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# Multiple Choice

I really need help solving these problems.

1.) Poorly trained workers could have an unfavorable effect on which of the following variances?

Labor Rate Variance Materials Quantity Variance
a.) Yes Yes
b.) No No
c.) No Yes
d.) Yes No

2.) The variance that is most useful in assessing the performance of the purchasing department manager is:

the labor rate variance.

the materials quantity variance.

the labor efficiency variance.

the materials price variance.

3.) During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers were being 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?

Labor Rate Variance Labor Efficiency Variance
A.) No effect Unfavorable
B.) Unfavorable Favorable
C.) Unfavorable No effect
D.) Favorable Unfavorable

4.) Persechino Corporation is developing standards for its products. One product requires an input that is purchased for \$82.00 per kilogram from the supplier. By paying cash, the company gets a discount of 2% off this purchase price. Shipping costs from the supplier's warehouse amount to \$6.55 per kilogram. Receiving costs are \$0.47 per kilogram. The standard price per kilogram of this input should be:

\$87.38

\$90.66

\$76.62

\$82.00

5.) Mayall Corporation is developing standards for its products. Each unit of output of the product requires 0.92 kilogram of a particular input. The allowance for waste and spoilage is 0.02 kilogram of this input for each unit of output. The allowance for rejects is 0.11 kilogram of this input for each unit of output. The standard quantity in kilograms of this input per unit of output should be:

0.90

1.05

0.92

0.79

6.) The budget for May called for production of 9,000 units. Actual output for the month was 8,500 units with total direct materials cost of \$127,500 and total direct labor cost of \$77,775. The direct labor standards call for 45 minutes of direct labor per unit at a cost of \$12 per direct labor-hour. The direct materials standards call for one pound of direct materials per unit at a cost of \$15 per pound. The actual direct labor-hours were 6,375. Variance analysis of the performance for the month of May would indicate:

\$1,275 favorable direct labor efficiency variance.

\$7,500 favorable materials quantity variance.

\$1,275 unfavorable direct labor rate variance.

\$1,275 unfavorable direct labor efficiency variance.

7.) Information on Rex Co.'s direct material costs for May follows:

Actual quantity of direct materials purchased and used: 30,000 pounds
Actual cost of direct materials: \$84,000
Unfavorable direct materials quantity variance: \$3,000
Standard quantity of direct materials allowed for May production: 29,000 pounds

For the month of May, what was Rex's direct materials price variance?

\$6,000 favorable

\$2,800 favorable

\$6,000 unfavorable

\$2,800 unfavorable

8.) Matt Company uses a standard cost system. Information for raw materials for Product RBI for the month of October follows:

Standard price per pound of raw materials: \$1.60
Actual price per pound of raw materials: \$1.55
Actual quantity of raw materials purchased: 2,000 pounds
Actual quantity of raw materials used: 1,900 pounds
Standard quantity allowed for actual production: 1,800 pounds

What is the materials purchase price variance?

\$100 unfavorable

\$100 favorable

\$90 unfavorable

\$90 favorable

9.) Magno Cereal Corporation uses a standard cost system to collect costs related to the production of its "crunchy pickle" cereal. The pickle (materials) standards for each batch of cereal produced are 1.4 pounds of pickles at a standard cost of \$3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pounds at a total cost of \$253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for the month of August?

\$18,000 favorable

\$54,000 unfavorable

\$1,500 unfavorable

\$19,500 unfavorable

10.) The following materials standards have been established for a particular product:

Standard quantity per unit of output: 2.8 grams
Standard price: \$12.50 per gram

The following data pertain to operations concerning the product for the last month:

Actual materials purchased: 6,200 grams
Actual cost of materials purchased \$81,530
Actual materials used in production: 5,700 grams
Actual output: 1,800

What is the materials price variance for the month?

\$8,679 U

\$6,250 U

\$6,575 U

\$4,030 U

11.) Lange Company manufactures abstract-shaped sculptures made out of liquid jade. Each sculpture requires two (2) gallons of liquid jade. Because of the instability of the liquid jade at times, some sculptures crack or shatter during the production process. The jade used in the broken sculptures cannot be reused and is discarded. On the average, one sculpture is expected to be lost for every nine sculptures produced. In other words, eight good sculptures are generated from every nine production attempts.

Under traditional standard costing, what amount should Lange use for the standard quantity of liquid jade per sculpture?

2.222 gallons

2.250 gallons

2.000 gallons

2.125 gallons

12.) Lange Company manufactures abstract-shaped sculptures made out of liquid jade. Each sculpture requires two (2) gallons of liquid jade. Because of the instability of the liquid jade at times, some sculptures crack or shatter during the production process. The jade used in the broken sculptures cannot be reused and is discarded. On the average, one sculpture is expected to be lost for every nine sculptures produced. In other words, eight good sculptures are generated from every nine production attempts.

Under a total quality management (TQM) approach to standard costing, what amount should Lange use for the standard quantity of liquid jade per sculpture?

2.250 gallons

2.125 gallons

2.222 gallons

2.000 gallons

13.) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at \$20 per ounce
Direct labor: 1.4 hours at \$12.50 per hour
Variable manufacturing overhead: 1.4 hours at ? per hour

Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October:

? 3,750 units of compound were produced during the month.
? There was no beginning direct materials inventory.
? The ending direct materials inventory was 2,000 ounces.
? Direct materials purchased: 12,000 ounces for \$225,000.
? Direct labor hours worked: 5,600 hours at a cost of \$67,200.
? Variable manufacturing overhead costs incurred amounted to \$18,200.
? Variable manufacturing overhead applied to products: \$18,375.

The direct materials price variance for October is:

\$15,000 favorable

\$25,000 favorable

\$25,000 unfavorable

\$15,000 unfavorable

14.) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at \$20 per ounce
Direct labor: 1.4 hours at \$12.50 per hour
Variable manufacturing overhead: 1.4 hours at ? per hour

Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October:

? 3,750 units of compound were produced during the month.
? There was no beginning direct materials inventory.
? The ending direct materials inventory was 2,000 ounces.
? Direct materials purchased: 12,000 ounces for \$225,000.
? Direct labor hours worked: 5,600 hours at a cost of \$67,200.
? Variable manufacturing overhead costs incurred amounted to \$18,200.
? Variable manufacturing overhead applied to products: \$18,375.
The direct materials quantity variance for October is:

\$12,500 favorable

\$52,500 unfavorable

\$52,500 favorable

\$12,500 unfavorable

15.) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at \$20 per ounce
Direct labor: 1.4 hours at \$12.50 per hour
Variable manufacturing overhead: 1.4 hours at ? per hour

Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October:

? 3,750 units of compound were produced during the month.
? There was no beginning direct materials inventory.
? The ending direct materials inventory was 2,000 ounces.
? Direct materials purchased: 12,000 ounces for \$225,000.
? Direct labor hours worked: 5,600 hours at a cost of \$67,200.
? Variable manufacturing overhead costs incurred amounted to \$18,200.
? Variable manufacturing overhead applied to products: \$18,375.

The direct labor efficiency variance for October is:

\$1,900 unfavorable

\$1,400 favorable

\$3,750 favorable

\$4,375 unfavorable

16.) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at \$20 per ounce
Direct labor: 1.4 hours at \$12.50 per hour
Variable manufacturing overhead: 1.4 hours at ? per hour

Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October:

? 3,750 units of compound were produced during the month.
? There was no beginning direct materials inventory.
? The ending direct materials inventory was 2,000 ounces.
? Direct materials purchased: 12,000 ounces for \$225,000.
? Direct labor hours worked: 5,600 hours at a cost of \$67,200.
? Variable manufacturing overhead costs incurred amounted to \$18,200.
? Variable manufacturing overhead applied to products: \$18,375.

The variable overhead spending variance for October is:

\$1,900 unfavorable

\$4,375 unfavorable

\$3,750 favorable

\$1,400 favorable

17.) Ravena Labs., Inc. makes a single product which has the following standards:

Direct materials: 2.5 ounces at \$20 per ounce
Direct labor: 1.4 hours at \$12.50 per hour
Variable manufacturing overhead: 1.4 hours at ? per hour

Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are available for October:

? 3,750 units of compound were produced during the month.
? There was no beginning direct materials inventory.
? The ending direct materials inventory was 2,000 ounces.
? Direct materials purchased: 12,000 ounces for \$225,000.
? Direct labor hours worked: 5,600 hours at a cost of \$67,200.
? Variable manufacturing overhead costs incurred amounted to \$18,200.
? Variable manufacturing overhead applied to products: \$18,375.

The variable overhead efficiency variance for October is:

\$2,700 favorable

\$1,400 favorable

\$1,225 unfavorable

\$1,900 unfavorable

18.) Grub Chemical Company has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:

Standard Cost Per Batch
Milk Chocolate (2 pounts @ \$0.85 per pound) \$1.70
Direct labor (1.25 hours @ \$12.00 per hour) \$15.00
Variable overhead (1.25 hours @ \$44.00 per hour) \$55.00

Variable manufacturing overhead at Grub is applied based on direct labor hours. The actual results for last month were as follows:

Number of batches produced........................3,800
Direct labor hours incurred............................4,510
Pounds of chocolate purchased.....................9,000
Pounds of chocolate used in production.....7,880
Cost of chocolate purchased.........................\$7,200
Direct labor cost................................................\$53,218

What is ChocO's materials (milk chocolate) price variance?

\$740 unfavorable

\$450 favorable

\$502 unfavorable

\$56 favorable

19.) Grub Chemical Company has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:

Standard Cost Per Batch
Milk Chocolate (2 pounts @ \$0.85 per pound) \$1.70
Direct labor (1.25 hours @ \$12.00 per hour) \$15.00
Variable overhead (1.25 hours @ \$44.00 per hour) \$55.00

Variable manufacturing overhead at Grub is applied based on direct labor hours. The actual results for last month were as follows:

Number of batches produced........................3,800
Direct labor hours incurred............................4,510
Pounds of chocolate purchased.....................9,000
Pounds of chocolate used in production.....7,880
Cost of chocolate purchased.........................\$7,200
Direct labor cost................................................\$53,218

What is ChocO's materials (milk chocolate) quantity variance?

\$952 favorable

\$1,190 unfavorable

\$238 unfavorable

\$476 unfavorable

20.) Grub Chemical Company has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:

Standard Cost Per Batch
Milk Chocolate (2 pounts @ \$0.85 per pound) \$1.70
Direct labor (1.25 hours @ \$12.00 per hour) \$15.00
Variable overhead (1.25 hours @ \$44.00 per hour) \$55.00

Variable manufacturing overhead at Grub is applied based on direct labor hours. The actual results for last month were as follows:

Number of batches produced........................3,800
Direct labor hours incurred............................4,510
Pounds of chocolate purchased.....................9,000
Pounds of chocolate used in production.....7,880
Cost of chocolate purchased.........................\$7,200
Direct labor cost................................................\$53,218

What is ChocO's labor rate variance?

\$3,782 favorable

\$902 favorable

\$2,880 favorable

\$14,432 favorable

21.) Jiles Corporation is developing direct labor standards. The basic direct labor wage rate is \$12.40 per hour. Employment taxes are 11% of the basic wage rate. Fringe benefits are \$3.51 per hour. A particular product requires 0.83 direct labor-hours per unit. The allowance for breaks and personal needs is 0.03 direct labor-hours per unit. The allowance for cleanup, machine downtime, and rejects is 0.10 direct labor-hours per unit.

Required:

a. Determine the standard rate per direct labor-hour. Show your work!

b. Determine the standard direct labor-hours per unit of product. Show your work!

c. Determine the standard labor cost per unit of product to the nearest cent. Show your work!

#### Solution Summary

The solution explains various multiple choice questions relating to variance calculations.

\$2.19