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COST 102 - With Answers
COST 102 - With Answers
COST 102 - With Answers
a. budgeted costs.
b. standard costs.
c. both budgeted and standard costs.
d. none of these.
a. is a predetermined cost.
b. contributes to management planning and control.
c. is a unit amount.
d. none of the above; a standard does not differ from a budget.
47. Donkey Company expects direct materials cost of $6 per unit for 100,000 units (a total of
$600,000 of direct materials costs). Donkey’s standard direct materials cost and budgeted direct
materials cost is
Standard Budgeted
a. $6 per unit $600,000 per year
b. $6 per unit $6 per unit
c. $600,000 per year $6 per unit
d. $600,000 per year $600,000 per year
53. Which of the following is not considered an advantage of using standard costs?
54. If a company is concerned with the potential negative effects of establishing standards, it should
a. normal standard.
b. realistic standard.
c. ideal standard.
d. conceivable standard.
57. Most companies that use standards set them at
a. 1
b. 2
c. 3
d. 2 and 3
a. pounds.
b. barrels.
c. dollars.
d. board feet.
62. The direct labor quantity standard is sometimes called the direct labor
a. volume standard.
b. effectiveness standard.
c. efficiency standard.
d. quality standard.
63. A manufacturing company would include setup and downtime in their direct
65. The total standard cost to produce one unit of product is shown
67. A standard which represents an efficient level of performance that is attainable under expected
operating conditions is called a(n)
a. ideal standard.
b. loose standard.
c. tight standard.
d. normal standard.
70. The labor time requirements for standards may be determined by the
a. sales manager.
b. product manager.
c. industrial engineers.
d. payroll department manager.
71. To determine the standard rate for direct labor, management consults
a. purchasing agents.
b. product managers.
c. quality control engineers.
d. the payroll department.
Breakmorning Corporation produces a product that requires 2.6 pounds of materials per unit. The
allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is
$4 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and
handling costs are $.10 per pound. The hourly wage rate is $9.00 per hour, but a raise which will average
$.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per
hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2
hours and .1 hours, respectively.
a. $3.92.
b. $4.00.
c. $4.17
d. $4.25
a. 2.6 pounds.
b. 2.7 pounds.
c. 2.9 pounds.
d. 3.0 pounds.
74. The standard direct labor rate per hour is
a. $ 9.00.
b. $ 9.25.
c. $12.00.
d. $12.25.
a. 1 hour.
b. 1.1 hours.
c. 1.2 hours.
d. 1.3 hours.
76. The standard direct materials quantity does not include allowances for
a. unavoidable waste.
b. normal spoilage.
c. unexpected spoilage.
d. all of the above are included.
77. Allowances should not be made in the direct labor quantity standard for
a. wasted time.
b. rest periods.
c. cleanup.
d. machine downtime.
78. The standard predetermined overhead rate used in setting the standard overhead cost is
determined by dividing
79. Fleck’s standard quantities for 1 unit of product include 2 pounds of materials and 1.5 labor
hours. The standard rates are $3 per pound and $10 per hour. The standard overhead rate is
$12 per direct labor hour. The total standard cost of Fleck’s product is
a. $21.
b. $25.
c. $33
d. $39.
ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units,
ToolTime used 3,100 pounds of materials at a total cost of $12,090.
a. $300 F.
b. $90 U.
c. $310 U.
d. $400 U.
a. $90 U.
b. $310 F.
c. $400 F.
d. $700 F.
83. ToolTime’s materials quantity variance is
a. $90 F.
b. $310 U.
c. $400 U.
d. $700 U.
ToolTime has a standard of 2 hours of labor per unit, at $12 per hour. In producing 2,000 units, ToolTime
used 3,850 hours of labor at a total cost of $46,970.
a. $770 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
a. $770 U.
b. $800 U.
c. $1,030 F.
d. $1,930 F.
a. $770 U.
b. $1,030 F.
c. $1,800 F.
d. $1,930 F.
Stiner Company has a materials price standard of $2.00 per pound. Five thousand pounds of materials
were purchased at $2.20 per pound. The actual quantity of materials used was 5,000 pounds, although
the standard quantity allowed for the output was 4,500 pounds.
a. $100 U.
b. $1,000 U.
c. $900 U.
d. $1,000 F.
90. Stiner Company's materials quantity variance is
a. $1,000 U.
b. $1,000 F.
c. $1,100 F.
d. $1,100 U.
a. $2,000 U.
b. $2,000 F.
c. $2,100 U.
d. $2,100 F.
92. The standard quantity allowed for the units produced was 6,500 pounds, the standard price was
$2.50 per pound, and the materials quantity variance was $375 favorable. Each unit uses 1
pound of materials. How many units were actually produced?
a. 6,350
b. 6,500
c. 15,875
d. 6,650
a. production department.
b. purchasing department.
c. sales department.
d. controller's department.
98. If the labor quantity variance is unfavorable and the cause is inefficient use of direct labor, the
responsibility rests with the
a. sales department.
b. production department.
c. budget office.
d. controller's department.
99. Which one of the following describes the total overhead variance?
a. The difference between what was actually incurred and the flexible budget amount
b. The difference between what was actually incurred and overhead applied
c. The difference between the overhead applied and the flexible budget amount
d. The difference between what was actually incurred and the total production budget
100. A company developed the following per-unit standards for its product: 2 gallons of direct
materials at $6 per gallon. Last month, 3,000 gallons of direct materials were purchased for
$17,100. The direct materials price variance for last month was
a. $17,100 favorable.
b. $450 favorable.
c. $900 favorable.
d. $900 unfavorable.
101. The per-unit standards for direct materials are 2 pounds at $4 per pound. Last month, 11,200
pounds of direct materials that actually cost $42,400 were used to produce 6,000 units of
product. The direct materials quantity variance for last month was
a. $3,200 favorable.
b. $2,400 favorable.
c. $3,200 unfavorable.
d. $5,600 unfavorable.
102. The per-unit standards for direct labor are 1.5 direct labor hours at $12 per hour. If in producing
2,400 units, the actual direct labor cost was $36,800 for 3,000 direct labor hours worked, the
total direct labor variance is
a. $1,920 unfavorable.
b. $6,400 favorable.
c. $4,000 unfavorable.
d. $6,400 unfavorable.
103. The standard rate of pay is $10 per direct labor hour. If the actual direct labor payroll was
$39,200 for 4,000 direct labor hours worked, the direct labor price (rate) variance is
a. $800 unfavorable.
b. $800 favorable.
c. $1,000 unfavorable.
d. $1,000 favorable.
104. The standard number of hours that should have been worked for the output attained is 10,000
direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct
labor price variance was $10,500 unfavorable, and the standard rate of pay was $15 per direct
labor hour, what was the actual rate of pay for direct labor?
a. $2.00
b. $.40
c. $2.50
d. $10.00
106. A company uses 40,000 gallons of materials for which it paid $9.00 a gallon. The materials price
variance was $80,000 favorable. What is the standard price per gallon?
a. $2.00
b. $7.00
c. $10.00
d. $11.00
107. CIB, Inc. produces a product requiring 4 pounds of material costing $2.50 per pound. During
December, CIB purchased 4,200 pounds of material for $10,080 and used the material to
produce 500 products. What was the materials price variance for December?
a. $400 F
b. $420 F
c. $80 U
d. $480 U
108. Debbie Co. manufactures a product requiring two pounds of direct material. During 2009,
Debbie purchases 24,000 pounds of material for $74,400 when the standard price per pound is
$3.00. During 2009, Debbie uses 22,000 pounds to make 12,000 products. The standard direct
material cost per unit of finished product is
a. $6.20.
b. $6.76.
c. $6.00.
d. $6.40.
109. Cola Co. manufactures a product with a standard direct labor cost of two hours at $24.00 per
hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor
quantity variance was
a. $4,880 F.
b. $4,800 U.
c. $3,280 U.
d. $4,880 U.
110. Cola Co. manufactures a product with a standard direct labor cost of two hours at $24.00 per
hour. During July, 2,000 units were produced using 4,200 hours at $24.40 per hour. The labor
price variance was
a. $1,680 U.
b. $6,480 U.
c. $6,480 F.
d. $4,800 U.
111. A company developed the following per unit materials standards for its product: 3 pounds of
direct materials at $4 per pound. If 12,000 units of product were produced last month and
37,500 pounds of direct materials were used, the direct materials quantity variance was
a. $3,600 favorable.
b. $6,000 unfavorable.
c. $3,600 unfavorable.
d. $6,000 favorable.
112. The standard direct labor cost for producing one unit of product is 5 direct labor hours at a
standard rate of pay of $12. Last month, 15,000 units were produced and 73,500 direct labor
hours were actually worked at a total cost of $810,000. The direct labor quantity variance was
a. $18,000 unfavorable.
b. $27,000 unfavorable.
c. $27,000 favorable.
d. $18,000 favorable.
113. Blue Fin Co. produces a product requiring 10 pounds of material at $1.50 per pound. Blue Fin
produced 10,000 units of this product during 2009 resulting in a $30,000 unfavorable materials
quantity variance. How many pounds of direct material did Blue Fin use during 2009?
a. 120,000 pounds
b. 100,000 pounds
c. 200,000 pounds
d. 145,000 pounds
114. Wild West Inc. produces a product requiring 3 direct labor hours at $20.00 per hour. During
January, 2,000 products are produced using 6,300 direct labor hours. Wild West’s actual payroll
during January was $122,850. What is the labor quantity variance?
a. $2,850 U
b. $6,000 F
c. $3,150 F
d. $6,000 U
115. Raylight Products planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the
plastic actually cost $80 per yard. The company actually made 2,600 units, although it had
planned to make only 2,200 units. Total yards used for production were 2,640. How much is the
total materials variance?
a. $32,400 U
b. $3,240 U
c. $2,640 F
d. $600 U
116. If actual direct materials costs are greater than standard direct materials costs, it means that
117. If actual costs are greater than standard costs, there is a(n)
a. normal variance.
b. unfavorable variance.
c. favorable variance.
d. error in the accounting system.
119. A company developed the following per-unit standards for its product: 2 pounds of direct
materials at $4 per pound. Last month, 1,000 pounds of direct materials were purchased for
$3,800. The direct materials price variance for last month was
a. $3,800 favorable.
b. $200 favorable.
c. $100 favorable.
d. $200 unfavorable.
120. The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 2,800
gallons of direct materials that actually cost $10,600 were used to produce 1,500 units of
product. The direct materials quantity variance for last month was
a. $800 favorable.
b. $600 favorable.
c. $800 unfavorable.
d. $1,400 unfavorable.
121. The purchasing agent of the Skateboard Company ordered materials of lower quality in an effort
to economize on price. What variance will most likely result?
122. The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing
1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the
total direct labor variance is
a. $1,200 unfavorable.
b. $4,000 favorable.
c. $2,500 unfavorable.
d. $4,000 unfavorable.
123. The standard rate of pay is $15 per direct labor hour. If the actual direct labor payroll was
$88,200 for 6,000 direct labor hours worked, the direct labor price (rate) variance is
a. $1,800 unfavorable.
b. $1,800 favorable.
c. $2,250 unfavorable.
d. $2,250 favorable.
124. The standard number of hours that should have been worked for the output attained is 6,000
direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct
labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct
labor hour, what was the actual rate of pay for direct labor?
a. If the materials price variance is unfavorable, then the materials quantity variance
must also be unfavorable.
b. If the materials price variance is unfavorable, then the materials quantity variance
must be favorable.
c. Price and quantity variances move in the same direction. If one is favorable, the
others will be as well.
d. There is no correlation of favorable or unfavorable for price and quantity variances.
a. sum of the total materials variance and the total labor variance.
b. difference between the total materials variance and the total labor variance.
c. sum of the controllable variance and the volume variance.
d. total variance minus the controllable variance and the volume variance.
130. The total variance is $25,000. The total materials variance is $10,000. The total labor variance is
twice the total overhead variance. What is the total overhead variance?
a. $2,500
b. $5,000
c. $7,500
d. $10,000
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
a
39. d 61. c 83. c 105. b 127. b 149. a 171. a
a
40. c 62. c 84. c 106. d 128. d 150. c 172. c
a
41. c 63. d 85. a 107. b 129. c 151. c 173. b
a
42. d 64. b 86. c 108. c 130. b 152. a 174. b
a
43. a 65. c 87. b 109. b 131. b 153. c 175. a
a
44. a 66. d 88. c 110. a 132. c 154. c 176. c
a
45. b 67. d 89. b 111. b 133. c 155. d 177. c
a
46. c 68. c 90. a 112. d 134. b 156. b 178. b
a a
47. a 69. d 91. a 113. a 135. b 157. d 179. a
a a
48. b 70. c 92. b 114. d 136. c 158. a 180. c
a
49. b 71. d 93. d 115. d 137. b 159. b 181. d
a
50. a 72. c 94. c 116. c 138. a 160. a 182. b
a
51. d 73. d 95. c 117. b 139. c 161. c 183. d
a
52. c 74. d 96. b 118. a 140. b 162. b 184. d
a
53. c 75. d 97. a 119. b 141. a 163. c 185. a
a
54. b 76. c 98. b 120. a 142. a 164. b 186. d
a
55. b 77. a 99. b 121. d 143. a 165. d 187. c
a a
56. c 78. a 100. c 122. b 144. c 166. c 188. d
a
57. a 79. d 101. a 123. b 145. b 167. c
a
58. d 80. a 102. b 124. c 146. c 168. b
a
59. a 81. b 103. b 125. d 147. d 169. a
a
60. c 82. b 104. c 126. a 148. d 170. b
131. The formula for the materials price variance is
133. A company uses 8,400 pounds of materials and exceeds the standard by 400 pounds. The
quantity variance is $1,800 unfavorable. What is the standard price?
a. $1.50
b. $3.00
c. $4.50
d. Cannot be determined from the data provided.
134. A company purchases 20,000 pounds of materials. The materials price variance is $3,000
favorable. What is the difference between the standard and actual price paid for the materials?
a. $.75
b. $.15
c. $3.75
d. Cannot be determined from the data provided.
135. A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price
variance was $30,000 unfavorable. What is the standard price per pound?
a. $1.50
b. $4.50
c. $6.00
d. $7.50
136. If the materials price variance is $2,400 F and the materials quantity and labor variances are
each $1,800 U, what is the total materials variance?
a. $2,400 F
b. $1,800 U
c. $600 F
d. $2,700 U
137. Unfavorable materials price and quantity variances are generally the responsibility of the
Price Quantity
a. Purchasing department Purchasing Department
b. Purchasing department Production Department
c. Production department Production Department
d. Production Department Purchasing Department
138. The total overhead variance is the difference between the
a. actual overhead costs and overhead costs applied based on standard hours allowed.
b. actual overhead costs and overhead costs applied based on actual hours.
c. overhead costs applied based on actual hours and overhead costs applied based on
standard hours allowed.
d. the actual overhead costs and the standard direct labor costs.
139. The predetermined overhead rate for Weed-B-Gone is $8, comprised of a variable overhead rate
of $5 and a fixed rate of $3. The amount of budgeted overhead costs at normal capacity of
$240,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the
predetermined overhead rate of $8. Actual overhead for June was $15,800 variable and $9,100
fixed, and standard hours allowed for the product produced in June was 3,000 hours. The total
overhead variance is
a. $4,900 F.
b. $900 F.
c. $900 U.
d. $4,900 U.
140. The predetermined overhead rate for Weed-B-Gone is $8, comprised of a variable overhead rate
of $5 and a fixed rate of $3. The amount of budgeted overhead costs at normal capacity of
$240,000 was divided by normal capacity of 30,000 direct labor hours, to arrive at the
predetermined overhead rate of $8. Actual overhead for June was $14,800 variable and $8,100
fixed, and 1,500 units were produced. The direct labor standard is 2 hours per unit produced.
The total overhead variance is
a. $2,900 F.
b. $1,100 F.
c. $1,100 U.
d. $2,900 U.
a. The form, content, and frequency of variance reports vary considerably among
companies.
b. The form, content, and frequency of variance reports do not vary among companies.
c. The form and content of variance reports vary considerably among companies, but
the frequency is always weekly.
d. The form and content of variance reports are consistent among companies, but the
frequency varies.
142. Sonic Corporation’s variance report for the purchasing department reports 500 units of material
A purchased and 1,200 units of material B purchased. It also reports standard prices of $2 for
Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for
Material B. Sonic should report a total price variance of
a. $190 F.
b. $20 F.
c. $20 U.
d. $190 U.
146. Magliano Company prepared its income statement for internal use. How would amounts for
cost of goods sold and variances appear?
a. Cost of goods sold would be at actual costs, and variances would be reported
separately.
b. Cost of goods sold would be combined with the variances, and the net amount
reported at standard cost.
c. Cost of goods sold would be at standard costs, and variances would be reported
separately.
d. Cost of goods sold would be combined with the variances, and the net amount
reported at actual cost.
147. Dell Widgets prepared its income statement for management using a standard cost accounting
system. Which of the following appears at the “standard” amount?
a. Sales
b. Selling expenses
c. Gross profit
d. Cost of goods sold
148. The costing of inventories at standard cost for external financial statement reporting purposes is
a. not permitted.
b. preferable to reporting at actual costs.
c. in accordance with generally accepted accounting principles if significant differences
exist between actual and standard costs.
d. in accordance with generally accepted accounting principles if significant differences
do not exist between actual and standard costs.
149. Income statements prepared internally for management often show cost of goods sold at
standard cost and variances are
a. separately disclosed.
b. deducted as other expenses and revenues.
c. added to cost of goods sold.
d. closed directly to retained earnings.
150. In Sonic Corporation’s income statement, they report gross profit of $50,000 at standard and
the following variances:
Overhead 900 F
a. $46,660.
b. $47,500.
c. $52,500.
d. $53,340.