Chapter 10 Multiple choice – Flashcards

A direct materials quantity standard generally includes an allowance for waste

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased

Waste on the production line will result in an unfavorable materials quantity variance

A materials price variance is unfavorable if the actual price exceeds the standard price

A favorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

The standard price per unit for direct materials should not include the cost of delivering the materials.

Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance

An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates

The standard labor rate per hour defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits

The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used

A quantity standard indicates how much output should have been produced

The standard cost per unit is computed by dividing the standard quantity or hours by the standard price or rate

Which of the following would produce a materials price variance?

The variance that is usually most useful in assessing the performance of the purchasing department manager is

Poor quality materials could have an unfavorable effect on which of the following variances

Which of the following would produce a labor rate variance

During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

In a company's standard costing system direct labor-hours are used as the base for applying variable manufacturing overhead costs. The standard direct labor rate is twice the variable overhead rate. Last period the labor efficiency variance was unfavorable. From this information one can conclude that last period the variable overhead efficiency variance was

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be: