 bags

• Direct materials purchased: 85,000 pounds at a cost of P32,300

• Direct labor worked: 390 hours at a cost of P4,875

• Variable manufacturing overhead incurred: P1,475

• Inventory of direct materials on Jan 31: 3,000 pounds

Standard Quantity Standard Cost

or Hours per Mip

Direct materials 6 board feet P9.00

Direct labor 0.8 hours P9.60

There were no inventories of any kind on August 1 During August, the following events occurred:

• Purchased 15,000 board feet at the total cost of P24,000

• Used 12,000 board feet to produce 2,100 Mips

• Used 1,700 hours of direct labor time at a total cost of P20,060

The Alpha Company produces toys for national distribution Standards for a particular toy are:

Materials: 12 ounces per unit at 56¢ per ounce

Labor: 2 hours per unit at P2.75 per hour

During the month of December, the company produced 1,000 units Information for the month follows:

Materials: 14,000 ounces were purchased and used at a total cost of P7,140

Labor: 2,500 hours worked at a total cost of P8,000

Reference: 10-7

The following materials standards have been established for a particular product:

Standard quantity per unit of output 4.4 pounds

Standard price P13.20 per pound

The following data pertain to operations concerning the product for the last month:

Actual materials purchased 4,800 pounds

Actual cost of materials purchased P62,880

Actual materials used in production 4,300 pounds

Actual output 700 units

The following materials standards have been established for a particular product:

Standard quantity per unit of output 1.9 grams

Standard price P18.00 per gram

The following data pertain to operations concerning the product for the last month:

Actual materials purchased 5,800 grams

Actual cost of materials purchased P108,460

Actual materials used in production 5,200 grams

Actual output 2,700 units

The following materials standards have been established for a particular product: Standard quantity per unit of output 6.8 meters

Standard price P17.10 per meter

The following data pertain to operations concerning the product for the last month: Actual materials purchased 9,000 meters

Actual cost of materials purchased P156,600

Actual materials used in production 8,500 meters

Actual output 1,200 units

Standard labor rate P15.25 per hour

The following data pertain to operations concerning the product for the last month: Actual hours worked 9,600 hours

Actual total labor cost P144,480

Actual output 1,200 units

The Clark Company makes a single product and uses standard costing Some data concerning this product for the month of May follow:

Labor rate variance: P 7,000 F

Labor efficiency variance: P12,000 F

Variable overhead efficiency variance: P 4,000 F

Number of units produced: 10,000

Standard labor rate per direct labor hour: P12

Standard variable overhead rate per direct labor hour: P 4

Actual labor hours used: 14,000

Actual variable manufacturing overhead costs: P58,290

Standard variable overhead rate P11.55 per hour

The following data pertain to operations for the last month:

Actual hours 4,900 hours

Actual total variable overhead cost P58,310

Actual output 3,000 units

The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labor hours Data for the month of February include the following:

• Variable manufacturing overhead cost incurred: P48,700

• Total variable overhead variance: P300 F

• Standard hours allowed for actual production: 7,000

• Actual direct labor hours worked: 6,840