Documente Academic
Documente Profesional
Documente Cultură
TRUE/FALSE
1.
2.
3.
4.
5.
6.
7.
8.
10.
ANS:
T
Engineering studies are often too rigorous and may not
be achievable by operating personnel.
The standard cost sheet provides the input standards
needed to compute the total amount of inputs allowed
ANS:
T
for the actual output, an essential component in
computing efficiency variances.
Ideal standards can be achieved under efficient
operating conditions.
ANS:
T
ANS:
F
No. Currently attainable standards can be achieved
under efficient operating conditions. Ideal standards
demand maximum efficiency and can be achieved only
if everything operates perfectly.
ANS:
ANS:
ANS:
Currently attainable standards offer the most behavioral The total budget variance is the difference between the
benefits because higher performance levels are
actual cost of the input and its planned cost.
attained through challenging, yet achievable, standards.
T
ANS:
ANS:
ANS:
11.
ANS:
F
The standard quantity of materials allowed can be
calculated by multiplying the unit quantity standard by
the actual output.
ANS:
T
In setting standards, historical experience should be
used with caution because it can perpetuate operating The quantity of each input that should be used to
inefficiencies.
produce one unit of output is documented on the
standard cost sheet.
ANS:
T
ANS:
9.
ANS:
F
No. Manufacturing environments that focus on
ANS:
T
continuous improvement and JIT purchasing and
manufacturing do not realize the benefits of operational An unfavorable price variance occurs whenever the
control in a standard cost system.
actual prices are greater than the standard prices.
ANS:
24.
25.
d.
e.
f.
g.
26.
27.
ANS:
For better control, the materials price variance is
computed using actual quantity of materials purchased.
ANS:
ANS:
T
ANS:
Since it is better to have information on variances
earlier rather than later, the materials price variance
uses the actual quantity of materials purchased rather ANS:
than the actual quantity of materials used.
ANS:
28.
29.
30.
F
C
A
D
E
G
The sum of the labor rate and labor efficiency variances ANS:
will always add up to the total labor variance.
Match the variance with its correct calculation.
a. Actual Quantity Actual Price
ANS:
T
b. (Actual Hours Actual Rate) (Standard Hours
Standard Rate)
Kaizen costing provides fixed standards which reflect
c. (Actual Quantity Actual Price) (Standard
continuous improvement efforts.
Quantity Standard Price)
d. (Actual Hours Standard Hours) Standard
ANS:
F
Rate
Thus, kaizen costing differs from traditional standard
e. (Actual Price Standard Price) Actual
costing in that the standard changes frequently,
Quantity
reflecting continuous improvement efforts.
f. Standard Quantity Standard Price
A kaizen standard reflects the realized improvements g. (Actual Rate Standard Rate) Actual Hours
h. (Actual Quantity Standard Quantity)
for the past periods and a search for more
Standard Price
improvements for the future.
ANS:
T
Setting this new level as a minimum standard for future Actual Costs
performance locks in the realized improvements and
Budgeted Costs
initiates simultaneously the maintenance cycle and a
search for additional improvement opportunities
Total Materials Variance
31.
MATCHING
Match each item with the correct statement below.
a. Quantity Standards
b. Ideal Standards
c. Price Standards
9.
ANS:
10.
ANS:
ANS:
11.
ANS:
12.
ANS:
13.
ANS:
ANS:
14.
ANS:
15.
ANS:
COMPLETION
1.
ANS:
2.
Cost control
3.
Historical experiences
ANS:
Price variance
rate variance
_________________ occur whenever actual prices or actual
usage of inputs are greater than standard prices or
standard usage.
ANS:
6.
7.
8.
Unfavorable variances
ANS:
5.
ANS:
4.
ANS:
Kaizen costing
2.
Ideal standards
a. do not allow for machine breakdowns, slack, or
lack of skill (even momentarily).
b. demand maximum efficiency.
c. can be achieved only if everything operates
perfectly.
d. All of these.
e. None of these.
11.
14.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-1
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
2 min.
ANS:
D
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-1
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Knowledge
NOT:
2 min.
ANS:
A
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-2
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Knowledge
NOT:
2 min.
18.
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-2
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
19.
ANS:
B
SQ = Unit quantity standard Actual output.
SQ = 10,000 1 = 10,000 sheets.
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-2
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Variances indicate
a. that actual performance is not going according
to plan.
b. the cause of the variance.
c. who is responsible for the variance.
d. when the variance should be investigated.
e. none of these.
ANS:
A
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Knowledge
NOT:
2 min.
Figure 10-1.
Flying High Company manufactures model airplanes.
During the month, it manufactured 10,000 airplanes.
Each one used an average of 6.5 direct labor hours and The difference between the actual cost of the input and
an average of 1.5 sheets of aluminum. It normally
its planned cost is
manufactures 7,500 airplanes. Materials and labor
a. the total budget variance.
standards for making the airplanes are:
b. the usage variance.
c. the price variance.
Direct Materials (1 sheet of aluminum @
$10.00
d. the efficiency variance.
$10.00)
e. the budget variance.
Direct Materials (other accessories @
8.75
$8.75)
Direct Labor (6 hours @ $7.00)
42.00
ANS:
A
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
20. Refer to Figure 10-1. Compute the standard hours
STA:
AICPA: FN-Measurement | IMA: Performance
allowed for a volume of 10,000 airplanes.
Measurement | ACBSP: APC-27-Managerial Accounting
a. 60,000 hours
Features/Costs
KEY:
b. 420,000 hours
Bloom's: Knowledge
c. 70,000 hours
NOT:
2 min.
d. 65,000 hours
Which of the following is true concerning the materials
price variance?
ANS:
A
a. It is the difference between the actual and
b.
c.
d.
e.
ANS:
C
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting Which of the following is not true concerning control
Features/Costs
KEY:
limits?
Bloom's: Comprehension
a. Control limits are the top and bottom measures
NOT:
2 min.
of the allowable range.
b. The upper control limit is the standard plus the
25. The usage variance is the difference between the actual
allowable deviation.
and standard quantity of inputs
c. The lower control limit is the standard minus the
a. multiplied by the standard unit price of the
allowable deviation.
input.
d. In current practice, control limits are set
b. budgeted multiplied by the standard unit price of
objectively using standard formulas.
the input.
e. Variances that fall outside the control limits are
c. multiplied by the actual unit price of the input.
investigated.
d. purchased multiplied by the actual unit price of
the input.
e. None of these.
ANS:
D
In current practice, control limits are set subjectively,
using past experience, judgment, and intuition.
ANS:
A
PTS:
1
DIF:
Difficulty: Moderate
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
OBJ:
LO: 10-3
STA:
AICPA: FN-Measurement | IMA: Performance
NAT:
BUSPROG: Analytic
Measurement | ACBSP: APC-27-Managerial Accounting STA:
AICPA: FN-Measurement | IMA: Performance
Features/Costs
KEY:
Measurement | ACBSP: APC-27-Managerial Accounting
Bloom's: Comprehension
Features/Costs
KEY:
NOT:
2 min.
Bloom's: Comprehension
NOT:
2 min.
26. Which of the following is true regarding variances?
a. Unfavorable variances occur whenever actual
Acme Company's standard cost is $500,000. The
prices or actual usage of inputs are greater than
allowable deviation is 10%. Its actual costs for three
standard prices or standard usage.
months are
b. Favorable variances occur whenever actual
prices or actual usage of inputs are greater than
January
$520,000
standard prices or standard usage.
February
$550,000
c. Unfavorable variances are always credits.
March
$575,000
d. Favorable variances are always debits.
e. None of these.
The upper and lower control limits are, respectively,
a. $550,000 and $450,000
b. $500,000 and $450,000
ANS:
A
PTS:
1
DIF:
c. $550,000 and $500,000
Difficulty: Moderate
d. $575,000 and $520,000
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting ANS:
A
Features/Costs
KEY:
The upper control limit is $550,000 ($500,000 +
Bloom's: Comprehension
($500,000 10%)).
NOT:
2 min.
The lower control limit is $450,000 ($500,000
($500,000 10%)).
27. All of the following are true regarding variance
investigation except
PTS:
1
DIF:
Difficulty: Easy
a. the investigation should be undertaken only if
OBJ:
LO: 10-3
the anticipated benefits are greater than the
NAT:
BUSPROG: Analytic
expected costs.
STA:
AICPA: FN-Measurement | IMA: Performance
b. managers must consider whether a variance will
Measurement | ACBSP: APC-27-Managerial Accounting
recur.
Features/Costs
KEY:
c. it is difficult to assess the costs and benefits of
Bloom's: Application
NOT:
3 min.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
3 min.
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
The materials price variance is computed using the
STA:
AICPA: FN-Measurement | IMA: Performance
equation
Measurement | ACBSP: APC-27-Managerial Accounting a. (Actual Price Actual Quantity) (Standard
Features/Costs
KEY:
Price Standard Quantity).
Bloom's: Application
b. (Standard Price Actual Quantity) (Actual
NOT:
3 min.
Price Actual Quantity).
c. (Standard Price Standard Quantity) (Actual
31. Refer to Figure 10-2. The variance that is higher than
Price Actual Quantity).
the upper control limit is
d. (Actual Price Actual Quantity) (Standard
a. $220,000
Price Actual Quantity).
b. $280,000
e. None of these.
c. $265,000
d. $235,000
ANS:
D
PTS:
1
DIF:
Difficulty: Moderate
ANS:
B
PTS:
1
DIF:
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
Difficulty: Easy
STA:
AICPA: FN-Measurement | IMA: Performance
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
Measurement | ACBSP: APC-27-Managerial Accounting
STA:
AICPA: FN-Measurement | IMA: Performance
Features/Costs
KEY:
Measurement | ACBSP: APC-27-Managerial Accounting
Bloom's: Comprehension
Features/Costs
KEY:
NOT:
3 min.
Bloom's: Application
NOT:
3 min.
The materials usage variance is calculated by the
equation
32. Refer to Figure 10-2. The variance that is lower than the a. (Standard Price Actual Quantity) (Standard
lower control limit is
Price Standard Quantity).
a. $220,000
b. (Standard Price Standard Quantity)
b. $280,000
(Standard Price Actual Quantity).
c. $265,000
c. (Actual Price Actual Quantity) (Standard
d. $235,000
Price Actual Quantity).
d. (Actual Price Standard Quantity) (Actual
Quantity Standard Price).
ANS:
A
PTS:
1
DIF:
e. None of these.
Difficulty: Easy
OBJ:
LO: 10-3
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
ANS:
A
PTS:
1
DIF:
Measurement | ACBSP: APC-27-Managerial Accounting Difficulty: Moderate
Features/Costs
KEY:
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
Bloom's: Application
STA:
AICPA: FN-Measurement | IMA: Performance
NOT:
3 min.
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
36.
3 min.
ANS:
E
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
ANS:
A
STA:
AICPA: FN-Measurement | IMA: Performance
12,000 blades 1.5 pounds = 18,000 pounds of steel
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
MUV
= (AQ SQ)SP
Bloom's: Comprehension
$1,000
= (AQ 18,000)$8
NOT:
3 min.
AQ
= 17,875 pounds
During the month of March, Baker's Express purchased Or 12,000 blades 1.5 pounds $8 = $144,000
10,000 pounds of flour at $1 per pound. At the end of
$1,000 = $143,000/$8 = 17,875 pounds
March, Baker's Express found that it had an unfavorable
materials price variance of $500. The standard cost per PTS:
1
DIF:
Difficulty: Moderate
pound must be
OBJ:
LO: 10-4
a. $1.95
NAT:
BUSPROG: Analytic
b. $1.00
STA:
AICPA: FN-Measurement | IMA: Performance
c. $1.05
Measurement | ACBSP: APC-27-Managerial Accounting
d. $0.95
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
ANS:
D
MPV
= (AP SP)AQ
During June, Cisco Company produced 12,000 chainsaw
$500
= ($1 SP)10,000
blades. The standard quantity of material allowed per
SP
= $0.95
unit was 1.5 pounds of steel per blade at a standard
cost of $8 per pound. The actual cost was $7 per pound.
The actual pounds of steel that Cisco purchased were
19,500 pounds. All materials purchased were used.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
Calculate Cisco's materials usage variance.
a. $10,500 U
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
b. $12,000 F
Measurement | ACBSP: APC-27-Managerial Accounting c. $12,000 U
Features/Costs
KEY:
d. $10,500 F
Bloom's: Application
NOT:
3 min.
ANS:
C
38. During the month of March, Baker's Express purchased 12,000 blades 1.5 pounds = 18,000 pounds of steel
10,000 pounds of flour at $1 per pound. At the end of
March, Baker's Express found that it had a favorable
MUV
= (AQ SQ)SP
materials price variance of $500. The standard cost per
= (19,500 18,000)$8
pound must be
= $12,000 U
a. $0.95
b. $1.00
c. $1.05
PTS:
1
DIF:
Difficulty: Easy
d. $1.95
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
ANS:
C
Measurement | ACBSP: APC-27-Managerial Accounting
MPV
= (AP SP)AQ
Features/Costs
KEY:
$500
= ($1 SP)10,000
Bloom's: Application
SP
= $1.05
NOT:
3 min.
37.
1
DIF:
Difficulty: Moderate
LO: 10-4
BUSPROG: Analytic
AICPA: FN-Measurement | IMA: Performance
a.
b.
c.
d.
$50,000
$49,900
$50,000
$49,900
ANS:
MPV
MUV
F and $2,000 U
U and $2,000 F
F and $1,900 U
F and $1,900 U
A
=
=
=
=
=
=
output
Actual output
(AP SP)AQ
($1.90 $2.00)500,000
$50,000 F
(AQ SQ)SP
(499,000 500,000)$2.00
$2,000 U
ANS:
A
(2,950 3,000) $18 = $900 F
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
4 min.
42.
1,000 units
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Mover Company has developed the following standards During August, 10,000 units were produced. The
for one of its products:
standard quantity of material allowed per unit was 10
pounds at a standard cost of $3 per pound. If there was
Direct materials:
7.5 pounds $8 per
an unfavorable usage variance of $18,750 for August,
pound
the actual quantity of materials used must be
Direct labor:
2 hours $12 per hour
a. 106,250 pounds.
b. 93,750 pounds.
The following activity occurred during March:
c. 31,875 pounds.
d. 23,438 pounds.
Materials purchased:
5,000 pounds costing
$42,500
Materials used:
3,600 pounds
ANS:
A
Units produced:
500 units
10,000 10 $3 = $300,000
Direct labor:
1,150 hours at
$300,000 + $18,750 = $318,750
$11.80/hour
$318,750/$3 = 106,250 pounds
The company records materials price variances at the PTS:
1
DIF:
Difficulty: Moderate
time of purchase. The variable standard cost per unit for OBJ:
LO: 10-4
materials and labor is
NAT:
BUSPROG: Analytic
a. $98.
STA:
AICPA: FN-Measurement | IMA: Performance
b. $84.
Measurement | ACBSP: APC-27-Managerial Accounting
c. $74.
Features/Costs
KEY:
d. $38.
Bloom's: Application
NOT:
3 min.
ANS:
B
Direct materials (7.5 pounds $8)
Direct labor (2 hours $12)
$60
24
$84
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
ANS:
B
40,000 5 $2.50 = $500,000
$500,000 $25,000 = $475,000
43. Roberts Company uses a standard costing system. The $475,000/$2.50 = 190,000 pounds
following information pertains to direct materials for the
July:
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
Standard price per lb.
$18.00
NAT:
BUSPROG: Analytic
Actual purchase price per lb.
$16.50
STA:
AICPA: FN-Measurement | IMA: Performance
Quantity purchased
3,100 lbs.
Measurement | ACBSP: APC-27-Managerial Accounting
Quantity used
2,950 lbs.
Features/Costs
KEY:
Standard quantity allowed for actual
3,000 lbs.
Bloom's: Application
NOT:
46.
3 min.
$240
$120
$360
ANS:
C
$170,000 (10,000 $16) = $10,000 U
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
47.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
4 min.
Refer to Figure 10-3. Calculate the labor rate variance
and the labor efficiency variance, respectively.
a. $4,500 U and $3,000 U
b. $4,500 F and $3,000 F
c. $4,500 U and $3,000 F
d. $4,500 F and $3,000 U
ANS:
A
LRV = (AR - SR)AH
($15 - $12)1,500 = $4,500 U
LEV = (AH - SH)SR
(1,500 - 1,250)$12 = $3,000 U
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-3. Compute the total budget
variances for materials and labor, respectively.
a. $2,800 F and $7,500 F
b. $2,800 F and $7,500 U
c. $2,800 U and $7,500 U
d. $2,800 U and $7,500 F
c. $135,000 F
d. $170,000 U
ANS:
Materials
Labor
Actual
Cost*
$27,200
Budgeted
Cost^
$30,000
Variance
2,800 F
ANS:
A
MPV= (AP-SP)AQ
22,500
15,000
7,500 U
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Refer to Figure 10-5. What is the materials usage
Measurement | ACBSP: APC-27-Managerial Accounting
variance?
Features/Costs
KEY:
a. $112,500 F
Bloom's: Application
b. $112,500 U
NOT:
4 min.
c. $45,000 F
d. $45,000 U
51. Refer to Figure 10-3. Compute the costs of leather and
direct labor that should have been incurred for the
production of 125 boots.
ANS:
D
a. $36,000 and $36,000
b. $46,500 and $37,500
($2.25 x 400,000) - ($2.25 x 380,000)
c. $37,200 and $20,000
$45,000 U
d. $30,000 and $15,000
ANS:
D
Materials: (SQ x SR) x AQ = $240 x 125 = $30,000
Labor: (SH x SR) x AQ = $120 x 125 = $15,000
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
4 min.
Figure 10-5.
Seaside Company produces picture frames. During
the year 190,000 picture frames were produced.
Materials and labor standards for producing the
picture frames are as follows:
$4.50
$20.00
52.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-5. What is Seaside's labor rate
variance?
a. $180,000 F
b. $180,000 U
c. $225,000 U
d. $217,500 F
ANS:
B
LRV = (AR - SR)AH
($10.50 - $10.00) x 360,000
$180,000 U
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-5. What is Seaside's total labor
variance?
a. $20,000 F
b. $20,000 U
c. $112,500 F
d. $120,000 U
ANS:
A
(360,000 x $10.50) - (380,000 x $10.00)
$20,000 F
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
56.
Actual Hours).
c. (Actual Hours Standard Rate) (Standard
Hours Standard Rate).
d. (Standard Hours Actual Rate) (Actual Hours
Actual Rate).
e. None of these.
ANS:
C
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
2 min.
Which of the following is not true regarding the use of
labor variance information?
a. The actual wage rate is almost always different
from the standard rate.
b. Unexpected overtime can cause variation in the
labor rate.
c. An average wage rate is chosen as the labor rate
standard.
d. The production manager controls the use of
labor.
e. The actual wage rate is used in determining the
labor rate variance.
ANS:
A
Typically, the actual wage rate is equal to the standard
rate.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
2 min.
ANS:
B
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Kaizen costing involves
Bloom's: Knowledge
a. changing the standards frequently.
NOT:
2 min.
b. changing management.
c. outsourcing processes.
57. The labor rate variance is computed by
d. major ad campaigns.
a. (Actual Rate Actual Hours) (Standard Rate
Standard Hours).
b. (Standard Rate Actual Rate) (Actual Rate
ANS:
A
Actual Hours).
Thus, kaizen costing differs from traditional standard
c. (Actual Rate Standard Hours) (Standard
costing in that the standard changes frequently,
Rate Actual Hours).
reflecting continuous improvement efforts.
d. (Actual Rate Actual Hours) (Standard Rate
Actual Hours).
PTS:
1
DIF:
Difficulty: Moderate
e. None of these.
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Decision Modeling | IMA: Performance
ANS:
D
PTS:
1
DIF:
Measurement | ACBSP: APC-27-Managerial Accounting
Difficulty: Moderate
Features/Costs
KEY:
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
Bloom's: Knowledge
STA:
AICPA: FN-Measurement | IMA: Performance
2 min.
Measurement | ACBSP: APC-27-Managerial Accounting NOT:
Features/Costs
KEY:
Which of the following is not true about Kaizen
Bloom's: Comprehension
Standards?
NOT:
2 min.
a. Kaizen standards are the standards used for
continuous improvement.
58. The labor efficiency variance is calculated by the
b. Kaizen standards are a currently attainable
equation
standard that reflects planned improvement.
a. (Standard Hours Actual Hours) (Actual
c. Kaizen standards are constantly changing.
Hours Standard Rate).
d. Kaizen standards are the standards used in
b. (Actual Rate Actual Hours) (Standard Rate
63.
Features/Costs
Bloom's: Application
NOT:
4 min.
KEY:
a.
b.
c.
d.
Labor Rate
Variance
Favorable
Favorable
Unfavorable
Unfavorable
Labor Efficiency
Variance
Favorable
Unfavorable
Favorable
Unfavorable
ANS:
D
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Strategic
Planning | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Comprehension
NOT:
2 min.
During January, 7,000 direct labor hours were worked at
a standard cost of $20 per hour. If the direct labor rate
variance for January was $17,500 favorable, the actual
cost per direct labor hour must be
a. $17.50.
b. $20.00.
c. $22.50.
d. $25.00.
ANS:
A
7,000 $20 = $140,000
$140,000 $17,500 = $122,500
$122,500/7,000 = $17.50
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Strategic
Planning | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
2 min.
During October, 10,000 direct labor hours were worked
at a standard cost of $10 per hour. If the direct labor
rate variance for October was $4,000 unfavorable, the
actual cost per direct labor hour must be
a. $10.40.
b. $10.00.
c. $9.60.
d. $9.20.
ANS:
A
10,000 $10 = $100,000
$100,000 + $4,000 = $104,000
$104,000/10,000 = $10.40
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Strategic
Planning | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
2 min.
67.
6,000
LEV = $66,000 F
6,072
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Figure 10-6.
Extreme Builders constructs houses. The standard labor
rate is $25 per hour and the standard number of hours
is 15,000 hours per home. During the year, it
constructed 12 homes using 18,000 labor hours per
home and a rate of $28 per hour.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
($28 - $25)216,000
$648,000 U
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-6. Calculate the labor efficiency
variance.
a. $1,008,000 F
b. $900,000 U
c. $1,008,000 U
d. $900,000 F
ANS:
B
LEV = (AH - SH)SR
(216,000 - 180,000) x $25
$900,000 U
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
72.
73.
1
DIF:
Difficulty: Moderate
LO: 10-6
BUSPROG: Analytic
AICPA: FN-Measurement | IMA: Reporting |
APC-06-Recording Transactions
Bloom's: Application
NOT:
ANS:
C
ANS:
A
The variances for materials and labor are closed directly
15,000 blades 1.5 pounds = 22,500 pounds of steel
to Cost of Goods Sold only if immaterial.
MUV
= (AQ SQ)SP
$2,500
= (AQ 22,500)$5
AQ
= 22,000 pounds
OBJ:
LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions
Work in Process = SQ SP = 22,500 $5 = $112,500 KEY:
Bloom's: Application
NOT:
Materials = AQ SP = 22,000 $5 = $110,000
4 min.
Or, 15,000 blades 1.5 pounds $5 = $112,500
$2,500 = $110,000/$5 = 22,000 pounds
PTS:
OBJ:
NAT:
STA:
ACBSP:
KEY:
4 min.
1
DIF:
Difficulty: Moderate
LO: 10-6
BUSPROG: Analytic
AICPA: FN-Measurement | IMA: Reporting |
APC-06-Recording Transactions
Bloom's: Application
NOT:
Figure 10-8.
The Perfect Tool Company (South America Division)
produced 80,000 saw blades during the year. It took 1.5
hours of labor per blade at a rate of $8.50 per hour.
However, its standard labor rate is $8.00. Its labor
efficiency variance was an unfavorable $40,000.
ANS:
C
LEV = (AH - SH) x SR
$40,000 = (120,000 - SH) x $8
115,000 hours
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-8. What is Perfect's labor rate
variance?
a. $57,500 U
b. $57,500 F
c. $60,000 U
d. $60,000 F
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
C
Measurement | ACBSP: APC-06-Recording Transactions ANS:
=
(AR
SR)AH
KEY:
Bloom's: Application
NOT:
4 min.
($8.50 - $8) x 120,000
77.
Accrued Payroll
1,057,500
c. Work In Process
920,000
Labor Rate Variance
60,000
Labor Efficiency Variance
40,000
Accrued Payroll
940,000
d. Work In Process
960,000
Labor Rate Variance
57,500
Labor Efficiency Variance
40,000
Accrued Payroll
977,500
ANS:
A
= (AR - SR)AH
ANS:
$60,000 U
= (AQ - SQ)SP
(1,400,000 - 1,500,000) x $3
$300,0000 F
SQ = 1,500,000 = 250,000 x 6
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions
KEY:
Bloom's: Application
NOT:
4 min.
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-9. What is James labor rate variance?
a. $190,625 F
b. $250,000 F
c. $250,000 U
d. $193,750 U
Figure 10-9.
ANS:
C
James Company manufactures t-shirts. During the year, (AR - SR)AH
it manufactured 250,000 t-shirts, using 2 hours of direct
($8.50 - $8.00) x 500,000
labor at a rate of $8.50 per hour. The materials and
labor standards for manufacturing the t-shirts are:
$250,000 U
Direct materials (6 yards of fabric @ $3 per
yard)
Direct labor (2.4 hours @ $8.00 per hour)
$18
17
AH = 500,000 = 250,000 x 2
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
3 min.
Refer to Figure 10-9. What is James labor efficiency
variance?
a. $800,000 U
b. $850,000 F
c. $800,000 F
d. $850,000 U
$700,000 F
ANS:
C
(AH - SH)SR
PTS:
OBJ:
NAT:
STA:
1
DIF:
Difficulty: Easy
LO: 10-4
BUSPROG: Analytic
AICPA: FN-Measurement | IMA: Performance
(500,000 - 600,000) x $8
$800,000 F
OBJ:
LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions
KEY:
Bloom's: Application
NOT:
3 min.
AH = 500,000 = 250,000 x 2
SH = 600,000 = 250,000 x 2.4
PTS:
1
DIF:
Difficulty: Easy
Refer to Figure 10-9. What is the entry to close the
OBJ:
LO: 10-5
variances of labor and materials?
NAT:
BUSPROG: Analytic
a. Materials Price Variance
700,000
STA:
AICPA: FN-Measurement | IMA: Performance
Materials Usage Variance
300,000
Measurement | ACBSP: APC-27-Managerial Accounting
Labor Efficiency Variance
800,000
Features/Costs
KEY:
Cost of Goods Sold
1,800,000
Bloom's: Application
NOT:
3 min.
Cost of Goods Sold
250,000
Labor Rate Variance
250,000
85. Refer to Figure 10-9. What is the entry to record the
b. Materials Price Variance
750,000
purchase of materials?
Materials Usage Variance
250,000
a. Materials
3,500,000
Labor Efficiency Variance
850,000
Materials Price Variance 750,000
Cost of Goods Sold
1,850,000
Accounts Payable
4,250,000
b. Materials
4,200,000
Cost of Goods Sold
300,000
Materials Price Variance 750,000
Labor Rate Variance
300,000
Accounts Payable
4,950,000
c. Cost of Goods Sold
1,800,000
c. Materials
4,200,000
Materials Price Variance
700,000
Materials Price Variance
700,000
Materials Usage Variance
300,000
Accounts Payable
3,500,000
Labor Efficiency Variance
800,000
d. Materials
3,500,000
Materials Price Variance
700,000
Labor Rate Variance
250,000
Accounts Payable
4,200,000
Cost of Goods Sold
250,000
ANS:
C
Materials = SP x AQ = $3 x 1,400,000 = $4,200,000
Accounts Payable = 1,400,000 x $2.50 =
$3,500,000
Material Price Variance = ($2.50 - $3.00) x
1,400,000 = $700,000 F
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions
KEY:
Bloom's: Application
NOT:
3 min.
86.
300,000
300,000
ANS:
A
Labor Efficiency Variance = (AH - SH)SR = (500,000
- 600,000)$8 = $800,000 F
Material Usage Variance = (AQ - SQ)SP =
(1,400,000 - 1,500,000)$3 = $300,000 F
Material Price Variance = (AP - SP)AQ = ($2.50 $3.00)1,4000,000= $700,000 F
LRV = (AR - SR)AH = ($8.50 - $8.00)500,000 =
$250,000 U
DIF:
Difficulty: Easy
185
120
Required:
90
ANS:
A.
SH = 8 hours x 7,000 = 56,000
B.
SQ = 2 x 7,000 = 14,000 plastic casings
PC = 7,000 x $185 = $1,295,000 electronic kits
PC = 14,000 x $45 = $630,000 plastic casings
C.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-3 | LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
5 min.
630,
000
840,
000
(10,80F
0)
60,90U
0
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-2 | LO: 10-3 | LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
10 min.
2.
B.
Materials
(electronic
component kits)
Materials (plastic
casings)
Labor
= (500 475)$14.50
= $362.50 U
B.
ANS:
= (AQ SQ)SP
= (9,500 9,000)$6
= $3,000 U
A.
MUV
B.
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-3 | LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
Bloom's: Application
NOT:
A labor efficiency variance will be investigated when the KEY:
5 min.
variance is greater than either $100 or 10% of the
standard labor cost.
Westminster Company has the following information
During September, the company used 500 direct labor concerning its direct materials:
hours at a rate of $15 per hour. Its standard rate is 475
Direct Materials:
direct labor hours at a rate of $14.50 per hour.
Standard Quantity
100,000
Actual Quantity
80,000
A.
Determine the company's labor efficiency
Standard Price
$3
variance and whether it is favorable or
Actual Price
$4
unfavorable.
B.
Should the variance be investigated?
A.
Determine the materials price variance and
whether it is favorable or unfavorable.
B.
Determine the materials usage variance and
ANS:
whether it is favorable or unfavorable.
C.
Westminster has set control limits stating that
A.
LEV
= (AH SH)SR
Leeds Company uses the following rule to determine
whether labor efficiency variances should be
investigated:
B.
MUV = (AQ - SQ) x SP
(7,320,000 - 7,200,000) x $0.08 = $9,600 U
PTS:
1
DIF:
Difficulty: Easy
OBJ:
LO: 10-3 | LO: 10-4
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
5 min.
ANS:
A.
MPV
= (AP SP)AQ
= ($4 $3)80,000
= $80,000 U
B.
MUV
= (AQ SQ)SP
= (80,000 100,000)$3
= $60,000 F
C.
i.
ii.
iii.
iv.
5.
$100.00
12.00
$112.00
PTS:
1
DIF:
Difficulty: Moderate
There were no beginning or ending work-in-process
OBJ:
LO: 10-3 | LO: 10-4
inventories.
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Required:
Measurement | ACBSP: APC-33-Incremental analysis
Compute the direct materials variances.
KEY:
Bloom's: Application
NOT: A.
B.
Compute the direct labor variances.
10 min.
C.
Give possible reasons for the occurrence of
each of the preceding variances.
PURE Inc. produces flavored waters, sold in gallons.
Recently the company adopted the following materials
standard for one gallon of its raspberry flavored water:
Direct materials (90 oz. @ $0.08)
7.20
ANS:
A.
C.
E.
LRV = (AR -SR) x AH
(19.25 - 18.00) x 120,000 = $150,000 U
F.
LEV = (AH - SH) x SR
(120,000 - 110,000) x $18 = $180,000 U
PTS:
1
DIF:
Difficulty: Moderate
DuRoss Company produces coats. The company uses a OBJ:
LO: 10-3 | LO: 10-4 | LO: 10-5
NAT:
standard costing system and has set the following
BUSPROG: Analytic
standards for materials and labor:
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Fabric (8 yards @ $6)
$48
Features/Costs | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
Direct labor (2 hours @ $18)
$36
10 min.
Total prime cost
$84
Moving Baby Company produces baby strollers. During
the year 90,000 strollers were produced. The actual
During the year DuRoss produced 55,000 coats. Actual labor used was 225,000 hours at $12.75 per hour.
fabric purchased was 460,000 yards at $5.75 per yard. Moving Baby has the following labor standards: 2 hours
There were no beginning or ending inventories of fabric. at $13.00 per hour.
Actual direct labor was 120,000 hours at $19.25 per
hour.
Required:
Required:
A. Compute the cost of leather and direct labor that
should be incurred for the production of 55,000
coats.
B. Compute the total budget variances for materials
and labor.
C. Compute the materials price variance.
ANS:
A.
B.
Materials
Labor
C.
MPV = (AP - SP) x AQ
($5.75 - $6) x 460,000 = $115,000 F
D.
MUV = (AQ - SQ) x SP
(460,000 - 440,000) x $6 = $120,000 U
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-3 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-27-Managerial Accounting
Features/Costs | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
5 min.
Starling Manufacturing has developed the following
standards for one of its products.
Materials: 5 yards $6
per yard
Direct labor: 2 hours $8
per hour
$30
16
Materials purchased:
Materials used:
Units produced:
Direct labor:
Required:
A.
Calculate
B.
Calculate
C.
Calculate
D.
Calculate
the
the
the
the
direct
direct
direct
direct
KEY:
Bloom's: Application
10 min.
ANS:
A.
B.
C.
D.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
5 min.
10.
C.
D.
A.
Direct Labor:
Standard
2,000
Hours
Actual Hours
1,875
Standard Rate
$10
Actual Rate
$11
B.
C.
D.
ANS:
A.
B.
MPV
MUV
= (AP SP)AQ
= ($12 $14)12,000
= $24,000 F
= (AQ SQ)SP
= (12,000 10,000)$14
= $28,000 U
C.
LRV
= (AR SR)AH
= ($11 $10)1,875
= $1,875 U
D.
LEV
= (AH SH)SR
= (1,875 2,000)$10
= $1,250 F
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
500
525
$14
$14
ANS:
A.
MPV
= (AP SP)AQ
= ($17.50 $20)1,400
= $3,500 F
B.
MUV
= (AQ SQ)SP
= (1,400 1,500)$20
= $2,000 F
C.
LRV
= (AR SR)AH
= ($14 $14)525
= $0
D.
LEV
= (AH SH)SR
= (525 500)$14
= $350 U
Direct Labor:
Standard
Hours
Actual Hours
Standard Rate
Actual Rate
B.
$1,300 F
$1,500 F
$1,050 U
$800 U
NOT:
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
10 min.
Allison Company adopted a standard cost system
several years ago. The standard costs for the prime
costs of its single product follow:
Material: 10 kilograms @ $4.50 per
kilogram
Labor: 6 hours @ $8.50 per hour
$45.00
$51.00
Units completed:
5,800 units
Budgeted output:
6,000 units
Materials purchased:
60,000 kilograms
Total actual labor costs: $306,600
Actual hours of labor:
36,500 hours
Material usage variance:$2,250 U
Total material variance: $450 U
production process
Actual cost paid per kilogram of material
D.
it is favorable or unfavorable.
Determine the labor efficiency variance and
whether it is favorable or unfavorable.
D.
ANS:
A.
Standard
Cost
Labor
Rate
Variance
ANS:
Actual
Actual
Quantity A.
MPV
Cost Difference or Hours Variance
$8.50/hr. $8.40/hr.*
$.10
(fav.)
36,500
hrs.B.
MUV
Standard
Quantity
or Hours
34,800
hrs.**
Actual
C.
LRV
Quantity
Standard
or Hours Difference
Cost Variance
36,500 1,700 hrs. $8.50/hr. D.
hrs.
(unfav.)
LEV
D.
= (AP SP)AQ
= ($2.25 $2.00)53,000
= $13,250 U
= (AQ SQ)SP
= (53,000 50,000)$2
= $6,000 U
= (AR SR)AH
= ($8.00 $7.50)21,000
= $10,500 U
= (AH SH)SR
= (21,000 20,000)$7.50
= $7,500 U
Standard
Quantity
of Kg.
Actual
PTS:
1
DIF:
Difficulty: Moderate
Quantity
Standard OBJ:
LO: 10-4 | LO: 10-5
of Kg. Difference
Cost Variance
NAT:
BUSPROG: Analytic
Materials
STA:
AICPA: FN-Measurement | IMA: Performance
Usage
58,000 unknown 500 kg.# $4.50/kg. Measurement | ACBSP: APC-33-Incremental analysis
Variance
kg.***
kg.
(unfav.)
KEY:
Bloom's: Application
NOT:
10 min.
*** 5,800 units 10 kg. per unit
# working back: $2,250/$4.50 = 500 kg.
Rhodes Corporation manufactures a product with the
The actual kg. would be 58,500 (58,000 + 500) The following standard costs:
unfavorable variance is added to standard.
Direct materials (20 yards @ $1.85 per
$37.00
Actualyard)
Standard
Actual
QuantityDirect labor (4 hours @ $12.00 per
48.00
Cost
Cost Difference
of Kg.hour)
Variance
Materials
Price
$4.50/kg. Unknown $0.03##
60,000 Standards are based on normal monthly production
Variance
(fav.)
kg. involving 2,000 direct labor hours (500 units of output).
ANS:
A.
ANS:
15.
A.
MPV for
Beef
MPV for
Bags
Total MPV
= (AP SP)AQ
= ($1.10 $1.00)3,300
= $330 U
= ($0.15 $0.25)3,000
= $300 F
= $30 U
B.
MUV
= (AQ SQ)SP
= (3,300 3,000)$1.00
= $300 U
C.
LRV
= (AR SR)AH
= ($9.00 $9.00)750
= $0 Neither favorable nor
unfavorable
D.
LEV
= (AH SH)SR
= (750 900)$9.00
= $1,350 F
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
10 min.
Mersey Company produced 1,000 trash cans during
March using 450 direct labor hours and purchased and
used 3,100 pounds of rubber. Its materials and labor
standards are:
$1.00
0.25
2.70
ANS:
MPV
$620
AP
= (AP SP)AQ
= (AP $0.50)3,100
= $0.30 per pound
LRV
$900
AR
= (AR SR)AH
= (AR $16.00)450
= $18.00 per hour
C.
MUV
= (AQ SQ)SP
= (3,100 3,000)$0.50
= $50 U
D.
LEV
= (AH SH)SR
= (450 500)$16
= $800 F
A.
PTS:
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
10 min.
17.
D.
A.
B.
ANS:
MPV
$8,000
SP
= (AP SP)AQ
= ($5.00 SP)4,000
= $7.00 per pound
LRV
$1,000
SR
= (AR SR)AH
= ($7.00 SR)5,000
= $6.80 per hour
C.
C.
MUV
= (AQ SQ)SP
= (4,000 5,000)$7.00
= $7,000 F
D.
LEV
= (AH SH)SR
= (5,000 6,250)$6.80
= $8,500 F
Materials
Materials Price Variance
180,000
4,500
Accounts Payable
Work in Process
Materials Usage Variance
PTS:
1
DIF:
Difficulty: Challenging
OBJ:
LO: 10-4 | LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
10 min.
18.
184,500
120,000
60,000
Materials
Work in Process
Labor Rate Variance
180,000
337,500
9,200
Labor Efficiency
Just Right Inc. produces jeans. The following standards Variance
have been established:
Accrued Payroll
Direct materials (4 yards of denim @
$1.20)
Direct labor (1.5 hours @ $9)
$13.50
$18.30
6,300
340,400
$4.80
73,700
Materials Price
Variance
Materials Usage
Variance
Labor Rate Variance
Labor Efficiency Variance
Cost of Goods Sold
PTS:
OBJ:
NAT:
STA:
4,500
60,000
9,200
6,300
6,300
1
DIF:
Difficulty: Challenging
LO: 10-3 | LO: 10-4 | LO: 10-5 | LO: 10-6
BUSPROG: Analytic
AICPA: FN-Measurement | IMA: Performance
Materials Price
225
Variance
Materials
500
Usage
Variance
Labor Rate
900
Variance
Cost of Goods Sold
2,250
Materials Price
Variance
Accounts Payable
Work in
2,750
Process
Materials Usage
Variance
Materials
Work in
Process
18,700
Labor
1,700
Efficiency
Variance
Labor Rate Variance
Accrued Payroll
(4,500
$0.50)
225
2,025
500
MPV
= (AP SP)AQ
= ($4 $5)99,500
= $99,500 F
B.
MUV
= (AQ SQ)SP
= (99,500 100,000)$5
= $2,500 F
C.
LRV
= (AR SR)AH
= ($13 $12)1,050
= $1,050 U
D.
LEV
= (AH SH)SR
= (1,050 1,000)$12
= $600 U
E.
Materials
497,500
Materials Price Variance
Accounts Payable
99,500
398,000
Work in Process
500,000
Materials Usage Variance
Materials
2,500
497,500
2,250
(0.5
5,500
$6.80)
900
19,500
F.
Cost of Goods
1,700
Sold
Labor Efficiency
Variance
A.
1,700
Work in Process
Labor Efficiency Variance
Labor Rate Variance
12,000
600
1,050
Accrued Payroll
F.
1,650
2,500
D.
LEV
600
1,050
E.
Materials
4,200
Materials Price
Variance
Accounts
Payable
1,235
Work in Process
4,250
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-4 | LO: 10-5 | LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions |
ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
15 min.
$0.50
0.35
1.40
B.
C.
D.
E.
F.
ANS:
A.
MPV for
Tuna
MPV for
Cans
Total MPV
= (AP SP)AQ
= ($0.65 $0.50)4,900
= $735 U
= ($0.45 $0.35)5,000
= $500 U
= $1,235 U
B.
MUV
= (AQ SQ)SP
= (4,900 5,000)$0.50
= $50 F
C.
LRV
= (AR SR)AH
= ($8.00 $7.00)500
= $500 U
5,435
Materials
Usage
Variance
Materials
(4,900
$0.50) +
(5,000
$0.35)
2,500
21.
= (AH SH)SR
= (500 1,000)$7.00
= $3,500 F
13,650
50
4,200(4,900
$0.50) +
(5,000
$0.35)
Work in Process
Labor Rate
Variance
Labor
Efficiency
Variance
Accrued
Payroll
7,000
500
Cost of Goods
Sold
Materials Price
Variance
Labor Rate
Variance
1,735
Materials Usage
Variance
Labor Efficiency
Variance
Cost of Goods
Sold
(5,000
$0.50) +
(5,000
$0.35)
3,500
4,000
1,235
500
50
3,500
3,550
PTS:
1
DIF:
Difficulty: Challenging
OBJ:
LO: 10-4 | LO: 10-5 | LO: 10-6
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Measurement | IMA: Performance
Measurement | ACBSP: APC-06-Recording Transactions |
ACBSP: APC-33-Incremental analysis
KEY:
Bloom's: Application
NOT:
20 min.
Grandma's Attic Company produces soft pillows made
from goose down. The company uses a standard cost
system and has set the following standards for
materials and labor for each pillow:
Feathers from 5 large white geese (5
geese @ $5)
Fabric to make pillow cases (3 yards @
$2)
Direct labor (5 hours @ $8)
Total prime cost
$25
6
40
$71
Total MUV
= $200 F
= $500 U $200 F = $300 U
C.
LRV
= (AR SR)AH
= ($7.75 $8.00)5,200
= $1,300 F
D.
LEV
= (AH SH)SR
= (5,200 5,000)$8.00
= $1,600 U
E.
Materials
31,300
Materials Price
Variance
Accounts Payable
Work in
Process
Materials
Usage
Variance
Materials
Work in
Process
Labor
31,000
300
1,600
B.
26,490
(5,000 $5.00)
+ (3,000
$2.00)
ANS:
A.
(5,100 $5.00)
+ (2,900
$2.00)
4,810
31,300(5,100 $5.00)
+ (2,900
$2.00)
40,000
A.
Maintenance:
Physical standard: 20 minutes
Financial standard: $4.00 ($12 20/60 hours)
Kaizen:
Physical standard: 15 minutes
Financial standard: $3.00 ($12 15/60 hours)
B.
PTS:
1
DIF:
Difficulty: Moderate
OBJ:
LO: 10-5
NAT:
BUSPROG: Analytic
STA:
AICPA: FN-Decision Modeling | IMA: Strategic
Planning | ACBSP: APC-27-Managerial Accounting
Features/Costs
KEY:
Bloom's: Application
NOT:
5 min.
24.
4,000
$20 per bundle
C.
$10,000
$ 3,000
$ 4,000
ANS:
A.
LRV
= (AR SR)AH
= ($18 $15)6,350
= $19,050 U
B.
LEV
= (AH SH)SR
= (6,350 6,500)$15
= $2,250 F
C.
Work in Process
97,500
A supplier told Overland that it could purchase a couple
Labor Rate Variance
19,050
of similar components under a different brand name at
Labor Efficiency Variance
2,250
a lower price. This would result in cost savings of
Accrued Payroll
114,300
$2,000 per car. Furthermore, the company found that it
could redesign its manufacturing process to cut down
on both inspection labor and worker labor, which would PTS:
1
DIF:
Difficulty: Easy
result in cost savings of $1,000 per car.
OBJ:
LO: 10-5 | LO: 10-6
NAT:
BUSPROG: Analytic
Historical experience can provide an initial guideline for
STA:
AICPA: FN-Measurement | IMA: Performance
setting standards, but should be used with caution
Measurement | ACBSP: APC-06-Recording Transactions | because they can perpetuate existing inefficiencies.
ACBSP: APC-33-Incremental analysis
KEY:
Engineering studies can identify efficient approaches
Bloom's: Application
rigorous guidelines, but engineering standards often are
NOT:
5 min.
too rigorous. Input from operating personnel-since
operating personnel are accountable for meeting
ESSAY
standards, they should have significant input in setting
standards.
You decide
PTS:
1
DIF:
Difficulty: Moderate
1. Explain the three potential sources of quantitative
OBJ:
LO: 10-1
standards.
NAT:
BUSPROG: Communication
STA:
AICPA: FN-Decision Modeling | IMA: Strategic
ANS:
Planning | ACBSP: APC-25-Managerial
Characteristics/Terminology
KEY:
Bloom's: Comprehension
NOT:
5 min.