Chp 10 – Flashcards

A direct materials quantity standard generally includes an allowance for waste. True False

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. True False

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

A materials price variance is unfavorable if the actual price exceeds the standard price. True False

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. True False

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

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

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. True False

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

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

A quantity standard indicates how much output should have been produced. True False

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

Which of the following would produce a materials price variance? A. An excess quantity of materials used. B. An excess number of direct labor-hours worked in completing a job. C. Shipping materials to the plant by airfreight rather than by truck. D. Breakage of materials in production.

The variance that is usually most useful in assessing the performance of the purchasing department manager is: A. The materials quantity variance. B. The materials price variance. C. The labor rate variance. D. The labor efficiency variance.