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Exam 9: Standard Costing and Variances

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Question 21

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Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon.During July,Scarlett Company purchased and used 7,500 gallons.The direct material quantity variance was $750 unfavorable and the direct material price variance was $3,000 favorable.What price per gallon was paid for the purchases?

A) $5.00
B) $5.40
C) $4.60
D) $2.50

E) All of the above
F) A) and B)

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Question 22

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The price variance for direct labor is called the direct labor rate variance.Because the price of direct labor is called the direct labor rate,the price variance for labor is called the direct labor rate variance.

A) True
B) False

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Question 23

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In a standard cost system,overhead is applied per unit by multiplying the standard overhead rate times the standard quantity of the cost driver.This is a key difference between the standard cost system and the normal cost system - overhead is applied based on the standard quantity of the cost driver rather than the actual quantity.

The difference between budgeted volume and practical capacity,multiplied by the fixed overhead rate,is the

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the over- or underapplied variable overhead?

The formula SP × (SQ - AQ) is the

The difference between the actual price and the standard price,multiplied by the actual quantity of materials purchased is the

Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon.During July,Cooper Company purchased and used 13,000 gallons,paying $93,200.The direct materials quantity variance was $1,500 unfavorable.How many units were produced?

In a standard cost system,an unfavorable variance will appear as

The difference between the actual quantity and the standard quantity,multiplied by the standard price is the

Jupiter Co.applies overhead based on direct labor hours.The variable overhead standard is 4 hours at $12 per hour.During February,Jupiter Co.spent $113,400 for variable overhead.9,150 labor hours were used to produce 2,400 units.What is the variable overhead rate variance?

The fixed overhead volume variance is the difference between

A fixed overhead rate based on _______________ highlights for management attention the cost of unutilized capacity.

Madrid Co.has a direct labor standard of 4 hours per unit of output.Each employee has a standard wage rate of $11 per hour.During February,Madrid Co.paid $99,500 to employees for 9,150 hours worked.2,400 units were produced during February.What is the direct labor efficiency variance?

The formula SR × (SH - AH) is the

Venus Company applies overhead based on direct labor hours.The variable overhead standard is 10 hours at $3.50 per hour.During October,Venus Company spent $157,600 for variable overhead.47,440 labor hours were used to produce 4,800 units.What is the variable overhead rate variance?

An ideal standard is one which can be achieved only under perfect conditions.This is the definition of an ideal standard.

The variable overhead rate variance is the difference between the actual variable overhead rate and the standard variable overhead rate multiplied by the actual value of the cost driver.This is the formula for the variable overhead rate variance.

The difference between the actual labor rate and the standard labor rate,multiplied by the actual labor hours is the

The production manager is typically responsible for the direct labor rate variance.It is difficult to hold an individual manager responsible for the direct labor rate variance because many factors can influence the wage rate.