A. when the actual direct labor rate exceeds the standard direct labor rate Question 9 Which of the following best describes standard costs? A. costs used as a budget for a single unit of product Question 10 A company is setting its direct materials and direct labor standards for its leading product. Materials cost from the supplier are $5 per square foot, net of purchase discount. Freight-in amounts to $0.10 per square foot. Basic wages of the assembly line personnel are $10 per hour. Payroll taxes are approximately 20% of wages. Benefits amount to $2 per hour. How much is the direct material cost standard (per square foot)?
A. $5.10 per square foot Direct material cost standard (per square foot) = Cost per square foot + Freight-in cost Direct material cost standard (per square foot) = $5 + $0.10 = $5.10 Question 11 Which of the following is one of the reasons why companies use standard costs? A. to set performance targets Question 12 Which of the following is an example of a materials cost standard? A. $0.95 per square foot Question 13 Only unfavorable variances should be investigated, if substantial, to determine their causes. A. False Question 14 A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost. A. True Question 15 Favorable variances are added to unfavorable variances to create a total favorable variance. A. False Question 16 1 / 1 pts Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Emerald uses standard costs to prepare its flexible budget.
For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Materials: 1.5 pounds per unit; $4 per pound Labor: 2 hours per unit; $18 per hour During the first quarter, Emerald produced 5,000 units of this product. At the end of the quarter, an examination of the materials records showed that the company used 7,000 pounds of materials and the direct materials cost variance was $1,750 U. Which of the following would be a logical explanation for this variance? A. The company paid a higher price for the materials than allowed by the standards. Question 17 What does a favorable direct materials cost variance indicate? A. The actual cost of materials purchased was less than the standard cost of materials purchased. Question 18 Delicious Food Products is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was a favorable materials cost variance. Which of the following would be a logical explanation for that variance?
- Spring '16
- food products, department manager