Quiz 2 for P2

Write your final answer on the box provided before the number. Use CAPITAL letters only. Answers
written outside the box will not be considered. Erasures, changing of final answer, and the like will be
considered wrong.

1. Which of the following statements is/are true?

I. Both manufacturing and service firms may use standard costing systems
II. The direct materials usage variance is the sum of the actual quantities and the standard
quantities of units.

a. I only
b. II only
c. Both I and II
d. Neither I nor II

2. Which of the following statements is/are true?

I. Unfavorable variances occur whenever actual prices or usage are less than standard prices or
usage, and the opposite for a favorable variance.
II. The condition where everything operates perfectly and demands maximum efficiency is called
ideal standards.

a. I only
b. II only
c. Both I and II
d. Neither I nor II

3. Which of the following is true of currently attainable standards?

a. Currently attainable standards demand maximum sales price.
b. Currently attainable standards can be achieved under efficient operating conditions.
c. Currently attainable standards do not allow for normal breakdowns, interruptions, and less than
perfect skill.
d. Currently attainable standards demand maximum efficiency.

4. A purpose of standard costing is to:

a. allocate cost with more accuracy
b. eliminate the need for subjective decisions by management
c. control costs
d. all of the above

5. Standard costs are least useful for

a. Measuring production efficiency c. Job order production systems
b. Simplifying costing procedures d. Determining minimum inventory levels

6. Which of the following is true concerning standard costs?

a. If properly used, standards can help motivate employees.
b. Unfavorable variances, material in amount, should be investigated together with large favorable
variances.
c. Standard costs are estimates of costs attainable under the most practical conditions.
d. All of the above

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7. What type of direct material variances for price and usage will arise if the actual number of pounds
of materials used was more than standard pounds allowed and actual cost exceeds standard
cost?
Usage Price Usage Price
a. unfavorable favorable c. favorable unfavorable
b. favorable favorable d. unfavorable unfavorable

8. If a company follows a practice of isolating variances at the earliest time, the appropriate time to
isolate and recognize a direct materials price variance would be when:
a. the purchase order is originated c. the materials requisition is prepared
b. materials are purchased d. materials are used in production

9. Which of the following would least likely cause an unfavorable materials quantity (usage)
variance?
a. labor that possesses skills equal to those required by the standards
b. scheduling of substantial overtime
c. materials that do not meet specifications
d. machinery that has not been maintained properly

10. A manager prepared the following table by which to analyze labor costs for the month:
Actual Hours at Actual Hours at Standard Hours at
Actual Rate Standard Rate Standard Rate
₱10,000 ₱9,800 ₱8,820
What variance was ₱200?
a. Labor efficiency variance. c. Volume variance.
b. Labor price variance. d. Labor rate variance.

11. When a change in the manufacturing process increases the number of direct labor hours and
standards are unchanged, the resulting variance will be:
a. an unfavorable labor usage variance c. a favorable labor rate variance
b. an unfavorable labor rate variance d. a favorable labor usage variance

12. The most probable reason a company would experience a favorable labor rate variance and an
unfavorable labor efficiency variance is that:
a. the mix of workers assigned to the particular job was heavily weighted toward the use of higher
paid, experienced individuals
b. the mix of workers assigned to the particular job was heavily weighted toward the use of new,
relatively low-paid, unskilled workers
c. because of the production schedule, workers from other production areas were assigned to
assist in this particular process
d. defective materials caused more labor to be used in order to produce a standard unit

13. Which variance is least likely to be affected by hiring workers with less skill than those already
working?
a. Material use variance. c. Material price variance.
b. Labor rate variance. d. Variable overhead efficiency variance.

14. Which of the following term is best identified with a system of standard cost?
a. Management by objectives. c. Marginal costing.
b. Management by exception. d. Standard accounting system.

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15. The type of standard that is intended to represent challenging yet attainable results is:
a. theoretical standard c. normal standard
b. flexible budget standard d. expected actual standard

16. Which of the following equations measures the direct labor rate variance?
a. (SR × AH) − (SR × SH)
b. (AR × SH) − (SR × AH)
c. (AR × AH) − (SR × AH)
d. (AH – SH) x SR

17. For the doughnuts of Antiyaga Co. the Purchasing Manager decided to buy 65,000 bags of flour
with a quality rating two grades below that which the company normally purchased. This purchase
covered about 90% of the flour requirement for the period. As to the material variances, what will
be the likely effect?
A. B. C. D.
Usage variance Unfavorable Favorable No effect Favorable
Price variance Favorable Unfavorable Unfavorable Favorable

18. A company using very tight standards in a standard cost system should expect that
a. Most variances will be unfavorable
b. No incentive bonus will be paid
c. Costs will be controlled better than if lower standards were used
d. Employees will be strongly motivated to attain the standard

19. A materials price variance would not be caused by

a. ordering the wrong quality of materials.
b. ordering from the wrong supplier.
c. not taking a quantity discount.
d. requiring laborers to work overtime.

20. Which of the following factors would cause an unfavorable material quantity variance?
a. using poorly maintained machinery
b. using higher quality materials
c. using more highly skilled workers
d. receiving discounts for purchasing larger than normal quantities

21. Antiyaga Co. has the following data related to 100 units of final product:

Materials:
Standard: 280 pounds at $3.00 per pound
Actual: 300 pounds at $2.75 per pound

What is the material usage variance for Antiyaga Co.?

a. $60 favorable
b. $60 unfavorable
c. $55 favorable
d. $55 unfavorable

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22. During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour. If the
direct labor rate variance for October was $4,000 favorable, the actual cost per direct labor hour
must be
a. $10.40.
b. $10.00.
c. $9.60.
d. $9.20.

23. If the standard quantity (SQ), actual quantity (AQ), standard price (SP), and actual price (AP) are
350 units, 400 units, $13, and $12 respectively, then the total variance is _____.
a. $1,000 favorable
b. $250 favorable
c. $250 unfavorable
d. $1,000 unfavorable

24. During November, 10,000 units were produced. The standard quantity of material allowed per unit
was 10 pounds at a standard cost of $3 per pound. If there was a favorable usage variance of
$18,750 for November, the actual quantity of materials used must be
a. 23,438 pounds.
b. 93,750 pounds.
c. 31,875 pounds.
d. 106,250 pounds

25. During June, 16,000 pounds of materials were purchased at a cost of $6 per pound. If there was
an unfavorable direct materials price variance of $3,000 in June, the standard cost per pound
must be _____. (Round to two decimal places.)
a. $6.19
b. $5.81
c. $6.00
d. $0.19

26. Antiyaga Co. uses a standard costing system. The following information pertains to direct labor
costs for the month of February:
Standard direct labor rate per hour $13.00
Actual direct labor rate per hour $15.50
Labor rate variance $18,000 unfavorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours

How many actual labor hours were worked during February for Antiyaga Co.?
7,200 hours

27. Antiyaga Co. uses a standard costing system. The following information pertains to direct labor
costs for the month of February:
Standard direct labor rate per hour $13.00
Actual direct labor rate per hour $15.50
Labor rate variance $18,000 unfavorable

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 Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours

What is the total labor variance for Antiyaga Co.?

$18,400 F

28. During January, 7,715 direct labor hours were worked at a standard cost of $20 per hour. If the
direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour
must be
$17.73

29. Antiyaga Co. recently used 14,000 labor hours to produce 7,050 completed units. According to
manufacturing specifications, each unit is anticipated to take two hours to complete. The
company's actual payroll cost amounted to $158,200. If the standard labor cost per hour is $11,
Antiyaga Co.'s labor efficiency variance is:
1,100 F

30. The following data relate to product no. 33 of Antiyaga Co.:

Direct labor standard: 5 hours at $15 per hour

Direct labor used in production: 45,000 hours at a cost of $693,000
Manufacturing activity, product no. 33: 8,900 units completed

The direct-labor rate variance is:

18,000 UF

31. Information about Antiyaga Co.'s direct material costs is as follows:

Standard unit price ₱3.50
Actual quantity purchased 1,600
Standard quantity allowed for actual production 1,450
Unfavorable materials purchase price variance ₱240
What was the actual purchase price per unit, rounded to the nearest penny?
₱3.65

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32. Antiyaga Co. uses a standard costing system in the manufacture of its single product. The 30,000
units of raw material in inventory were purchased for ₱105,000, and three units of raw material
are required to produce one unit of final product. In November, the company produced 8,000
units of product. The standard allowed for material was ₱60,000, and there was an unfavorable
quantity variance of ₱2,500. The materials price variance for the units used in November was
25,000 UF

33. Antiyaga Co.'s direct labor costs for April are as follows:
Standard direct labor hours 42,000
Actual direct labor hours 41,200
Total direct labor payroll ₱247,200
Direct labor efficiency variance – favorable ₱3,480
What is Antiyaga Co.'s direct labor rate variance?
67,980 UF

34. Antiyaga Co. has a maintenance shop where repairs to its motor vehicles are done. During last
month’s labor strike, certain records were lost. The actual input of direct labor hours was 1,000,
and the resulting direct labor efficiency variance was a favorable P800. The standard direct labor
rate was P28.00 per hour, but an unexpected labor shortage necessitated the hiring of higher-
paid workers for some jobs and had resulted in a rate variance of P3,400. The actual direct labor
rate was
31.40 per hour

35. A company uses a standard cost system to account for its only product. The materials standard
per unit was 4 lbs. at $5.10 per lb. Operating data for April were as follows:
Material used 8,700 lbs.
Cost of material used $40,950
Number of finished units produced 2,000
The material usage variance for April was:
3,570 UF