Test 3 (CH. 8,9)
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Test 3 (CH. 8,9)

Course: ACG 203, Spring 2008

School: UNC Wilmington

Word Count: 2463

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NOTICE: This test covers only chapters 8 & 9. Your test will cover chapter 11 also. I will try to find some problems for you from chapter 11. Good luck! Accounting 203 Test 3 Chapters 8,9 1. A favorable material price variance coupled with an unfavorable material usage variance would most likely result from: A) machine efficiency problems. B) the purchase and use of lower than standard quality material. C)...

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This NOTICE: test covers only chapters 8 & 9. Your test will cover chapter 11 also. I will try to find some problems for you from chapter 11. Good luck! Accounting 203 Test 3 Chapters 8,9 1. A favorable material price variance coupled with an unfavorable material usage variance would most likely result from: A) machine efficiency problems. B) the purchase and use of lower than standard quality material. C) labor efficiency problems. D) the purchase and use of higher than standard quality material. 2. If the labor efficiency variance is unfavorable, then: A) the standard rate exceeded the actual rate. B) the actual rate exceeded the standard rate. C) standard hours allowed for the actual output exceeded actual hours. D) actual hours exceeded standard hours allowed for the actual output. 3. Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variable will be: A) either favorable or unfavorable. B) zero. C) unfavorable. D) favorable. 4. The terms "standard quantity allowed" or "standard hours allowed" means: A) the actual input in units multiplied by the standard output allowed. B) the actual output in units multiplied by the standard input allowed. C) the standard output in units multiplied by the standard input allowed. D) the actual output in units multiplied by the standard output allowed. Version 1 Page 1 5. The following materials standards have been established for a particular product: Standard quantity per unit of output ... Standard price ..................................... 5.3 meters $17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased ................... 8,100 meters Actual cost of materials purchased ....... $141,345 Actual materials used in production...... 7,600 meters Actual output......................................... 1,400 units What is the materials price variance for the month? A) $2,025 U B) $8,600 U C) $8,725 U D) $3,141 U 6. The following materials standards have been established for a particular product: Standard quantity per unit of output ... Standard price ..................................... 5.3 meters $17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased ................... 8,100 meters Actual cost of materials purchased ....... $141,345 Actual materials used in production...... 7,600 meters Actual output......................................... 1,400 units What is the materials quantity variance for the month? A) $2,025 U B) $8,600 U C) $3,096 U D) $3,141 U Version 1 Page 2 7. The standard cost card for one unit of a certain finished product shows the following: Direct materials .................................. Direct labor ........................................ Variable manufacturing overhead ...... Standard Quantity or Hours 10 pounds 2.5 hours 1.5 hours Standard Price or Rate $ ? per pound $16 per hour $10 per hour If the total standard variable cost for one unit of finished product is $85, then the standard price per pound for direct materials is: A) $5.90. B) $3.00. C) $4.60. D) $1.74. 8. The Cox Company uses standard costing. The following data are available for April: Actual quantity of direct materials used ........ Standard price of direct materials .................. Material quantity variance ............................. 12,200 gallons $4 per gallon $2,000 unfavorable The standard quantity of material allowed for April production is: A) 11,700 gallons. B) 10,200 gallons. C) 12,700 gallons. D) 14,200 gallons. 9. The Swenson Company has a standard costing system. The following data are available for June: Actual quantity of direct materials purchased ..... Standard price of direct materials........................ Material price variance ........................................ Material quantity variance................................... 35,000 pounds $4 per pound $7,000 unfavorable $4,200 favorable The actual price per pound of direct materials purchased in June is: A) $4.20. B) $4.08. C) $3.92. D) $4.32. Version 1 Page 3 10. Palo Corp. manufactures one product with a standard direct labor cost of 2 hours at $6.00 per hour. During March, 500 units were produced using 1,050 hours at $6.10 per hour. The unfavorable direct labor efficiency variance is: A) $105. B) $300. C) $305. D) $100. 11. The following labor standards have been established for a particular product: Standard labor hours per unit of output ...... 8.7 hours Standard labor rate ...................................... $18.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked ........... 3,800 hours Actual total labor cost ......... $67,640 Actual output....................... 500 units What is the labor efficiency variance for the month? A) $11,095 F B) $9,790 F C) $11,095 U D) $9,955 F Use the following to answer questions 12-15: The Odle Company makes and sells a single product called a Kitt. Odle employs a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9 direct labor hours at $15 per hour. There were no inventories of any kind on June 1. During June, the following events occurred: - Purchased 17,000 pounds of material at a total cost of $190,000. - Used 15,000 pounds of material to produce 2,400 Kitts. - Used 1,900 hours of direct labor time at a total cost of $38,000. 12. The direct labor rate variance would be A) $15,200 U. B) $ 9,500 F C) $ 2,000 debit. D) $ 9,500 U Version 1 Page 4 13. The direct labor efficiency variance would be A) $5,600 F B) $3,900 credit. C) $5,600 U D) $7,500 F 14. The Material Price Variance would be A) $14,000 U B) $10,000 debit. C) $14,000 F D) $10,000 F 15. The Direct Materials Quantity Variance would be A) $36,000 debit. B) $60,000 U C) $46,000 U D) $60,000 F Use the following to answer questions 16-19: The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept. Direct 2 materials......... gallons at $4 per gallon Direct labor............... 0.5 hours at $8 per hour During September, the company made 6,000 Lepts and incurred the following costs: Direct materials purchased ......... 13,400 gallons at $4.10 per gallon Direct materials used .................. 12,600 gallons Direct labor used......................... 2,800 hours at $7.65 per hour 16. The material price variance for September was: A) $1,260 favorable. B) $1,260 unfavorable. C) $1,340 unfavorable. D) $1,340 favorable. Version 1 Page 5 17. The material quantity variance for September was: A) $2,400 unfavorable. B) $2,460 unfavorable. C) $5,740 unfavorable. D) $5,600 unfavorable. 18. The labor rate variance for September was: A) $ 280 favorable. B) $1,530 unfavorable. C) $ 980 unfavorable. D) $ 980 favorable. 19. The labor efficiency variance for September was: A) $22,400 favorable. B) $ 3,200 favorable. C) $ 1,600 favorable. D) $33,600 favorable. 20. A static budget: A) is valid for only one level of activity. B) should be compared to actual costs to assess how well costs were controlled. C) represents the best way to set spending targets for managers. D) should be compared to a flexible budget to assess how well costs were controlled. 21. The variable overhead efficiency variance is most effective in measuring: A) the difference between actual hours utilized in production and the standard hours allowed at a certain level of output. B) the difference between actual variable overhead costs incurred during the period and the budget allowance based on actual input. C) excessive usage of overhead resources. D) the difference between actual variable overhead costs incurred during the period and the budget amount based on the time that should have been expended in producing at a certain level of activity. 22. The higher the denominator level of activity: A) the lower the cost per unit of product. B) the more profitable operations likely will be. C) the higher the cost per unit of product. D) the less likely is the occurrence of a volume variance. Version 1 Page 6 23. In a standard cost system, the volume variance will be unfavorable when: A) the standard hours allowed for the output of the period are less than the denominator hours. B) the standard hours allowed for the output of the period are greater than the actual hours incurred. C) actual hours are less than the denominator hours. D) actual hours are greater than the denominator hours. 24. At Eady Company, maintenance is a variable cost that varies directly with machinehours. The performance report for July showed that actual maintenance costs totaled $8,650 and that the associated spending variance was $250 favorable. If 5,000 machinehours were actually worked during July, the budgeted maintenance cost per machinehour was: A) $1.68. B) $1.83. C) $1.78. D) $1.73. 25. The Ammon Company uses a standard cost system in which manufacturing overhead is applied to units on the basis of machine-hours. During July, the company budgeted $350,000 in manufacturing overhead cost at a denominator activity of 25,000 machinehours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during July: Total actual manufacturing overhead cost incurred ...... $325,000 4,600 Units of product completed ........................................... 23,000 Actual machine-hours worked ...................................... The amount of overhead cost that the company applied to work in process for July was: A) $322,000. B) $325,000. C) $315,000. D) $292,500. Version 1 Page 7 Use the following to answer questions 26-28: Barrick Company has established a flexible budget for manufacturing overhead based on direct labor-hours. Total budgeted costs at 200,000 direct labor-hours are as follows: Variable costs (total): Packing supplies .............. Indirect labor ................... Fixed costs (total): Utilities ............................ Rent ................................. Insurance ......................... $120,000 $180,000 $100,000 $ 40,000 $ 20,000 26. The flexible budget for factory overhead would show that the variable factory overhead cost per direct labor-hour is: A) $0.90. B) $1.80. C) $0.60. D) $1.50. 27. At an activity level of 170,000 direct labor-hours, the flexible budget for factory overhead would show the budgeted amount for utilities as: A) $100,000. B) $160,000. C) $ 85,000. D) $140,000. 28. If Barrick Company plans to operate at 180,000 direct labor-hours during the next period, the flexible budget would show indirect labor costs of: A) $180,000. B) $270,000. C) $171,000. D) $162,000. Version 1 Page 8 Use the following to answer questions 29-33: Franklin Glass Works uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labor-hours. Each unit requires two standard hours of labor for completion. The denominator activity for the year was based on budgeted production of 200,000 units. Total overhead was budgeted at $900,000 for the year, and the variable overhead rate was $3.00 per unit. The actual data pertaining to the manufacturing overhead for the year are presented below: 29. Franklin's variable overhead efficiency variance for the year is: A) $70,400 favorable. B) $33,000 favorable. C) $66,000 unfavorable. D) $70,400 unfavorable. 30. Franklin's variable overhead spending variance for the year is: A) $52,000 unfavorable. B) $85,000 unfavorable. C) $85,000 favorable. D) $52,000 favorable. 31. Franklin's fixed overhead budget variance for the year is: A) $52,000 unfavorable. B) $85,000 favorable. C) $85,000 unfavorable. D) $52,000 favorable. 32. Franklin's fixed overhead volume variance for the year is: A) $55,000 unfavorable. B) $3,000 unfavorable. C) $19,000 favorable. D) $25,000 favorable. 33. The fixed overhead applied to Franklin's production for the year is: A) $297,000. B) $484,200. C) $300,000. D) $352,000. Version 1 Page 9 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. B D C B A A B A A B D D B C A C A D C A A A A C A D A D C C A B A Version 1 Page 10

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