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Multiple Choice Quiz
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1
Which of the following phrases correctly describes a standard?
A)A per unit budget that assumes peak efficiency at all times
B)A benchmark to measure performance
C)An allowance for machine breakdowns
D)The effort that should be expended by an average worker
2
Eastbank Company, a lounge chair manufacturer, uses a standard costing system. Each unit of a finished product contains 3 yards of cloth. However, there is unavoidable waste of 0.5 yards per unit of finished product that occurs when the cloth is cut for assembly. The cost of the cloth is $10 per yard. What is the standard direct material cost for cloth per unit of finished product?
A)$5.00
B)$25.00
C)$30.00
D)$35.00
3
Hamrick Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the materials costs of one unit of product:
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During June, the company purchased 165,000 pounds of direct material at a total cost of $1,171,500. The company manufactured 25,000 units of product during June using 151,000 pounds of direct materials. What is the direct material quantity variance for June?
A)$7,000 favorable
B)$7,000 unfavorable
C)$7,100 favorable
D)$7,100 unfavorable
4
Hamrick Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the materials costs of one unit of product:
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During June, the company purchased 165,000 pounds of direct material at a total cost of $1,171,500. The company manufactured 25,000 units of product during June using 151,000 pounds of direct materials. (Note that this is the same data that was provided for the previous question.) What is the price variance for the direct materials acquired by the company for June?
A)$15,100 favorable
B)$15,100 unfavorable
C)$16,500 favorable
D)$16,500 unfavorable
5
Clifford Company reported a favorable materials price variance and an unfavorable materials quantity variance. Based on these variances, what is the most likely conclusion that will be made by the company's cost accountant?
A)The actual cost per unit of materials was less than the standard cost per unit.
B)The actual usage of materials was less than the standard allowed.
C)More materials were purchased than were used.
D)More materials were used than were purchased.
6
How is the "standard quantity allowed" computed?
A)Actual input in units times the standard output allowed
B)Actual output in units times the standard input allowed
C)Actual output in units times the standard output allowed
D)Standard output in units times the standard input allowed
7
Cassidy Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the direct labor costs of one unit of product:
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The total factory wages for June were $800,000, 90 percent of which were for direct labor. The company manufactured 25,000 units of product during June using 32,000 direct labor hours. What is the direct labor efficiency variance for June?
A)$11,000 favorable
B)$11,000 unfavorable
C)$11,250 favorable
D)$11,250 unfavorable
8
Cassidy Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the direct labor costs of one unit of product:
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The total factory wages for June were $800,000, 90 percent of which were for direct labor. The company manufactured 25,000 units of product during June using 32,000 direct labor hours. (Note that this is the same data that was provided for the previous question.) What is the he direct labor rate variance for June ?
A)$16,000 favorable
B)$16,000 unfavorable
C)$96,000 favorable
D)$96,000 unfavorable
9
Howard Company maintains warehouses that stock items carried by its e-retailer clients. When one of Howard's clients receives an order from an online customer, the order is forwarded to Howard. Howard then pulls the item from the warehouse, packs it and ships it to the customer. Howard uses a predetermined variable overhead rate based on direct labor-hours. According to the company's records, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $6.50 per direct-labor hour. During July, Howard shipped 240,000 orders using 9,200 direct labor-hours. The company incurred a total of $58,880 in variable overhead costs. What is the variable overhead efficiency variance for July?
A)$920 favorable
B)$920 unfavorable
C)$2,600 favorable
D)$2,600 unfavorable
10
Howard Company maintains warehouses that stock items carried by its e-retailer clients. When one of Howard's clients receives an order from an online customer, the order is forwarded to Howard. Howard then pulls the item from the warehouse, packs it and ships it to the customer. Howard uses a predetermined variable overhead rate based on direct labor-hours. According to the company's records, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $6.50 per direct-labor hour. During July, Howard shipped 240,000 orders using 9,200 direct labor-hours. The company incurred a total of $58,880 in variable overhead costs. (Note that this is the same data that was provided for the previous question.) What is the variable overhead rate variance for July?
A)$920 favorable
B)$920 unfavorable
C)$2,600 favorable
D)$2,600 unfavorable
11
(Note: Answer this question only if you are responsible for Appendix 10A.)
Nash Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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During August, the company completed 28,000 units of product, worked 344,000 direct labor-hours, and incurred the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. What is the fixed overhead budget variance for August?
A)$14,000 F
B)$14,000 U
C)$12,800 F
D)$12,800 U
12
(Note: Answer this question only if you are responsible for Appendix 10A.)
Nash Company applies manufacturing overhead costs to products on the basis of direct labor-hours. The standard cost card shows that 12 direct labor-hours are required per unit of product. For August, the company budgeted to work 360,000 direct labor-hours and to incur the following total manufacturing overhead costs:
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During August, the company completed 28,000 units of product, worked 344,000 direct labor-hours, and incurred the following total manufacturing overhead costs:
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The denominator activity in the predetermined overhead rate is 360,000 direct labor-hours. (Note that this is the same data that was provided for the previous question.) What is the fixed overhead volume variance for August?
A)$17,200 U
B)$19,920 F
C)$19,920 U
D)$31,680 U





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