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Most companies that use standards set them at a. the normal level. b. a conceivable level. c. the ideal level. d. last year’s level. 62. A managerial accountant 1. does not participate in the standard setting process. 2. provides knowledge of cost behaviors in the standard setting process. 3. provides input of historical costs to the standard setting process. a. 1 b. 2 c. 3 d. 2 and 3 63. The cost of freight-in a. is to be included in the standard cost of direct materials. b. is considered a selling expense. c. should have a separate standard apart from direct materials. d. should not be included in a standard cost system. 64. The direct materials quantity standard would not be expressed in a. pounds. b. barrels. c. dollars. d. board feet. 65. The direct materials quantity standard should a. exclude unavoidable waste. b. exclude quality considerations. c. allow for normal spoilage. d. always be expressed as an ideal standard. 66. The direct labor quantity standard is sometimes called the direct labor a. volume standard. b. effectiveness standard. c. efficiency standard. d. quality standard. 67. A manufacturing company would include setup and downtime in their direct a. materials price standard. b. materials quantity standard. c. labor price standard. d. labor quantity standard. 68. Allowance for spoilage is part of the direct a. materials price standard. b. materials quantity standard. c. labor price standard. d. labor quantity standard. 69. The total standard cost to produce one unit of product is shown a. at the bottom of the income statement. b. at the bottom of the balance sheet. c. on the standard cost card. d. in the Work in Process Inventory account. 70. An unfavorable materials quantity variance would occur if a. more materials were purchased than were used. b. actual pounds of materials used were less than the standard pounds allowed. c. actual labor hours used were greater than the standard labor hours allowed. d. actual pounds of materials used were greater than the standard pounds allowed. 71. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct materials price per pound is a. $1.96. b. $2.00. c. $2.13 d. $2.17 72. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct materials quantity per unit is a. 2.6 pounds. b. 2.7 pounds. c. 2.9 pounds. d. 3.0 pounds. 73. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor rate per hour is a. $ 12.00. b. $ 12.30. c. $15.60. d. $15.90. 74. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor hours per unit is a. 1 hour. b. 1.1 hours. c. 1.2 hours. d. 1.3 hours. 75. The standard direct materials quantity does not include allowances for a. unavoidable waste. b. normal spoilage. c. unexpected spoilage. d. all of the above are included. 76. Allowances should not be made in the direct labor quantity standard for a. wasted time. b. rest periods. c. cleanup. d. machine downtime. 77. The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing a. budgeted overhead costs by an expected standard activity index. b. actual overhead costs by an expected standard activity index. c. budgeted overhead costs by actual activity. d. actual overhead costs by actual activity. 78. Hofburg’s standard quantities for 1 unit of product include 2 pounds of materials and 1.5 labor hours. The standard rates are $2 per pound and $7 per hour. The standard overhead rate is $8 per direct labor hour. The total standard cost of Hofburg’s product is a. $14.50. b. $17.00. c. $22.50. d. $26.50. 79. Which of the following statements is true? a. Variances are the differences between total actual costs and total standard costs. b. When actual costs exceed standard costs, the variance is favorable. c. An unfavorable variance results when actual costs are decreasing but standards are not changed. d. All of the above are true. 80. Unfavorable materials price and quantity variances are generally the responsibility of the Price Quantity a. Purchasing department Purchasing Department b. Purchasing department Production Department c. Production department Production Department d. Production Department Purchasing Department 81. Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 3,900 units, although it had planned to make only 3,300 units. Total yards used for production were 3,960. How much is the total materials variance? a. $48,600 U b. $4,860 U c. $3,960 F d. $900 U 82. If actual direct materials costs are greater than standard direct materials costs, it means that a. actual costs were calculated incorrectly. b. the actual unit price of direct materials was greater than the standard unit price of direct materials. c. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected. d. the purchasing agent or the production foreman is inefficient. 83. If actual costs are greater than standard costs, there is a(n) a. normal variance. b. unfavorable variance. c. favorable variance. d. error in the accounting system. 84. A total materials variance is analyzed in terms of a. price and quantity variances. b. buy and sell variances. c. quantity and quality variances. d. tight and loose variances. 85. A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,500 pounds of direct materials were purchased for $5,700. The direct materials price variance for last month was a. $5,700 favorable. b. $300 favorable. c. $150 favorable. d. $300 unfavorable. 86. The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was a. $3,200 favorable. b. $2,400 favorable. c. $3,200 unfavorable. d. $5,600 unfavorable. 87. The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result? a. Favorable materials quantity variance b. Favorable total materials variance c. Unfavorable materials price variance d. Unfavorable laborquantity variance 88. The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,800 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is a. $1,800 unfavorable. b. $6,000 favorable. c. $3,750 unfavorable. d. $6,000 unfavorable. 89. The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is a. $2,400 unfavorable. b. $2,400 favorable. c. $3,000 unfavorable. d. $3,000 favorable. 90. The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor? a. $8.50 per direct labor hour b. $7.50 per direct labor hour c. $9.50 per direct labor hour d. $9.00 per direct labor hour 91. Which one of the following statements is true? a. If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable. b. If the materials price variance is unfavorable, then the materials quantity variance must be favorable. c. Price and quantity variances move in the same direction. If one is favorable, the others will be as well. d. There is no correlation of favorable or unfavorable for price and quantity variances. 92. Variances from standards are a. expressed in total dollars. b. expressed on a per-unit basis. c. expressed on a percentage basis. d. all of these. 93. A favorable variance a. is an indication that the company is not operating in an optimal manner. b. implies a positive result if quality control standards are met. c. implies a positive result if standards are flexible. d. means that standards are too loosely specified. 94. The total materials variance is equal to the a. materials price variance. b. difference between the materials price variance and materials quantity variance. c. product of the materials price variance and the materials quantity variance. d. sum of the materials price variance and the materials quantity variance. 95. Information on Jayhawk’s direct labor costs for the month of August is as follows: Actual rate $10 Standard hours 11,000 Actual hours 10,000 Direct labor price variance—unfavorable $4,000 What was the standard rate for August? a. $9.96 c. $10.40 b. $9.60 d. $10.04 96. The total variance is $35,000. The total materials variance is $14,000. The total labor variance is twice the total overhead variance. What is the total overhead variance? a. $3,500 b. $7,000 c. $10,500 d. $14,000 97. The formula for the materials price variance is a. (AQ × SP) – (SQ × SP). b. (AQ × AP) – (AQ × SP). c. (AQ × AP) – (SQ × SP). d. (AQ × SP) – (SQ × AP). 98. The formula for the materials quantity variance is a. (SQ × AP) – (SQ × SP). b. (AQ × AP) – (AQ × SP). c. (AQ × SP) – (SQ × SP). d. (AQ × AP) – (SQ × SP). 99. A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1,800 unfavorable. What is the standard price? a. $2 b. $4 c. $6 d. Cannot be determined from the data provided. 100. A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials? a. $1.00 b. $0.20 c. $5.00 d. Cannot be determined from the data provided.

Most companies that use standards set them at

a. the normal level.

b. a conceivable level.

c. the ideal level.

d. last year’s level.

 

62. A managerial accountant

1. does not participate in the standard setting process.

2. provides knowledge of cost behaviors in the standard setting process.

3. provides input of historical costs to the standard setting process.

a. 1

b. 2

c. 3

d. 2 and 3

63. The cost of freight-in

a. is to be included in the standard cost of direct materials.

b. is considered a selling expense.

c. should have a separate standard apart from direct materials.

d. should not be included in a standard cost system.

64. The direct materials quantity standard would not be expressed in

a. pounds.

b. barrels.

c. dollars.

d. board feet.

65. The direct materials quantity standard should

a. exclude unavoidable waste.

b. exclude quality considerations.

c. allow for normal spoilage.

d. always be expressed as an ideal standard.

66. The direct labor quantity standard is sometimes called the direct labor

a. volume standard.

b. effectiveness standard.

c. efficiency standard.

d. quality standard.

67. A manufacturing company would include setup and downtime in their direct

a. materials price standard.

b. materials quantity standard.

c. labor price standard.

d. labor quantity standard.

 

68. Allowance for spoilage is part of the direct

a. materials price standard.

b. materials quantity standard.

c. labor price standard.

d. labor quantity standard.

69. The total standard cost to produce one unit of product is shown

a. at the bottom of the income statement.

b. at the bottom of the balance sheet.

c. on the standard cost card.

d. in the Work in Process Inventory account.

70. An unfavorable materials quantity variance would occur if

a. more materials were purchased than were used.

b. actual pounds of materials used were less than the standard pounds allowed.

c. actual labor hours used were greater than the standard labor hours allowed.

d. actual pounds of materials used were greater than the standard pounds allowed.

71. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct materials price per pound is

a. $1.96.

b. $2.00.

c. $2.13

d. $2.17

72. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct materials quantity per unit is

a. 2.6 pounds.

b. 2.7 pounds.

c. 2.9 pounds.

d. 3.0 pounds.

73. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor rate per hour is

a. $ 12.00.

b. $ 12.30.

c. $15.60.

d. $15.90.

74. Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively. The standard direct labor hours per unit is

a. 1 hour.

b. 1.1 hours.

c. 1.2 hours.

d. 1.3 hours.

75. The standard direct materials quantity does not include allowances for

a. unavoidable waste.

b. normal spoilage.

c. unexpected spoilage.

d. all of the above are included.

76. Allowances should not be made in the direct labor quantity standard for

a. wasted time.

b. rest periods.

c. cleanup.

d. machine downtime.

77. The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing

a. budgeted overhead costs by an expected standard activity index.

b. actual overhead costs by an expected standard activity index.

c. budgeted overhead costs by actual activity.

d. actual overhead costs by actual activity.

78. Hofburg’s standard quantities for 1 unit of product include 2 pounds of materials and 1.5 labor hours. The standard rates are $2 per pound and $7 per hour. The standard overhead rate is $8 per direct labor hour. The total standard cost of Hofburg’s product is

a. $14.50.

b. $17.00.

c. $22.50.

d. $26.50.

79. Which of the following statements is true?

a. Variances are the differences between total actual costs and total standard costs.

b. When actual costs exceed standard costs, the variance is favorable.

c. An unfavorable variance results when actual costs are decreasing but standards are not changed.

d. All of the above are true.

80. Unfavorable materials price and quantity variances are generally the responsibility of the

Price Quantity

a. Purchasing department Purchasing Department

b. Purchasing department Production Department

c. Production department Production Department

d. Production Department Purchasing Department

81. Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 3,900 units, although it had planned to make only 3,300 units. Total yards used for production were 3,960. How much is the total materials variance?

a. $48,600 U

b. $4,860 U

c. $3,960 F

d. $900 U

82. If actual direct materials costs are greater than standard direct materials costs, it means that

a. actual costs were calculated incorrectly.

b. the actual unit price of direct materials was greater than the standard unit price of direct materials.

c. the actual unit price of raw materials or the actual quantities of raw materials used was greater than the standard unit price or standard quantities of raw materials expected.

d. the purchasing agent or the production foreman is inefficient.

83. If actual costs are greater than standard costs, there is a(n)

a. normal variance.

b. unfavorable variance.

c. favorable variance.

d. error in the accounting system.

84. A total materials variance is analyzed in terms of

a. price and quantity variances.

b. buy and sell variances.

c. quantity and quality variances.

d. tight and loose variances.

85. A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,500 pounds of direct materials were purchased for $5,700. The direct materials price variance for last month was

a. $5,700 favorable.

b. $300 favorable.

c. $150 favorable.

d. $300 unfavorable.

86. The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

a. $3,200 favorable.

b. $2,400 favorable.

c. $3,200 unfavorable.

d. $5,600 unfavorable.

87. The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

a. Favorable materials quantity variance

b. Favorable total materials variance

c. Unfavorable materials price variance

d. Unfavorable laborquantity variance

88. The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,800 units, the actual direct labor cost was $48,000 for 3,000 direct labor hours worked, the total direct labor variance is

a. $1,800 unfavorable.

b. $6,000 favorable.

c. $3,750 unfavorable.

d. $6,000 unfavorable.

89. The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

a. $2,400 unfavorable.

b. $2,400 favorable.

c. $3,000 unfavorable.

d. $3,000 favorable.

90. The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?

a. $8.50 per direct labor hour

b. $7.50 per direct labor hour

c. $9.50 per direct labor hour

d. $9.00 per direct labor hour

91. Which one of the following statements is true?

a. If the materials price variance is unfavorable, then the materials quantity variance must also be unfavorable.

b. If the materials price variance is unfavorable, then the materials quantity variance must be favorable.

c. Price and quantity variances move in the same direction. If one is favorable, the others will be as well.

d. There is no correlation of favorable or unfavorable for price and quantity variances.

92. Variances from standards are

a. expressed in total dollars.

b. expressed on a per-unit basis.

c. expressed on a percentage basis.

d. all of these.

93. A favorable variance

a. is an indication that the company is not operating in an optimal manner.

b. implies a positive result if quality control standards are met.

c. implies a positive result if standards are flexible.

d. means that standards are too loosely specified.

94. The total materials variance is equal to the

a. materials price variance.

b. difference between the materials price variance and materials quantity variance.

c. product of the materials price variance and the materials quantity variance.

d. sum of the materials price variance and the materials quantity variance.

95. Information on Jayhawk’s direct labor costs for the month of August is as follows:

Actual rate $10

Standard hours 11,000

Actual hours 10,000

Direct labor price variance—unfavorable $4,000

What was the standard rate for August?

a. $9.96 c. $10.40

b. $9.60 d. $10.04

96. The total variance is $35,000. The total materials variance is $14,000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

a. $3,500

b. $7,000

c. $10,500

d. $14,000

97. The formula for the materials price variance is

a. (AQ × SP) – (SQ × SP).

b. (AQ × AP) – (AQ × SP).

c. (AQ × AP) – (SQ × SP).

d. (AQ × SP) – (SQ × AP).

98. The formula for the materials quantity variance is

a. (SQ × AP) – (SQ × SP).

b. (AQ × AP) – (AQ × SP).

c. (AQ × SP) – (SQ × SP).

d. (AQ × AP) – (SQ × SP).

99. A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?

a. $2

b. $4

c. $6

d. Cannot be determined from the data provided.

100. A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

a. $1.00

b. $0.20

c. $5.00

d. Cannot be determined from the data provided.

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