Chapter 23/Performance Evaluation Using Variances From Standard Costs ? 231
The following data is given for the Walker Company:
Budgeted production 1,000 units Actual production 980 units Materials: Standard price per lb $2.00 Standard pounds per completed unit 12 Actual pounds purchased and used in production 11,800 Actual price paid for materials $23,000 Labor: Standard hourly labor rate $14 per hour Standard hours allowed per completed unit 4.5 Actual labor hours worked 4,560 Actual total labor costs $62,928 Overhead: Actual and budgeted fixed overhead $27,000 Standard variable overhead rate $3.50 per standard labor hour Actual variable overhead costs $15,500 Overhead is applied on standard labor hours.
35. The direct labor rate variance is:
a. 912U b. 912F c. 2,100U d. 2,100F ANS: B DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
36. The direct labor time variance is:
a. 912F b. 912U c. 2,100U d. 2,100F ANS: C DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
232 ??Chapter 23/Performance Evaluation Using Variances From Standard Costs
The following data is given for the Walker Company:
Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours.
37. The direct labor rate variance is:
a. 6,000U b. 6,000F c. 33,000F d. 33,000U ANS: B DIF: Difficult OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
38. The direct labor time variance is:
a. 6,000F b. 6,000U c. 33,000U d. 33,000F ANS: C DIF: Difficult OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
The Joyner Corporation had 8,000 actual direct labor hours at an actual rate of $12.20 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.5 hours per completed unit at a standard rate of $13 per hour.
39. Compute the labor rate variance.
a. 6,400U b. 6,400F c. 6,500U d. 6,500U ANS: B DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
Chapter 23/Performance Evaluation Using Variances From Standard Costs ? 233
40. Compute the labor time variance.
a. 6,400F b. 6,400U c. 6,500U d. 6,500F ANS: C DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement Standard Actual Material Cost Per Yard $2.00 $2.04 Standard Yards per Unit 5 yards 4.75 yards Units of Production 9,450
41. Calculate the Total Direct Materials cost variance using the above information:
a. $2,929.50 Unfavorable b. $2,929.50 Favorable c. $3,780.00 Unfavorable d. $3,562.50 Favorable ANS: B DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
42. Calculate the Total Direct Materials Price variance using the above information:
a. $1,795.50 Favorable b. $378 Favorable
c. $1,795.50 Unfavorable d. $378 Unfavorable ANS: C DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
43. Calculate the Total Direct Materials Quantity variance using the above information:
a. $2,929.50 Unfavorable b. $2,929.50 Favorable c. $4,725 Unfavorable d. $4,725 Favorable ANS: D DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
234 ??Chapter 23/Performance Evaluation Using Variances From Standard Costs
Standard Actual Rate $12.00 $12.25 Hours 18,900 17,955 Units of Production 9,450
44. Calculate the Direct Labor Variance using the above information
a. $6,851.25 Favorable b. $6,851.25 Unfavorable c. $2,362.50 Unfavorable d. $2,362.50 Favorable ANS: A DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
45. Calculate the Direct Labor Time Variance using the above information
a. $2,362.50 Favorable b. $2,362,50 Unfavorable c. $11,340.00 Favorable d. $11,340.00 Unfavorable ANS: C DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
46. Calculate the Direct Labor Rate Variance using the above information
a. $4,488.75 Unfavorable b. $6,851.25 Favorable c. $4,488.75 Favorable d. $6,851.25 Unfavorable ANS: A DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
47. Which of the following is not a reason for a direct materials quantity variance?
a. Malfunctioning equipment
b. Purchasing of inferior raw materials c. Material requiring rework d. Spoilage of materials ANS: C DIF: Difficult OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
Chapter 23/Performance Evaluation Using Variances From Standard Costs ? 235
48. The formula to compute direct labor rate variance is to calculate the difference between
a. actual costs + (actual hours * standard rate) b. actual costs - standard cost
c. (actual hours * standard rate) - standard costs d. actual costs - (actual hours * standard rate) ANS: D DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
49. The formula to compute direct labor time variance is to calculate the difference between
a. actual costs - standard costs b. actual costs + standard costs
c. (actual hours * standard rate) - standard costs d. actual costs - (actual hours * standard rate) ANS: C DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
50. The formula to compute direct materials price variance is to calculate the difference between
a. actual costs - (actual quantity * standard price) b. actual cost + standard costs c. actual cost - standard costs
d. (actual quantity * standard price) -standard costs ANS: A DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
51. The formula to compute direct material quantity variance is to calculate the difference between
a. actual costs - standard costs b. standard costs - actual costs
c. (actual quantity * standard price) - standard costs d. actual costs - (standard price * standard costs) ANS: C DIF: Moderate OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement
52. Which of the following would not lend itself to applying direct labor variances?
a. Help desk
b. Administrative assistant c. Customer service personnel d. Telemarketer ANS: B DIF: Easy OBJ: 23-03
NAT: AACSB Analytic | IMA-Performance Measurement