Question 1

A favorable cost variance occurs when
A)actual costs are more than standard costs
B)standard costs are more than actual costs
C)standard costs are less than actual costs
D)actual costs are the same as standard costs

Accepted Answer

A favorable cost variance happens when the actual costs incurred are less than what was planned or budgeted, hence when standard costs are more than actual costs.

Question 2

Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour. What is the direct labor time variance?
A)$9,300 favorable
B)$9,300 unfavorable
C)$9,450 favorable
D)$9,450 unfavorable

Accepted Answer

The answer of Jaxson Corporation has the following data related...

Question 3

Standard costs are divided into which of the following components?
A)variance standard and quantity standard
B)materials standard and labor standard
C)quality standard and quantity standard
D)price standard and quantity standard

Accepted Answer

Standard costs are generally divided into two components: price standard and quantity standard. The price standard is the expected cost of the input, while the quantity standard is the expected quantity of the input to be used. Together, they help to establish the expected total cost of a production process. Therefore, option D, which includes price standard and quantity standard, is the correct answer.

Question 4

If the price paid per unit differs from the standard price per unit for direct materials, the variance is a
A)variable variance
B)controllable variance
C)price variance
D)volume variance

Accepted Answer

If the price paid per unit differs from the standard price per unit for direct materials, the resulting variance is known as a price variance.

Question 5

The total manufacturing cost variance is
A)the difference between actual costs and standard costs for units produced
B)the flexible budget variance plus the time variance
C)the difference between planned costs and standard costs for units produced
D)none of the answers are correct

Accepted Answer

The total manufacturing cost variance is the difference between actual costs and standard costs for units produced. This variance measures the overall difference between the actual costs incurred and the costs that should have been incurred based on the standards set by the organization.

Question 6

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are  The amount of direct materials price variance is
A)$2,750 unfavorable variance
B)$2,750 favorable variance
C)$1,500 favorable variance
D)$1,500 unfavorable variance

Accepted Answer

The answer of The standard costs and actual costs for...

Question 7

The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70
Actual costs 6,000 hours at $12.00
What is the direct labor time variance?
A)$18,000 favorable
B)$18,000 unfavorable
C)$17,550 unfavorable
D)$17,550 favorable

Accepted Answer

Direct Labor Time Variance = (Actual Hours - Standard Hours) x Standard Hourly Rate
= (6,000 - 7,500) x $11.70
= 1,500 x $11.70
= $17,550 unfavorable

Therefore, the answer is D, $17,550 favorable is incorrect as the variance is unfavorable. A and B are also incorrect as they provide an amount but do not indicate whether it is favorable or unfavorable.

Question 8

The materials price variance is
A)$0
B)$59,400 unfavorable
C)$59,400 favorable
D)$6,000 unfavorable

Accepted Answer

The answer of The materials price variance is
A)$0
B)$59,400 unfavorable
C)$59,400 favorable
D)$6,000...

Question 9

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials quantity variance?
A)$1,020 favorable
B)$1,020 unfavorable
C)$900 favorable
D)$900 unfavorable

Accepted Answer

Direct materials quantity variance = (actual quantity - standard quantity) x standard price

Actual quantity = 5,000 pounds

Standard quantity = 4,800 pounds

Standard price = $5.10 per pound

Direct materials quantity variance = (5,000 - 4,800) x $5.10 = $1,020 unfavorable.

Question 10

The total manufacturing cost variance consists of
A)direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance
B)direct materials cost variance, direct labor rate variance, and factory overhead cost variance
C)direct materials cost variance, direct labor cost variance, and variable factory overhead controllable variance
D)direct materials cost variance, direct labor cost variance, and factory overhead cost variance

Accepted Answer

The total manufacturing cost variance consists of three variances: direct materials cost variance, direct labor cost variance, and factory overhead cost variance. The direct materials cost variance measures the difference between the standard cost of the actual quantity of materials used and the actual cost of those materials. The direct labor cost variance measures the difference between the standard cost of the actual hours worked and the actual cost of those hours. The factory overhead cost variance measures the difference between the standard cost of the actual volume of overhead incurred and the actual cost of that overhead. Therefore, D is the correct answer.

Question 11

If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a
A)time variance
B)price variance
C)quantity variance
D)rate variance

Accepted Answer

The answer of If the actual direct labor hours spent...

Question 12

The direct materials quantity variance is
A)22,800 favorable
B)22,800 unfavorable
C)52,000 favorable
D)52,000 unfavorable

Accepted Answer

The answer of The direct materials quantity variance is
A)22,800 favorable
B)22,800...

Question 13

The materials quantity variance is
A)63,000 favorable
B)63,000 unfavorable
C)59,400 favorable
D)59,400 unfavorable

Accepted Answer

The answer of The materials quantity variance is
A)63,000 favorable
B)63,000 unfavorable
C)59,400...

Question 14

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are  The amount of the direct materials quantity variance is
A)$875 favorable variance
B)$850 unfavorable variance
C)$850 favorable variance
D)$875 unfavorable variance

Accepted Answer

The answer of The standard costs and actual costs for...

Question 15

The direct materials price variance is
A)$22,800 unfavorable
B)$22,800 favorable
C)$52,000 unfavorable
D)$52,000 favorable

Accepted Answer

The answer of The direct materials price variance is
A)$22,800 unfavorable
B)$22,800...

Question 16

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $4.50; And standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials price variance?
A)$3,000 favorable
B)$3,000 unfavorable
C)$2,880 favorable
D)$2,880 unfavorable

Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($4.50 - $5.10) x 5,000 = -$3,000, which is favorable because the actual price is less than the standard price.

Question 17

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a
A)variable variance
B)rate variance
C)quantity variance
D)volume variance

Accepted Answer

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is known as the rate variance. This variance measures the difference between the actual rate paid and the standard rate, multiplied by the actual hours worked. It helps in determining whether the company paid more or less for labor compared to the standard rate. The other options listed (variable variance, quantity variance, and volume variance) do not specifically relate to differences in wage rates.

Question 18

?If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a
A)controllable variance
B)price variance
C)quantity variance
D)rate variance

Accepted Answer

If the actual quantity of direct materials used differs from the standard quantity, the variance is known as the quantity variance. This represents the difference in cost between the actual quantity of materials used and the standard quantity that should have been used for the actual level of production.

Question 19

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour.Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor time variance?
A)$1,650 favorable
B)$1,650 unfavorable
C)$1,500 favorable
D)$1,500 unfavorable

Accepted Answer

Direct Labor Time Variance = (Actual Hours - Standard Hours) x Standard Rate

Direct Labor Time Variance = (5,500 - 5,000) x $23.70

Direct Labor Time Variance = 500 x $23.70

Direct Labor Time Variance = $11,850

Since the actual costs are higher than the standard costs, the variance is unfavorable. Therefore, the correct answer is B, $1,650 unfavorable.

Question 20

Which of the following is not a reason standard costs are separated into two components?
A)The price and quantity variances need to be identified separately to correct the actual major differences
B)Identifying variances determines which manager must find a solution to major discrepancies
C)If a negative variance is overshadowed by a favorable variance, managers may overlook potential corrections
D)Variances bring attention to discrepancies in the budget and require managers to revise budgets closer to actual results

Accepted Answer

Standard costs are separated into price and quantity components primarily to identify where variances occur, assign responsibility, and ensure that negative variances are addressed. The separation is not specifically about revising budgets closer to actual results, but about managing and controlling costs effectively.

Quiz 7: Performance Evaluation Using Variances From Standard Costs

A favorable cost variance occurs when

Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour. What is the direct labor time variance?

Standard costs are divided into which of the following components?

If the price paid per unit differs from the standard price per unit for direct materials, the variance is a

The total manufacturing cost variance is

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are The amount of direct materials price variance is

The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70 Actual costs 6,000 hours at $12.00 What is the direct labor time variance?

The materials price variance is

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials quantity variance?

The total manufacturing cost variance consists of

If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a

The direct materials quantity variance is

The materials quantity variance is

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are The amount of the direct materials quantity variance is

The direct materials price variance is

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $4.50; And standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials price variance?

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a

?If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a

The following data relate to direct labor costs for August: Actual costs: 5,500 hours at $24.00 per hour.Standard costs: 5,000 hours at $23.70 per hour. What is the direct labor time variance?

Which of the following is not a reason standard costs are separated into two components?