Chapter 10 Standard Costs and the Balanced Scorecard

True/False Questions
1. Ideal standards do not allow for machine breakdowns and other normal inefficiencies.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
(. The standard #rice #er unit for direct materials should reflect the final) delivered cost
of the materials) net of an' discounts taken.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
*. The standard +uantit' or standard hours allowed refers to the amount of the in#ut that
should have been used to #roduce the actual out#ut of the #eriod.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
,. In develo#ing a direct material #rice standard) the e-#ected freight cost on the
materials should be included.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
.. /aterial #rice variances are often isolated at the time materials are #urchased) rather
than when the' are #laced into #roduction) to facilitate earlier recognition of
variances.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
0. 1aste on the #roduction line will result in a materials #rice variance.
Ans: !alse AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
2. It is best to isolate the material +uantit' variance when the materials are #urchased.
Ans: !alse AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7
Chapter 10 Standard Costs and the Balanced Scorecard
4. 1hen the material #rice variance is recorded at the time of #urchase) raw materials are
recorded as inventor' at actual cost.
Ans: !alse AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
5. If im#rovement in a #erformance measure on a balanced scorecard should lead to
im#rovement in another #erformance measure) but does not) then em#lo'ees must
work harder.
Ans: !alse AACSB: Anal'tic
AICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting
$%: . $evel: /edium
17. A manufacturing c'cle efficienc' 8/C&9 of greater than one is im#ossible.
Ans: True AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium
11. Ins#ection Time is generall' considered to be value:added time.
Ans: !alse AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
1(. A manager would generall' like to see a trend indicating an increase in setu# time.
Ans: !alse AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
1*. A manufacturing c'cle efficienc' 8/C&9 of 7.* means that 27; of through#ut time is
s#ent on non:value:added activities.
Ans: True AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium
1,. If standard costs e-ceed actual costs) a credit entr' would be made in the a##ro#riate
variance account to record the variance.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: /edium
10-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1.. If a favorable variance is recorded in the accounting records) it will be recorded as a
credit.
Ans: True AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Multiple Choice Questions
10. To measure controllable #roduction inefficiencies) which of the following is the best
basis for a com#an' to use in establishing the standard hours allowed for the out#ut of
one unit of #roduct<
A9 Average historical #erformance for the last several 'ears.
B9 &ngineering estimates based on ideal #erformance.
C9 &ngineering estimates based on attainable #erformance.
=9 The hours #er unit that would be re+uired for the #resent workforce to satisf'
e-#ected demand over the long run.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: /edium
12. oorl' trained workers could have an unfavorable effect on which of the following
variances<
$abor Rate >ariance /aterials ?uantit' >ariance
A9 @es @es
B9 @es "o
C9 "o @es
=9 "o "o
Ans: C AACSB: Anal'tic
AICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting
$%: (6 * $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-
Chapter 10 Standard Costs and the Balanced Scorecard
14. Richter Cor#. recorded the following entr' in its general ledger:
1ork in rocess 0)777
/aterial ?uantit' >ariance .77
Raw /aterials 0).77
The above Aournal entr' indicates that:
A9 the materials +uantit' variance for the #eriod was favorable.
B9 less materials were used in #roduction during the #eriod than was called for at
standard.
C9 the materials +uantit' variance for the #eriod was unfavorable.
=9 the actual #rice #aid for the materials used in #roduction was greater than the
standard #rice allowed.
Ans: C AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: (6 2 $evel: /edium
15. 1hen the actual #rice #aid on credit for a raw material e-ceeds its standard #rice) the
Aournal entr' would include:
A9 Credit to Raw /aterials6 Credit to /aterials rice >ariance
B9 Credit to Accounts a'able6 Credit to /aterials rice >ariance
C9 Credit to Raw /aterials6 =ebit to /aterials rice >ariance
=9 Credit to Accounts a'able6 =ebit to /aterials rice >ariance
Ans: = AACSB: Reflective Thinking AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: (6 2 $evel: 3ard
(7. The variance that is most useful in assessing the #erformance of the #urchasing
de#artment manager is:
A9 the materials +uantit' variance.
B9 the materials #rice variance.
C9 the labor rate variance.
=9 the labor efficienc' variance.
Ans: B AACSB: Reflective Thinking
AICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting
$%: ( $evel: &as'
10-10 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
(1. The #roduction de#artment should generall' be res#onsible for material #rice
variances that resulted from:
A9 #urchases made in uneconomical lot:siBes.
B9 rush orders arising from #oor scheduling.
C9 #urchase of the wrong grade of materials.
=9 changes in the market #rices of raw materials.
Ans: B AACSB: Reflective Thinking
AICA BB: Critical Thinking6 Resource /anagement AICA !": Re#orting
$%: ( $evel: &as'
((. A debit balance in the labor efficienc' variance account indicates that:
A9 standard hours e-ceed actual hours.
B9 actual hours e-ceed standard hours.
C9 standard rate and standard hours e-ceed actual rate and actual hours.
=9 actual rate and actual hours e-ceed standard rate and standard hours.
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: 3ard
Source: CA) ada#ted
(*. The Aournal entr' below:
1ork in rocess (.)777
=irect $abor &fficienc' >ariance 1)(77
=irect $abor Rate >ariance ()777
Accrued 1ages a'able (,)(77
indicates that:
A9 the total labor variance was C477) unfavorable.
B9 em#lo'ees received an une-#ected rate increase during the #eriod.
C9 more labor time was re+uired to com#lete the out#ut of the #eriod than was
allowed at standard.
=9 res#onses a and b are both correct.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: 3ard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-11
Chapter 10 Standard Costs and the Balanced Scorecard
(,. 1hen the actual wage rate #aid to direct labor workers e-ceeds the standard wage rate)
the Aournal entr' would include:
A9 =ebit to 1ages a'able6 Credit to $abor Rate >ariance
B9 =ebit to 1ork:In:rocess6 Credit to $abor Rate >ariance
C9 =ebit to 1ages a'able6 =ebit to $abor Rate >ariance
=9 =ebit to 1ork:In:rocess6 =ebit to $abor Rate >ariance
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: /edium
(.. =uring a recent length' strike at /orell /anufacturing Com#an') management
re#laced striking assembl' line workers with office workers. The assembl' line
workers were being #aid C14 #er hour while the office workers are onl' #aid C17 #er
hour. 1hat is the most likel' effect on the labor variances in the first month of this
strike<
$abor Rate >ariance $abor &fficienc' >ariance
A9 Dnfavorable "o effect
B9 "o effect Dnfavorable
C9 Dnfavorable !avorable
=9 !avorable Dnfavorable
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
(0. 1hich of the following will increase a com#an'Es manufacturing c'cle efficienc'
8/C&9<
=ecrease in rocess Time =ecrease in 1ait Time
A9 @es @es
B9 @es "o
C9 "o @es
=9 "o "o
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: 3ard
10-1! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
(2. ersechino Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires
an in#ut that is #urchased for C4(.77 #er kilogram from the su##lier. B' #a'ing cash)
the com#an' gets a discount of (; off this #urchase #rice. Shi##ing costs from the
su##lierEs warehouse amount to C0... #er kilogram. Receiving costs are C7.,2 #er
kilogram. The standard #rice #er kilogram of this in#ut should be:
A9 C20.0(
B9 C42.*4
C9 C57.00
=9 C4(.77
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
urchase #rice.................................................................. C4(.77
$ess cash discount 8(; F C4(9........................................ 1.0,
Shi##ing costs from the su##lierGs warehouse................ 0...
Receiving costs................................................................ 7.,2
Standard #rice #er kilogram............................................ C42.*4
(4. /a'all Cor#oration is develo#ing standards for its #roducts. &ach unit of out#ut of the
#roduct re+uires 7.5( kilogram of a #articular in#ut. The allowance for waste and
s#oilage is 7.7( kilogram of this in#ut for each unit of out#ut. The allowance for
reAects is 7.11 kilogram of this in#ut for each unit of out#ut. The standard +uantit' in
kilograms of this in#ut #er unit of out#ut should be:
A9 7.57
B9 7.5(
C9 7.25
=9 1.7.
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
/aterial re+uirement #er unit of out#ut) in kilograms.... 7.5(
Allowance for waste and s#oilages) in kilograms........... 7.7(
Allowance for reAects) in kilograms................................. 7.11
Standard +uantit' #er unit' of out#ut) in kilograms........ 1.7.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1"
Chapter 10 Standard Costs and the Balanced Scorecard
(5. Heffs Cor#oration is develo#ing direct labor standards. The basic direct labor wage rate
is C1,.77 #er hour. &m#lo'ment ta-es are 11; of the basic wage rate. !ringe benefits
are C*.(, #er direct labor:hour. The standard rate #er direct labor:hour should be:
A9 C1,.77
B9 C5.((
C9 C,.24
=9 C14.24
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
Basic direct labor wage rate............................................. C1,.77
&m#lo'ment ta-es 811; F C1,.779................................. 1..,
!ringe benefits................................................................. *.(,
Standard rate #er direct labor:hour.................................. C14.24
*7. Irefrath Cor#oration is develo#ing direct labor standards. A #articular #roduct
re+uires 7.21 direct labor:hours #er unit. The allowance for breaks and #ersonal needs
is 7.7, direct labor:hours #er unit. The allowance for cleanu#) machine downtime) and
reAects is 7.1( direct labor:hours #er unit. The standard direct labor:hours #er unit
should be:
A9 7.21
B9 7.42
C9 7.02
=9 7...
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
Basic labor time #er unit.................................................. 7.21
Allowance for breaks and #ersonal needs....................... 7.7,
Allowance for cleanu#) machine downtime) and reAects. 7.1(
Standard direct labor:hours #er unit................................ 7.42
10-1# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
*1. The budget for /a' called for #roduction of 5)777 units. Actual out#ut for the month
was 4).77 units with total direct materials cost of C1(2).77 and total direct labor cost
of C22)22.. The direct labor standards call for ,. minutes of direct labor #er unit at a
cost of C1( #er direct labor:hour. The direct materials standards call for one #ound of
direct materials #er unit at a cost of C1. #er #ound. The actual direct labor:hours were
0)*2.. >ariance anal'sis of the #erformance for the month of /a' would indicate:
A9 C2).77 favorable materials +uantit' variance.
B9 C1)(2. favorable direct labor efficienc' variance.
C9 C1)(2. unfavorable direct labor efficienc' variance.
=9 C1)(2. unfavorable direct labor rate variance.
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 * $evel: /edium Source: C/A) ada#ted
Solution:
Actual rate J =irect labor cost K =irect labor:hours J C22)22. K 0)*2. J C1(.(7
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J 0)*2. F 8C1(.(7 L C1(9 J C1)(2. unfavorable
Standard hours J Standard hours #er unit F Actual out#ut
J 8,. minutes K 07 minutes9 F 4).77 J 0)*2.
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1( F 80)*2. L 0)*2.9 J 7
*(. $ion Com#an'Es direct labor costs for the month of Hanuar' were as follows:
Actual total direct labor:hours................... (7)777
Standard total direct labor:hours................ (1)777
=irect labor rate varianceMunfavorable.... C*)777
Total direct labor cost................................. C1(0)777
1hat was $ionEs direct labor efficienc' variance<
A9 C0)777 favorable
B9 C0)1.7 favorable
C9 C0)*77 favorable
=9 C0),.7 favorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard Source: CA) ada#ted
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1$
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
Actual rate J =irect labor cost K Actual direct labor:hours
J C1(0)777 K (7)777 J C0.*7
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
C*)777 J (7)777 F 8C0.*7 L Standard rate9
Standard rate J C0.1.
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C0.1. F 8(7)777 L (1)7779
J C0)1.7 favorable
**. Information on Re- Co.Es direct material costs for /a' follows:
Actual +uantit' of direct materials #urchased and used. *7)777 #ounds
Actual cost of direct materials........................................ C4,)777
Dnfavorable direct materials +uantit' variance.............. C*)777
Standard +uantit' of direct materials allowed for /a'
#roduction.................................................................... (5)777 #ounds
!or the month of /a') what was Re-Es direct materials #rice variance<
A9 C()477 favorable
B9 C()477 unfavorable
C9 C0)777 unfavorable
=9 C0)777 favorable
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard Source: CA) ada#ted
Solution:
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
C*)777 J Standard #rice F 8*7)777 L (5)7779
Standard #rice J C*
/aterials #rice variance J 8Actual +uantit' F Actual #rice9 L 8Actual +uantit' F
Standard #rice9 J C4,)777 L 8*7)777 F C*9 J C0)777 favorable
10-1% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
*,. /att Com#an' uses a standard cost s'stem. Information for raw materials for roduct
RBI for the month of %ctober follows:
Standard #rice #er #ound of raw materials.................. C1.07
Actual #urchase #rice #er #ound of raw materials....... C1...
Actual +uantit' of raw materials #urchased................. ()777 #ounds
Actual +uantit' of raw materials used......................... 1)577 #ounds
Standard +uantit' allowed for actual #roduction......... 1)477 #ounds
1hat is the materials #urchase #rice variance<
A9 C57 favorable
B9 C57 unfavorable
C9 C177 favorable
=9 C177 unfavorable
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium Source: CA) ada#ted
Solution:
/aterials #rice variance J Actual +uantit' #urchased F 8Actual #rice L Standard #rice9
J ()777 F 8C1... L C1.079
J C177 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-17
Chapter 10 Standard Costs and the Balanced Scorecard
*.. Buckler Com#an' manufactures desks with vin'l to#s. The standard material cost for
the vin'l used #er /odel S desk is C(2.77 based on 1( s+uare feet of vin'l at a cost of
C(.(. #er s+uare foot. A #roduction run of 1)777 desks in /arch resulted in usage of
1()077 s+uare feet of vin'l at a cost of C(.77 #er s+uare foot) a total cost of C(.)(77.
The materials +uantit' variance resulting from the above #roduction run was:
A9 C1)(77 unfavorable
B9 C1)*.7 unfavorable
C9 C1)477 favorable
=9 C*)1.7 favorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium Source: CA) ada#ted
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J 1( F 1)777 J 1()777
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C(.(. F 81()077 L 1()7779 J C1)*.7 unfavorable
*0. /agno Cereal Cor#oration uses a standard cost s'stem to collect costs related to the
#roduction of its Ncrunch' #ickleO cereal. The #ickle 8materials9 standards for each
batch of cereal #roduced are 1., #ounds of #ickles at a standard cost of C*.77 #er
#ound. =uring the month of August) /agno #urchased 24)777 #ounds of #ounds at a
total cost of C(.*).77. /agno used all of these #ickles to #roduce 07)777 batches of
cereal. 1hat is /agnoEs materials +uantit' variance for the month of August<
A9 C1).77 unfavorable
B9 C14)777 favorable
C9 C15).77 unfavorable
=9 C.,)777 unfavorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J 1., F 07)777 J 4,)777
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C* F 824)777 L 4,)7779 J C14)777 favorable
10-18 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
*2. The following materials standards have been established for a #articular #roduct:
Standard +uantit' #er unit of out#ut.......... (.0 meters
Standard #rice............................................ C17... #er meter
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual materials #urchased........................ 0)777 meters
Actual cost of materials #urchased............ C.5),77
Actual materials used in #roduction.......... .)077 meters
Actual out#ut.............................................. ()(77 units
1hat is the materials +uantit' variance for the month<
A9 C,)((7 D
B9 C1)144 !
C9 C1)(00 !
=9 C*)507 D
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J (.0 F ()(77 J .)2(7
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C17... F 8.)077 L .)2(79 J C1)(00 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1
Chapter 10 Standard Costs and the Balanced Scorecard
*4. The following materials standards have been established for a #articular #roduct:
Standard +uantit' #er unit of out#ut.......... (.4 grams
Standard #rice............................................ C1(..7 #er gram
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual materials #urchased........................ 0)(77 grams
Actual cost of materials #urchased............ C41).*7
Actual materials used in #roduction.......... .)277 grams
Actual out#ut.............................................. 1)477 units
1hat is the materials #rice variance for the month<
A9 C0)(.7 D
B9 C,)7*7 D
C9 C4)025 D
=9 C0).2. D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterials #rice variance J Actual +uantit' F 8Actual #rice L Standard #rice9
J C41).*7 L 80)(77 F C1(..79
J C41).*7 L C22).77
J C,)7*7 unfavorable
10-!0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
*5. The standards for direct materials in making a certain #roduct are (7 #ounds at C7.2.
#er #ound. =uring the #ast #eriod) .0)777 units of #roduct were made and the material
+uantit' variance was C*7)777 D. The number of #ounds of direct material used
during the #eriod amounted to:
A9 1)747)777
B9 1)107)777
C9 1)(77)777
=9 24,)777
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J (7 F .0)777 J 1)1(7)777
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
C*7)777 J C7.2. F 8Actual +uantit' L 1)1(7)7779
Actual +uantit' J 1)107)777
,7. The standard cost card for one unit of a finished #roduct shows the following:
Standard ?uantit'
or 3ours
Standard rice
or Rate
=irect materials................................. 1( feet C< #er foot
=irect labor....................................... 1.. hours C1( #er hour
>ariable manufacturing overhead..... 1.. hours C4 #er hour
If the total standard variable cost for one unit of finished #roduct is C24) then the
standard #rice #er foot for direct materials is:
A9 C(
B9 C*
C9 C,
=9 C.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!1
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
Standard unit variable cost J 8=irect material standard +uantit' F =irect material
standard #rice9 P 8=irect labor standard hours F =irect labor standard rate9 P 8>ariable
overhead standard +uantit' F >ariable overhead standard #rice9
C24 J 81( F =irect materials standard #rice9 P 81.. F C1(9 P 81.. F C49
=irect materials standard #rice J C,
,1. Construction Safet' Cor#oration manufactures orange #lastic safet' suits for road
workers. The following information relates to the cor#orationEs #urchases and use of
material for the month of A#ril:
Total 'ards of material
/aterial #urchased................................................. 4).77
/aterial used in #roduction................................... 4)777
Standard material allowed for suits #roduced........ 4)(77
Construction Safet'Es materials #rice variance for A#ril was C1)(77 favorable. Its
materials +uantit' variance for A#ril was C577 favorable. 1hat does Construction
Safet' use as a standard #rice #er 'ard of material for its safet' suits<
A9 C1.47
B9 C(.,7
C9 C*.77
=9 C,..7
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard
Solution:
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
LC577 J Standard #rice F 84)777 L 4)(779
Standard #rice J C,..7
10-!! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
,(. A small com#onent is #urchased for the use in the #roduction of a maAor #roduct. The
standard #rice of the com#onent is C7.4.. =uring a recent #eriod) 0)477 units of the
small com#onent were #urchased and the materials #rice variance was C.,,
unfavorable. The standard number of units of the small com#onent allowed for the
actual out#ut of the #eriod was .),,7 units. 1hat was the actual #urchase #rice #er
unit<
A9 C7.2.
B9 C7.22
C9 C7.5*
=9 C7.5.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard Source: CI/A) ada#ted
Solution:
/aterials #rice variance J Actual +uantit' #urchased F 8Actual #rice L Standard #rice9
C.,, J 0)477 F 8Actual #rice L C7.4.9
Actual #rice J C7.5*
,*. /aBBucco Cor#oration has #rovided the following data concerning its direct labor
costs for Se#tember:
Standard wage rate............. C1*.*7 #er =$3
Standard hours................... ... =$3s #er unit
Actual wage rate................ C1*.(7 #er =$3
Actual hours....................... ,.)447 =$3s
Actual out#ut...................... 4),77 units
The $abor Rate >ariance for Se#tember would be recorded as a:
A9 debit of C,).44.
B9 credit of C,).44.
C9 credit of C,)0(7.
=9 debit of C,)0(7.
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'
Solution:
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J ,.)447 F 8C1*.(7 L C1*.*79
J C,).44 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!"
Chapter 10 Standard Costs and the Balanced Scorecard
,,. Raggs Cor#orationEs standard wage rate is C1(.(7 #er direct labor:hour 8=$39 and
according to the standards) each unit of out#ut re+uires *.5 =$3s. In A#ril) .)(77 units
were #roduced) the actual wage rate was C1(.17 #er =$3) and the actual hours were
(,)1.7 =$3s. The $abor Rate >ariance for A#ril would be recorded as a:
A9 credit of C()7(4.
B9 credit of C(),1..
C9 debit of C()7(4.
=9 debit of C(),1..
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'
Solution:
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J (,)1.7 F 8C1(.17 L C1(.(79
J C(),1. favorable
,.. 1armuth Cor#oration has #rovided the following data concerning its direct labor costs
for Se#tember:
Standard wage rate............. C1(.77 #er =$3
Standard hours................... 4.4 =$3s #er unit
Actual wage rate................ C1(..7 #er =$3
Actual hours....................... 04)1(7 =$3s
Actual out#ut...................... 0)077 units
The $abor &fficienc' >ariance for Se#tember would be recorded as a:
A9 credit of C1(7),47.
B9 debit of C1(7),47.
C9 debit of C1(.).77.
=9 credit of C1(.).77.
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 4.4 F 0)077 J .4)747
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1( F 804)1(7 L .4)7479
J C1(7),47 unfavorable
10-!# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
,0. !ast Cor#orationEs standard wage rate is C1*.17 #er direct labor:hour 8=$39 and
according to the standards) each unit of out#ut re+uires (.0 =$3s. In /arch) 4)777
units were #roduced) the actual wage rate was C1(.,7 #er =$3) and the actual hours
were 14)727 =$3s. The $abor &fficienc' >ariance for /arch would be recorded as a:
A9 debit of C**)4.(.
B9 credit of C**)4.(.
C9 debit of C*.)20*.
=9 credit of C*.)20*.
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: *6 2 $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J (.0 F 4)777 J (7)477
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1*.17 F 814)727 L (7)4779
J C*.)20* favorable
,2. =ata concerning Barber Com#an'Es direct labor costs for the month of Hanuar' follow:
Actual total direct labor:hours................... *,).77
Standard total direct labor:hours................ *.)777
Total direct labor cost................................. C(,1).77
=irect labor efficienc' variance................. C*)(77 !avorable
1hat is BarberEs direct labor rate variance<
A9 C12)(.7 unfavorable
B9 C(7)277 unfavorable
C9 C(1)777 unfavorable
=9 C(1)777 favorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: 3ard Source: CA) ada#ted
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!$
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
LC*)(77 J Standard rate F 8*,).77 L *.)7779
Standard rate J C0.,7
Actual rate J =irect labor cost K Actual hours
J C(,1).77 K *,).77 J C2
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J *,).77 F 8C2.77 L C0.,79
J C(7)277 unfavorable
,4. i#er Com#an' should work 1)777 direct labor:hours to #roduce (.7 units of #roduct.
=uring %ctober the com#an' worked 1)(.7 direct labor:hours and #roduced *77 units.
The standard hours allowed for %ctober would be:
A9 1)(.7 hours
B9 1)777 hours
C9 1)(77 hours
=9 it is im#ossible to determine from the data given.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours #er unit J Budgeted direct labor hours K Budgeted #roduction
J 1)777 K (.7 J ,
Standard hours J Standard hours #er unit F Actual #roduction J , F *77 J 1)(77
,5. Qann' &lectronics Com#an' uses a standard cost s'stem to collect costs related to the
#roduction of its water ski radios. The direct labor standard for each radio is 7.5 hours.
The standard direct labor cost #er hour is C2.(7.
=uring the month of August) Qann'Es water ski radio #roduction used 0)077 direct
labor:hours at a total direct labor cost of C,4)274. This resulted in #roduction of 0)577
water ski radios for August. 1hat is Qann'Es labor rate variance for the month of
August<
A9 C52( favorable
B9 C1)144 unfavorable
C9 C()107 favorable
=9 C()474 unfavorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
10-!% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J C,4)274 L 80)077 F C2.(79
J C1)144 unfavorable
.7. The following labor standards have been established for a #articular #roduct:
Standard labor:hours #er unit of out#ut..... ..7 hours
Standard labor rate..................................... C14.(. #er hour
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual hours worked.......... 5)477 hours
Actual total labor cost........ C120),77
Actual out#ut...................... 1)577 units
1hat is the labor efficienc' variance for the month<
A9 C*)7(. D
B9 C.),77 D
C9 C*)7(. !
=9 C.),2. D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J . F 1)577 J 5).77
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C14.(. F 85)477 L 5).779 J C.),2. unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!7
Chapter 10 Standard Costs and the Balanced Scorecard
.1. The following labor standards have been established for a #articular #roduct:
Standard labor:hours #er unit of out#ut..... 1.1 hours
Standard labor rate..................................... C11.07 #er hour
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual hours worked.......... 5),77 hours
Actual total labor cost........ C172)0*7
Actual out#ut...................... 4)077 units
1hat is the labor rate variance for the month<
A9 C042 !
B9 C()170 !
C9 C1),17 !
=9 C()170 D
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Actual rate J $abor cost K Actual hours
J C172)0*7 K 5),77 J C11.,.
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J 5),77 F 8C11.,. L C11.079 J C1),17 favorable
.(. Information on 1estcott Com#an'Es direct labor costs for a recent month follows:
Standard direct labor rate........................... C*.2.
Actual direct labor rate............................... C*..7
Total standard direct labor:hours............... 17)777
=irect labor efficienc' variance................. C,)(77 Dnfavorable
1hat were the actual hours worked during the month) rounded to the nearest hour<
A9 17)21,
B9 11)1(7
C9 11)(77
=9 11)51,
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: 3ard Source: C/A) ada#ted
10-!8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
C,)(77 J C*.2. F 8Actual hours L 17)7779
Actual hours J 11)1(7
.*. Sullivan Cor#orationEs direct labor costs for the month of /arch were as follows:
Total standard direct labor:hours............... ,()777
Total actual direct labor:hours................... ,7)777
=irect labor rate variance........................... C4),77 !avorable
Standard direct labor rate #er hour............. C0.*7
1hat was SullivanEs total direct labor #a'roll for the month of /arch<
A9 C(,*)077
B9 C(,,)777
C9 C(07)777
=9 C(07),77
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: 3ard Source: CA) ada#ted
Solution:
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
LC4),77 J ,7)777 F 8Actual rate L C0.*79
Actual rate J C0.75
=irect labor #a'roll J Actual rate F Actual hours
J C0.75 F ,7)777 J C(,*)077
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-!
Chapter 10 Standard Costs and the Balanced Scorecard
.,. &lliott Com#an' makes and sells a single #roduct. $ast #eriod the com#an'Es labor
rate variance was C1,),77 D. =uring the #eriod) the com#an' worked *0)777 actual
direct labor:hours at an actual cost of C**4),77. The standard labor rate for the #roduct
in dollars #er hour is:
A9 C5.,7
B9 C5.77
C9 C4..7
=9 C4.17
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
Solution:
Actual rate J =irect labor cost K =irect labor:hours
J C**4),77 K *0)777 J C5.,7
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
C1,),77 J *0)777 F 8C5.,7 L Standard rate9
Standard rate J C5.77
... Tub Co. uses a standard cost s'stem. The following information #ertains to direct
labor for #roduct B for the month of %ctober:
Actual rate #aid...................................................... C4.,7 #er hour
Standard rate.......................................................... C4.77 #er hour
Standard hours allowed for actual #roduction....... ()777 hours
$abor efficienc' variance....................................... C1)077 unfavorable
1hat were the actual hours worked during %ctober<
A9 1)477
B9 1)417
C9 ()157
=9 ()(77
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium Source: CA) ada#ted
Solution:
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
C1)077 J C4 F 8Actual hours L ()7779
Actual hours J ()(77
10-"0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
.0. In a #eriod) the labor efficienc' variance was C.,)777 favorable. The standard direct
labor wage rate is C1(.77 #er hour and *7 direct labor:hours are allowed for each unit
of out#ut. Iiven that ,*).77 direct labor:hours were worked) how man' units of
out#ut were actuall' #roduced<
A9 1.7
B9 1)*77
C9 1),.7
=9 1)077
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: 3ard Source: CI/A) ada#ted
Solution:
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J Standard rate F RActual hours L 8Standard hours #er unit F Actual out#ut9S
LC.,)777 J C1( F R,*).77 L 8*7 F Actual out#ut9S
Actual out#ut J 1)077
.2. 1ar# /anufacturing Cor#oration uses a standard cost s'stem to collect costs related to
the #roduction of its ski lift chairs. 1ar# uses machine hours as an overhead base. The
variable overhead standards for each chair are 1.( machine hours at a standard cost of
C14 #er hour.
=uring the month of Se#tember) 1ar# incurred *,)777 machine hours in the
#roduction of *()777 ski lift chairs. The total variable overhead cost was C0,5),77.
1hat is 1ar#Es variable overhead s#ending variance for the month of Se#tember<
A9 C*2),77 unfavorable
B9 C,1)477 favorable
C9 C25)(77 favorable
=9 C4,)7,7 favorable
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: /edium
Solution:
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9
J C0,5),77 L 8*,)777 F C149
J C*2),77 unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"1
Chapter 10 Standard Costs and the Balanced Scorecard
.4. The following standards for variable manufacturing overhead have been established
for a com#an' that makes onl' one #roduct:
Standard hours #er unit of out#ut......... 1.( hours
Standard variable overhead rate........... C17.(7 #er hour
The following data #ertain to o#erations for the last month:
Actual hours............................................... .)777 hours
Actual total variable overhead cost............ C.()2.7
Actual out#ut.............................................. ,)777 units
1hat is the variable overhead efficienc' variance for the month<
A9 C1)047 !
B9 C()7,7 D
C9 C()117 D
=9 C*)257 D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1.( F ,)777 J ,)477
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9 J C17.(7 F 8.)777 L ,)4779 J C()7,7 unfavorable
10-"! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
.5. The following standards for variable manufacturing overhead have been established
for a com#an' that makes onl' one #roduct:
Standard hours #er unit of out#ut......... 4.7 hours
Standard variable overhead rate........... C11... #er hour
The following data #ertain to o#erations for the last month:
Actual hours............................................... 2)777 hours
Actual total variable overhead cost............ C25)177
Actual out#ut.............................................. 077 units
1hat is the variable overhead s#ending variance for the month<
A9 C(*)007 D
B9 C1)2.7 !
C9 C(,)407 D
=9 C1)(77 D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9 J C25)177 L 82)777 F C11...9 J C1)2.7 favorable
07. The 3ane' Com#an' has a standard costing s'stem. >ariable manufacturing overhead
is a##lied on the basis of direct labor:hours. The following data are available for
Hanuar':
• Actual variable manufacturing overhead: C(.).77
• Actual direct labor:hours worked: .)477
• >ariable overhead s#ending variance: C077 !avorable
• >ariable overhead efficienc' variance: C(),2. Dnfavorable
The standard hours allowed for Hanuar' #roduction is:
A9 .)52. hours
B9 .)477 hours
C9 .),(. hours
=9 .)(.7 hours
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: 3ard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-""
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9
:C077 J C(.).77 L 8.)477 F Standard rate9
Standard rate J 8C(.).77 P C0779 K .)477 J C,..7
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9
C(),2. J C,..7 F 8.)477 L Standard hours9
Standard hours J .)(.7
01. Tanou'e Cor#oration kee#s careful track of the time re+uired to fill orders. =ata
concerning a #articular order a##ear below:
3ours
1ait time................ 1(.2
rocess time........... 1.0
Ins#ection time....... 7.,
/ove time.............. (.1
?ueue time............. 4.4
The through#ut time was:
A9 ,.1 hours
B9 1(.5 hours
C9 (..0 hours
=9 (1.. hours
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.0 P 7., P (.1 P 4.4 J 1(.5
10-"# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
0(. Simkin Cor#oration kee#s careful track of the time re+uired to fill orders. =ata
concerning a #articular order a##ear below:
3ours
1ait time................ (7.0
rocess time........... 1.5
Ins#ection time....... 7.1
/ove time.............. (.2
?ueue time............. ,.4
The manufacturing c'cle efficienc' 8/C&9 was closest to:
A9 7.,0
B9 7.70
C9 7.(7
=9 7.15
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
/C& J >alue:added time 8rocess time9 K Through#ut time
J rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9
J 1.5 K 81.5 P 7.1 P (.2 P ,.49 J 7.(7
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"$
Chapter 10 Standard Costs and the Balanced Scorecard
0*. Santo'o Cor#oration kee#s careful track of the time re+uired to fill orders. =ata
concerning a #articular order a##ear below:
3ours
1ait time................ (4.7
rocess time........... 1.7
Ins#ection time....... 7.,
/ove time.............. *.(
?ueue time............. ..1
The deliver' c'cle time was:
A9 4.* hours
B9 *.( hours
C9 *2.2 hours
=9 *0.* hours
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
=eliver' c'cle time J 1ait time P Through#ut time
J 1ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9
J (4.7 P 81.7 P 7., P *.( P ..19 J *2.2
10-"% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
0,. inkton Cor#oration kee#s careful track of the time re+uired to fill orders. The times
recorded for a #articular order a##ear below:
3ours
/ove time.............. *.0
1ait time................ 1*.*
?ueue time............. ..1
rocess time........... 7..
Ins#ection time....... 7.(
The deliver' c'cle time was:
A9 4.2 hours
B9 *.0 hours
C9 (( hours
=9 ((.2 hours
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
=eliver' c'cle time J 1ait time P Through#ut time
J 1ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9
J 1*.* P 87.. P 7.( P *.0 P ..19 J ((.2
0.. Scha## Cor#oration kee#s careful track of the time re+uired to fill orders. The times
recorded for a #articular order a##ear below:
3ours
/ove time.............. (.0
1ait time................ 17.,
?ueue time............. 0.4
rocess time........... 1..
Ins#ection time....... 7.,
The through#ut time was:
A9 11.* hours
B9 (1.2 hours
C9 12.( hours
=9 ,.. hours
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"7
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.. P 7., P (.0 P 0.4 J 11.*
00. >andenheuvel Cor#oration kee#s careful track of the time re+uired to fill orders. The
times recorded for a #articular order a##ear below:
3ours
/ove time.............. (.,
1ait time................ 14.(
?ueue time............. 0.4
rocess time........... 1.4
Ins#ection time....... 7.*
The manufacturing c'cle efficienc' 8/C&9 was closest to:
A9 7.70
B9 7.14
C9 7.0(
=9 7.10
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
/C& J rocess time K Through#ut time
J rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9
J 1.4 K 81.4 P 7.* P (., P 0.49 J 7.10
10-"8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
02. =uring the month of August) $inosa /anufacturing Cor#oration #urchased 17)777
#ounds of materials at a total actual cost of C27)777. $inosa used 4)777 #ounds of this
material for AugustEs #roduction. $inosaEs materials #rice variance for August was
C,)777 favorable. Its materials +uantit' variance was C2)777 unfavorable. 1hat
Aournal entr' would $inosa make to record the usage of materials and the materials
+uantit' variance for the month of August<
A9 1ork in rocess .()(77
/aterials ?uantit' >ariance 2)777
Raw /aterials .5)(77
B9 1ork in rocess 00)(77
/aterials ?uantit' >ariance 2)777
Raw /aterials .5)(77
C9 Raw /aterials 0*)777
/aterials ?uantit' >ariance 2)777
Accounts a'able 27)777
=9 1ork in rocess 02)777
/aterials ?uantit' >ariance 2)777
Raw /aterials 2,)777
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: 3ard
Solution:
/aterials #urchased +uantit' J urchase #rice L Standard cost 8Total9
LC,)777 J C27)777 L Standard cost
Standard cost J C2,)777
Raw materials J 8/aterials used K /aterials #urchased9 F Standard cost
J 84)777 K 17)7779 F C2,)777 J C.5)(77
1ork in #rocess J Raw materials L /aterials +uantit' variance
J C.5)(77 L C2)777
J C.()(77
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"
Chapter 10 Standard Costs and the Balanced Scorecard
04. olio Cor#oration has #rovided the following data concerning its most im#ortant raw
material) com#ound A1*>:
Standard cost) #er liter........................................... C*2.57
Standard +uantit') liters #er unit of out#ut............. *.4
Cost of material #urchased in Hul') #er liter........... C*4.07
/aterial #urchased in Hul') liters........................... ()(77
1hen recording the #urchase of materials) Raw /aterials would be:
A9 credited for C4*)*47.
B9 credited for C4,)5(7.
C9 debited for C4*)*47.
=9 debited for C4,)5(7.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Raw materials J /aterials #urchased F Standard cost
J ()(77 F C*2.57 J C4*)*47
05. Terstein Cor#oration has #rovided the following data concerning its most im#ortant
raw material) com#ound /77?:
Standard cost) #er liter........................................... C,1.(7
Standard +uantit') liters #er unit of out#ut............. (.5
/aterial used in #roduction in A#ril) liters............ *(7
Actual out#ut in A#ril) units................................... 177
1hen recording the use of materials in #roduction) Raw /aterials would be:
A9 debited for C1*)14,.
B9 debited for C11)5,4.
C9 credited for C1*)14,.
=9 credited for C11)5,4.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Raw materials J /aterials used F Standard cost
J *(7 F C,1.(7 J C1*)14,
10-#0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
27. Com#ound >.(/ is used to make Bl'e Cor#orationEs maAor #roduct. The standard
cost of >.(/ is C(..17 #er ounce and the standard +uantit' is *.1 ounces #er unit of
out#ut. In the most recent month) 1).77 ounces of the raw material were #urchased at
a cost of C(..(7 #er ounce. 1hen recording the #urchase of materials) Raw /aterials
would be:
A9 credited for C*2)477.
B9 credited for C*2)0.7.
C9 debited for C*2)477.
=9 debited for C*2)0.7.
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Raw materials J /aterials #urchased F Standard cost J 1).77 F C(..17 J C*2)0.7
21. Com#ound $,2D is used to make SBewcB'k Cor#orationEs maAor #roduct. The
standard cost of com#ound $,2D is C(2.47 #er ounce and the standard +uantit' is 1.*
ounces #er unit of out#ut. In the most recent month) 027 ounces of the com#ound were
used to make 077 units of the out#ut. 1hen recording the use of materials in
#roduction) Raw /aterials would be:
A9 debited for C14)0(0.
B9 credited for C14)0(0.
C9 debited for C(1)04,.
=9 credited for C(1)04,.
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Raw materials J /aterials used F Standard cost
J 027 F C(2.47 J C14)0(0
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#1
Chapter 10 Standard Costs and the Balanced Scorecard
2(. =ata concerning the direct labor costs for /arch of asko Cor#oration a##ear below:
Standard wage rate............. C1,.(7 #er =$3
Standard hours................... ..( =$3s #er unit
Actual wage rate................ C1..77 #er =$3
Actual hours....................... 2)2(7 =$3s
Actual out#ut...................... 1)*77 units
The Aournal entr' to record the incurrence of direct labor costs in /arch would include
the following for 1ork in rocess:
A9 credit of C11.)477.
B9 credit of C5.)55(.
C9 debit of C5.)55(.
=9 debit of C11.)477.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J ..( F 1)*77 J 0)207
1ork in #rocess J Standard hours F Standard rate
J 0)207 F C1,.(7 J C5.)55(
10-#! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
2*. Shackleford Cor#orationEs standard wage rate is C1*.27 #er direct labor:hour 8=$39
and according to the standards) each unit of out#ut re+uires 2.7 =$3s. In %ctober)
*)777 units were #roduced) the actual wage rate was C1,.17 #er =$3) and the actual
hours were (1)207 =$3s. In the Aournal entr' to record the incurrence of direct labor
costs in %ctober) the 1ork in rocess entr' would consist of a:
A9 debit of C(42)277.
B9 credit of C*70)410.
C9 credit of C(42)277.
=9 debit of C*70)410.
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting A##endi-: 17 $%: 2 $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 2 F *)777 J (1)777
1ork in #rocess J Standard hours F Standard rate
J (1)777 F C1*.27 J C(42)277
Dse the following to answer +uestions 2,:2.:
$ange Com#an' manufactures abstract:sha#ed scul#tures made out of li+uid Aade. &ach
scul#ture re+uires two 8(9 gallons of li+uid Aade. Because of the instabilit' of the li+uid Aade at
times) some scul#tures crack or shatter during the #roduction #rocess. The Aade used in the
broken scul#tures cannot be reused and is discarded. %n the average) one scul#ture is
e-#ected to be lost for ever' nine scul#tures #roduced. In other words) eight good scul#tures
are generated from ever' nine #roduction attem#ts.
2,. Dnder traditional standard costing) what amount should $ange use for the standard
+uantit' of li+uid Aade #er scul#ture<
A9 (.777 gallons
B9 (.1(. gallons
C9 (.((( gallons
=9 (.(.7 gallons
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#"
Chapter 10 Standard Costs and the Balanced Scorecard
Solution:
Standard +uantit' J Standard +uantit' #er unit F 8roduction attem#ts K "umber of
good scul#tures9 J ( F 85 K 49 J (.(.7 gallons
2.. Dnder a total +ualit' management 8T?/9 a##roach to standard costing) what amount
should $ange use for the standard +uantit' of li+uid Aade #er scul#ture<
A9 (.777 gallons
B9 (.1(. gallons
C9 (.((( gallons
=9 (.(.7 gallons
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: /edium
Solution:
Standard +uantit' #er unit J (.777 gallons
Dse the following to answer +uestions 20:22:
Touri Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires an in#ut that
is #urchased for C4..77 #er kilogram from the su##lier. B' #a'ing cash) the com#an' gets a
discount of ,; off this #urchase #rice. Shi##ing costs from the su##lierEs warehouse amount
to C,.0( #er kilogram. Receiving costs are C7... #er kilogram. &ach unit of out#ut of the
#roduct re+uires 7.2, kilogram of this in#ut. The allowance for waste and s#oilage is 7.7*
kilogram of this in#ut for each unit of out#ut. The allowance for reAects is 7.1* kilogram of
this in#ut for each unit of out#ut.
10-## Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
20. The standard #rice #er kilogram of this in#ut should be:
A9 C4..77
B9 C40.22
C9 C4*.(*
=9 C5*..2
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
urchase #rice.................................................................. C4..77
$ess cash discount 8,; F C4.9........................................ *.,7
Shi##ing costs.................................................................. ,.0(
Receiving costs................................................................ 7...
Standard #rice #er kilogram............................................ C40.22
22. The standard +uantit' in kilograms of this in#ut #er unit of out#ut should be:
A9 7.21
B9 7..4
C9 7.57
=9 7.2,
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
Standard +uantit':
/aterial re+uirements #er unit of out#ut......................... 7.2,
Allowance for waste and s#oilage................................... 7.7*
Allowance for reAects....................................................... 7.1*
Standard +uantit' in kilograms........................................ 7.57
Dse the following to answer +uestions 24:25:
Iarrigus Cor#oration is develo#ing direct labor standards. The basic direct labor wage rate is
C1,.77 #er hour. &m#lo'ment ta-es are 17; of the basic wage rate. !ringe benefits are C*..*
#er direct labor:hour. A #articular #roduct re+uires 7.2, direct labor:hours #er unit. The
allowance for breaks and #ersonal needs is 7.7. direct labor:hours #er unit. The allowance for
cleanu#) machine downtime) and reAects is 7.1* direct labor:hours #er unit.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#$
Chapter 10 Standard Costs and the Balanced Scorecard
24. The standard rate #er direct labor:hour should be:
A9 C5.72
B9 C1,.77
C9 C14.5*
=9 C,.5*
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
Basic wage rate #er hour................................................. C1,.77
&m#lo'ment ta-es 8C1, F 17;9...................................... 1.,7
!ringe benefits................................................................. *..*
Standard rate #er direct labor:hour.................................. C14.5*
25. The standard direct labor:hours #er unit should be:
A9 7.05
B9 7..0
C9 7.2,
=9 7.5(
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 1 $evel: &as'
Solution:
Basic labor time #er unit.................................................. 7.2,
Allowance for breaks and #ersonal needs....................... 7.7.
Allowance for cleanu#) machine downtime) and reAects. 7.1*
Standard direct labor:hour #er unit.................................. 7.5(
10-#% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 47:4,:
Ravena $abs.) Inc. makes a single #roduct which has the following standards:
=irect materials.................................... (.. ounces at C(7 #er ounce
=irect labor.......................................... 1., hours at C1(..7 #er hour
>ariable manufacturing overhead........ 1., hours at < #er hour
>ariable manufacturing overhead is a##lied on the basis of direct labor hours. The following
data are available for %ctober:
• *)2.7 units of com#ound were #roduced during the month.
• There was no beginning direct materials inventor'.
• The ending direct materials inventor' was ()777 ounces.
• =irect materials #urchased: 1()777 ounces for C((.)777.
• =irect labor hours worked: .)077 hours at a cost of C02)(77.
• >ariable manufacturing overhead costs incurred amounted to C14)(77.
• >ariable manufacturing overhead a##lied to #roducts: C14)*2..
47. The direct materials #rice variance for %ctober is:
A9 C1.)777 unfavorable
B9 C1.)777 favorable
C9 C(.)777 unfavorable
=9 C(.)777 favorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
/aterials #rice variance J 8Actual +uantit' F Actual #rice9 L 8Actual +uantit' F
Standard #rice9 J C((.)777 L 81()777 F C(79 J C1.)777 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#7
Chapter 10 Standard Costs and the Balanced Scorecard
41. The direct materials +uantit' variance for %ctober is:
A9 C.().77 unfavorable
B9 C.().77 favorable
C9 C1().77 unfavorable
=9 C1().77 favorable
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J (.. F *)2.7 J 5)*2.
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
J Standard #rice F R8=irect materials #urchased in ounces L &nding inventor' in
ounces9 L Standard +uantit'S
J C(7 F R81()777 L ()7779 L 5)*2.S
J C1().77 unfavorable
4(. The direct labor efficienc' variance for %ctober is:
A9 C1),77 favorable
B9 C1)577 unfavorable
C9 C*)2.7 favorable
=9 C,)*2. unfavorable
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1., F *)2.7 J .)(.7
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1(..7 F 8.)077 L .)(.79 J C,)*2. unfavorable
10-#8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
4*. The variable overhead s#ending variance for %ctober is:
A9 C1),77 favorable
B9 C1)577 unfavorable
C9 C*)2.7 favorable
=9 C,)*2. unfavorable
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: 3ard
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1., F *)2.7 J .)(.7
Standard rate F Standard hours #er unit F Actual out#ut J >ariable overhead a##lied
Standard rate J >ariable overhead a##lied K Standard hours
J C14)*2. K .)(.7 J C*..7
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9
J C14)(77 L 8.)077 F C*..79
J C1),77 favorable
4,. The variable overhead efficienc' variance for %ctober is:
A9 C1),77 favorable
B9 C1)((. unfavorable
C9 C1)577 unfavorable
=9 C()277 favorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: 3ard
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1., F *)2.7 J .)(.7
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9 J C*..7 F 8.)077 L .)(.79 J C1)((. unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-#
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 4.:57:
Beakins Com#an' #roduces a single #roduct. The standard cost card for the #roduct follows:
=irect materials 8, 'ards U C. #er 'ard9.................................... C(7
=irect labor 81.. hours U C17 #er hour9..................................... C1.
>ariable manufacturing overhead 81.. hrs U C, #er Vhour9....... C0
=uring a recent #eriod the com#an' #roduced 1)(77 units of #roduct. >arious costs associated
with the #roduction of these units are given below:
=irect materials #urchased 80)777 'ards9.............. C(4).77
=irect materials used in #roduction....................... .)777 'ards
=irect labor cost incurred 8()177 hours9................ C12)4.7
>ariable manufacturing overhead cost incurred. . . . C17)747
The com#an' records all variances at the earliest #ossible #oint in time. >ariable
manufacturing overhead costs are a##lied to #roducts on the basis of direct labor hours.
4.. The materials #rice variance for the #eriod is:
A9 C1)(.7 !
B9 C1).77 !
C9 C1)(.7 D
=9 C1).77 D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual
+uantit' #urchased F Standard #rice9 J C(4).77 L 80)777 F C.9 J C1).77 favorable
10-$0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
40. The materials +uantit' variance for the #eriod is:
A9 C5.7 D
B9 C.)777 !
C9 C1)777 D
=9 C0)777 !
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J , F 1)(77 J ,)477
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C. F 8.)777 L ,)4779 J C1)777 unfavorable
42. The labor rate variance for the #eriod is:
A9 C*)1.7 D
B9 C()277 !
C9 C()277 D
=9 C*)1.7 !
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C12)4.7 L 8()177 F C179 J C*)1.7 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$1
Chapter 10 Standard Costs and the Balanced Scorecard
44. The labor efficienc' variance for the #eriod is:
A9 C*)777 D
B9 C()..7 D
C9 C()..7 !
=9 C*)777 !
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1.. F 1)(77 J 1)477
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C17 F 8()177 L 1)4779 J C*)777 unfavorable
45. The variable overhead s#ending variance for the #eriod is:
A9 C1)047 !
B9 C1),,7 D
C9 C1),,7 !
=9 C1)047 D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9 J C17)747 L 8()177 F C,9 J C1)047 unfavorable
10-$! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
57. The variable overhead efficienc' variance for the #eriod is:
A9 C1)(77 D
B9 C1),,7 D
C9 C1)(77 !
=9 C1),,7 !
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1.. F 1)(77 J 1)477
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9 J C, F 8()177 L 1)4779 J C1)(77 unfavorable
Dse the following to answer +uestions 51:5.:
$ongview 3os#ital #erforms blood tests in its laborator'. The following standards have been
set for each blood test #erformed:
Standard ?uantit' or 3ours Standard rice or Rate
=irect materials............ (.7 #lates C(.2. #er #late
=irect labor.................. 7.( hours C1..77 #er hour
>ariable overhead......... 7.( hours C2.77 #er hour
=uring /a') the laborator' #erformed 1).77 blood tests. %n /a' 1 there were no direct
materials 8#lates9 on hand6 after a #late is used for a blood test it is discarded. >ariable
overhead is assigned to blood tests on the basis of direct labor hours. The following events
occurred during /a':
• *)077 #lates were #urchased for C5).,7
• *)(77 #lates were used for blood tests
• *,7 actual direct labor hours were worked at a cost of C.)..7
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$"
Chapter 10 Standard Costs and the Balanced Scorecard
51. The materials #rice variance for /a' is:
A9 C*07 !
B9 C*07 D
C9 C2,7 !
=9 C2,7 D
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8urchase
+uantit' F Standard #rice9 J C5).,7 L 8*)077 F C(.2.9 J C*07 favorable
5(. The materials +uantit' variance for /a' is:
A9 C1)0.7 !
B9 C1)0.7 D
C9 C..7 D
=9 C2(7 !
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J ( F 1).77 J *)777
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C(.2. F 8*)(77 L *)7779 J C..7 unfavorable
10-$# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
5*. The labor rate variance for /a' is:
A9 C((. !
B9 C((. D
C9 C,.7 !
=9 C,.7 D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C.)..7 L 8*,7 F C1.9 J C,.7 unfavorable
5,. The labor efficienc' variance for /a' is:
A9 C077 !
B9 C077 D
C9 C.1. D
=9 C.1. !
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 7.( F 1).77 J *77
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1. F 8*,7 L *779 J C077 unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$$
Chapter 10 Standard Costs and the Balanced Scorecard
5.. The variable overhead efficienc' variance for /a' is
A9 C*.7 !
B9 C*.7 D
C9 C(47 D
=9 C(47 !
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 7.( F 1).77 J *77
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9 J C2 F 8*,7 L *779 J C(47 unfavorable
Dse the following to answer +uestions 50:55:
Irub Chemical Com#an' has develo#ed cost standards for the #roduction of its new cologne)
Choc%. The variable cost standards below relate to each 17 gallon batch of Choc%:
Standard Cost er Batch
/ilk chocolate 8( #ounds U C7.4. #er #ound9........... C1.27
=irect labor 81.(. hours U C1(.77 #er hour9............... C1..77
>ariable overhead 81.(. hours U C,,.77 #er hour9..... C...77
>ariable manufacturing overhead at Irub is a##lied based on direct labor hours. The actual
results for last month were as follows:
"umber of batches #roduced..................... *)477
=irect labor hours incurred........................ ,).17
ounds of chocolate #urchased.................. 5)777
ounds of chocolate used in #roduction.... 2)447
Cost of chocolate #urchased...................... C2)(77
=irect labor cost......................................... C.*)(14
>ariable manufacturing overhead cost....... C(7.)277
10-$% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
50. 1hat is Choc%Es materials 8milk chocolate9 #rice variance<
A9 C.0 favorable
B9 C,.7 favorable
C9 C.7( unfavorable
=9 C2,7 unfavorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual
+uantit' #urchased F Standard #rice9 J C2)(77 L 85)777 F C7.4.9 J C,.7 favorable
52. 1hat is Choc%Es materials 8milk chocolate9 +uantit' variance<
A9 C(*4 unfavorable
B9 C,20 unfavorable
C9 C5.( favorable
=9 C1)157 unfavorable
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J ( F *)477 J 2)077
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C7.4. F 82)447 L 2)0779 J C(*4 unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$7
Chapter 10 Standard Costs and the Balanced Scorecard
54. 1hat is Choc%Es labor rate variance<
A9 C57( favorable
B9 C()447 favorable
C9 C*)24( favorable
=9 C1,),*( favorable
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C.*)(14 L 8,).17 F C1(9 J C57( favorable
55. 1hat is Choc%Es variable overhead efficienc' variance<
A9 C2)(07 unfavorable
B9 C17).07 favorable
C9 C*1)(,7 unfavorable
=9 C*5)7.7 unfavorable
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: /edium
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 1.(. F *)477 J ,)2.7
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
hours9 J C,, F 8,).17 L ,)2.79 J C17).07 favorable
10-$8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 177:17(:
8A##endi-9 1idman) Inc. makes and sells onl' one #roduct and uses standard costing. The
standard cost sheet for one unit of #roduct includes the following:
• =irect materials: . grams at C7.*. #er gram
• =irect labor: 1 hour at C4 #er hour
$ast #eriod the com#an' had the following results:
• .)777 grams of direct materials #urchased at C7.,7 #er gram
• ,)777 grams of direct materials used in #roduction
• 577 units of #roduct were made
• 4.7 hours of direct labor were used at C4..7 #er hour
177. The Aournal entr' to record the #urchase of direct materials last #eriod would include:
A9 Raw materials C()777) =ebit6 material #rice variance C(.7) Credit
B9 Raw materials C1)2.7) =ebit6 material #rice variance C(.7) Credit
C9 Raw materials C()777) =ebit6 material #rice variance C(.7) =ebit
=9 Raw materials C1)2.7) =ebit6 material #rice variance C(.7) =ebit
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Raw materials J /aterials #urchased F Standard cost J .)777 F C7.*. J C1)2.7
/aterials #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual
+uantit' #urchased F Standard #rice9 J 8.)777 F C7.,79 L 8.)777 F C7.*.9 J C(.7
unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$
Chapter 10 Standard Costs and the Balanced Scorecard
171. The Aournal entr' to record the use of direct materials in #roduction last #eriod would
include:
A9 1ork in #rocess C1),77) =ebit6 material +uantit' variance C12.) =ebit
B9 1ork in #rocess C1).2.) =ebit6 material +uantit' variance C12.) Credit
C9 1ork in #rocess C1),77) =ebit6 material +uantit' variance C12.) Credit
=9 1ork in #rocess C1).2.) =ebit6 material +uantit' variance C12.) =ebit
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut J . F 577 J ,).77
1ork in #rocess J Standard +uantit' F Standard #rice F Actual out#ut
J . F C7.*. F 577 J C1).2.
/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
J C7.*. F 8,)777 L ,).779 J C12. favorable
17(. The Aournal entr' to record the incurrence of direct labor cost last #eriod would
include:
A9 1ork in #rocess C2)(77) =ebit6 labor efficienc' variance C,77) Credit
B9 1ork in #rocess C2)(77) =ebit6 labor efficienc' variance C,77) =ebit
C9 1ork in #rocess C0)477) =ebit6 labor rate variance C,(.) =ebit
=9 1ork in #rocess C0)477) =ebit6 labor rate variance C,(.) Credit
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
Standard hours J Standard hours #er unit F Actual out#ut J 1 F 577 J 577
1ork in #rocess J Standard +uantit' F Standard #rice F Actual out#ut
J 1 F C4 F 577 J C2)(77
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C4 F 84.7 L 5779 J C,77 favorable
10-%0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 17*:170:
8A##endi-9 The Hohnson Com#an' makes a single #roduct called a ef. The com#an' uses a
standard cost s'stem and has established the following standards for one ef:
Standard ?uantit'
or 3ours
Standard Cost
#er ef
=irect materials.................................... , gallons C17
=irect labor.......................................... 7.. hours C.
>ariable manufacturing overhead........ 7.. hours C(
There was no direct materials inventor' on Hune 1. >ariable manufacturing overhead is
assigned on the basis of direct labor hours. The following events occurred in Hune:
• urchased .)777 gallons of direct materials at a cost of C1*)777
• Dsed ,)277 gallons of direct materials to #roduce 1)(77 efs
• Dsed 027 hours of direct labor at a cost of C0)*0.
• Incurred C().17 in variable manufacturing overhead cost
17*. The Aournal entr' to record the material +uantit' variance for Hune would include:
A9 /aterial +uantit' variance C.77) debit
B9 /aterial +uantit' variance C(.7) credit
C9 /aterial +uantit' variance C(.7) debit
=9 /aterial +uantit' variance C14.) credit
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Standard #rice #er gallon J Standard #rice #er ef K Standard +uantit' #er ef
J C17 K , J C(..7
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J , F 1)(77 J ,)477
/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
J C(..7 F 8,)277 L ,)4779 J C(.7 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%1
Chapter 10 Standard Costs and the Balanced Scorecard
17,. The Aournal entr' to record the labor efficienc' variance for Hune would include:
A9 $abor efficienc' variance C277) credit
B9 $abor efficienc' variance C277) debit
C9 $abor efficienc' variance C,*7) debit
=9 $abor efficienc' variance C547) credit
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
Standard rate #er hour J Standard #rice #er ef K Standard hours #er ef
J C. K 7.. J C17
Standard hours J Standard hours #er unit F Actual out#ut
J 7.. F 1)(77 J 077
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C17 F 8027 L 0779 J C277 unfavorable
17.. The amount debited to 1ork in rocess to record the use of direct materials in
#roduction in Hune is:
A9 C1*)777
B9 C11)2.7
C9 C1()777
=9 C1*).(7
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
1ork in #rocess J Standard #rice #er ef F Actual out#ut
J C17 F 1)(77 J C1()777
10-%! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
170. The amount credited to =irect /aterials Inventor' to record the use of direct materials
in Hune is:
A9 C1().77
B9 C11)2.7
C9 C1()777
=9 C17)2.7
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Standard #rice #er gallon J Standard #rice #er ef K Standard +uantit' #er ef
J C17 K , J C(..7
Raw materials J Raw materials used F Standard #rice #er gallon
J ,)277 F C(..7 J C11)2.7
Dse the following to answer +uestions 172:117:
Soll' Com#an' #roduces a #roduct for national distribution. Standards for the #roduct are:
• /aterials: 1( ounces #er unit at 07W #er ounce.
• $abor: ( hours #er unit at C4 #er hour.
=uring the month of =ecember) the com#an' #roduced 1)777 units. Information for the month
follows:
• /aterials: 1,)777 ounces #urchased and used at a total cost of C2)277.
• $abor: ().77 hours worked at a total cost of C(7)0(..
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%"
Chapter 10 Standard Costs and the Balanced Scorecard
172. The material #rice variance is:
A9 C277 D
B9 C077 !
C9 C077 D
=9 C277 !
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterial #rice variance J 8Actual +uantit' #urchased F Actual #rice9 L 8Actual
+uantit' #urchased F Standard #rice9
J C2)277 L 81,)777 F 7.079 J C277 favorable
174. The material +uantit' variance is:
A9 C1)(77 D
B9 C1)177 D
C9 C1)177 !
=9 C1)(77 !
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J 1( F 1)777 J 1()777
/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
J C7.07 F 81,)777 L 1()7779 J C1)(77 unfavorable
10-%# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
175. The labor rate variance is:
A9 C0(. D
B9 C.77 !
C9 C.77 D
=9 C0(. !
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C(7)0(. L 8().77 F C49 J C0(. unfavorable
117. The labor efficienc' variance is:
A9 C,)777 !
B9 C,)1(. !
C9 C,)1(. D
=9 C,)777 D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J ( F 1)777 J ()777
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C4 F 8().77 L ()7779 J C,)777 unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%$
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 111:11*:
=udle') Inc. makes a single #roduct which has the following standards:
• =irect materials: ( kilograms at C,.*7 #er kilogram
• =irect labor: * hours at C0 #er hour
• >ariable manufacturing overhead: C15..7 #er unit of out#ut
At the beginning of Hune there were no inventories. The following data #ertain to HuneEs
o#erations:
• =irect labor was C4(7).77 for 1,2)777 hours worked.
• =irect material #urchases were 117)777 kilograms for C,4.)777.
• >ariable manufacturing overhead incurred was C540)777.
• 5()777 kilograms of direct materials were used.
• The com#an' sold ,()777 units at C1*7 each.
• >ariable manufacturing overhead is a##lied based on direct labor hours.
• ,0)777 units were #roduced during the 'ear.
111. The material #rice variance is:
A9 C45),77 !
B9 C45),77 D
C9 C1()777 !
=9 C1()777 D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterial #rice variance J 8urchase +uantit' F Actual #rice9 L 8urchase +uantit' F
Standard #rice9 J C,4.)777 L 8117)777 F C,.*79 J C1()777 unfavorable
10-%% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
11(. The material +uantit' variance is:
A9 C22),77 D
B9 C7
C9 C1,)477 !
=9 C1,)477 D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: /edium
Solution:
Standard +uantit' J Standard hours #er unit F Actual out#ut
J ( F ,0)777 J 5()777
/aterial +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9
J C,.*7 F 85()777 L 5()7779 J C7
11*. The labor rate variance is:
A9 C01).77 D
B9 C.,)777 D
C9 C.,)777 !
=9 C01).77 !
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: /edium
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C4(7).77 L 81,2)777 F C09 J C01).77 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%7
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 11,:112:
8A##endi-9 Scha#er Cor#oration has #rovided the following data concerning its most
im#ortant raw material) com#ound =*7X:
Standard cost) #er liter.................................................... C,4.47
Standard +uantit') liters #er unit of out#ut...................... 0.7
Cost of material #urchased in =ecember) #er liter.......... C,5.27
/aterial #urchased in =ecember) liters.......................... *)177
/aterial used in #roduction in =ecember) liters............. ()*47
Actual out#ut in =ecember) units.................................... ,77
The raw material was #urchased on account.
11,. The debits to the Raw /aterials account for =ecember would total:
A9 C112)1(7
B9 C1.,)727
C9 C110)1,,
=9 C1.1)(47
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Raw materials J /aterial #urchased in =ecember) liters F Cost #er liter
J *)177 F C,4.47 J C1.1)(47
11.. The credits to the Raw /aterials account for =ecember would total:
A9 C110)1,,
B9 C1.1)(47
C9 C112)1(7
=9 C1.,)727
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Raw materials J /aterial used in #roduction in =ecember) liters F Cost #er liter
J ()*47 F C,4.47 J C110)1,,
10-%8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
110. The /aterials rice >ariance for =ecember would be recorded as a:
A9 Credit of C()1,(
B9 Credit of C()257
C9 =ebit of C()1,(
=9 =ebit of C()257
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
/aterials #rice variance J /aterial #urchased in =ecember) liters F 8Actual #rice L
Standard #rice9 J *)177 F 8C,5.27 L C,4.479 J C(257
112. The /aterials ?uantit' >ariance for =ecember would be recorded as a:
A9 Credit of C520
B9 Credit of C*.)1*0
C9 =ebit of C*.)1*0
=9 =ebit of C520
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J 0 F ,77 J (),77
/aterials +uantit' variance J Standard #rice F 8/aterial used in #roduction in
=ecember) liters L Standard +uantit'9 J C,4.47 F 8()*47 L (),779 J C520 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-%
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 114:1(1:
8A##endi-9 Com#ound ?4*C is a raw material used to make /ctier Cor#orationEs maAor
#roduct. The standard cost of com#ound ?4*C is C(*.27 #er ounce and the standard +uantit'
is 2.( ounces #er unit of out#ut. =ata concerning the com#ound for Hanuar' a##ear below:
Cost of material #urchased in Hanuar') #er ounce........... C(*.17
/aterial #urchased in Hanuar') ounces........................... 1),77
/aterial used in #roduction in Hanuar') ounces.............. 0(7
Actual out#ut in Hanuar') units........................................ 177
The raw material was #urchased on account.
114. The debits to the Raw /aterials account for Hanuar' would total:
A9 C**)147
B9 C12)70,
C9 C1,)05,
=9 C*()*,7
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Raw materials J /aterial #urchased in Hanuar') ounces F Cost #er ounce
J 1),77 F C(*.27 J C**)147
115. The credits to the Raw /aterials account for Hanuar' would total:
A9 C**)147
B9 C1,)05,
C9 C*()*,7
=9 C12)70,
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Raw materials J /aterial used in #roduction in Hanuar') ounces F Standard cost
J 0(7 F C(*.27 J C1,)05,
10-70 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1(7. The /aterials rice >ariance for Hanuar' would be recorded as a:
A9 Credit of C*2(
B9 Credit of C4,7
C9 =ebit of C4,7
=9 =ebit of C*2(
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
/aterials #rice variance J /aterial #urchased in Hanuar') ounces F 8Actual #rice L
Standard #rice9 J 1),77 F 8C(*.17 L C(*.279 J C4,7 favorable
1(1. The /aterials ?uantit' >ariance for Hanuar' would be recorded as a:
A9 =ebit of C14),40
B9 Credit of C14),40
C9 =ebit of C()*27
=9 Credit of C()*27
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: (6 2 $evel: /edium
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J 2.( F 177 J 2(7
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C(*.27 F 80(7 L 2(79 J C()*27 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-71
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 1((:1(*:
The following materials standards have been established for a #articular #roduct:
Standard +uantit' #er unit of out#ut.......... *.( meters
Standard #rice............................................ C1*.,7 #er meter
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual materials #urchased........................ ,)077 meters
Actual cost of materials #urchased............ C.5)477
Actual materials used in #roduction.......... ,),77 meters
Actual out#ut.............................................. 1)*77 units
1((. 1hat is the materials #rice variance for the month<
A9 C1)4,7 D
B9 C1)207 D
C9 C1)207 !
=9 C1)4,7 !
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
/aterials #rice variance J 8Actual materials #urchased F Actual #rice9 L 8urchase
Actual materials #urchased F Standard #rice9 J C.5)477 L 8,)077 F C1*.,79 J C1)4,7
favorable
10-7! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1(*. 1hat is the materials +uantit' variance for the month<
A9 C()047 D
B9 C*)1(7 D
C9 C()077 D
=9 C*)(10 D
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: &as'
Solution:
Standard +uantit' J Standard +uantit' #er unit F Actual out#ut
J *.( F 1)*77 J ,)107
/aterials +uantit' variance J Standard #rice F 8Actual +uantit' L Standard +uantit'9 J
C1*.,7 F 8,),77 L ,)1079 J C*)(10 unfavorable
Dse the following to answer +uestions 1(,:1(.:
The Bowden Com#an' makes a single #roduct. %nl' one kind of direct material is used to
make this #roduct. The com#an' uses a standard cost s'stem. The com#an'Es cost records for
Hune show the following data:
"umber of units #roduced............. 17)777
/aterial #rice variance.................. C4),77 !avorable
/aterial +uantit' variance............. C4)777 Dnfavorable
Actual direct material used............ (1)777 #ounds
=irect materials standard #rice...... C4 #er #ound
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7"
Chapter 10 Standard Costs and the Balanced Scorecard
1(,. The standard cost of direct material for one unit of out#ut is:
A9 C(
B9 C10
C9 C4
=9 C17
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard
Solution:
/aterials +uantit' variance J Standard #rice F RActual +uantit' L 8Standard +uantit'
#er unit F Actual out#ut9S
C4)777 J C4 F R(1)777 L 8Standard +uantit' #er unit F 17)7779S
Standard +uantit' #er unit J (
Standard cost #er unit J Standard #rice #er #ound F Standard +uantit' #er unit
J C4 F ( J C10
1(.. If the amount of direct material bought in Hune e+uals the amount of direct material
used in Hune) then the actual cost of direct material #er #ound is:
A9 C4.1(
B9 C4.77
C9 C2.07
=9 C2.,(
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: ( $evel: 3ard
Solution:
/aterials #rice variance J Actual +uantit' F 8Actual #rice L Standard #rice9
LC4),77 J (1)777 F 8Actual #rice L C49
Actual #rice J C2.07
10-7# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 1(0:1(4:
8A##endi-9 /ilnes Cor#oration has #rovided the following data concerning its direct labor
costs for "ovember:
Standard wage rate............. C1*.,7 #er =$3
Standard hours................... ..7 =$3s #er unit
Actual wage rate................ C1,.77 #er =$3
Actual hours....................... (7)1(7 =$3s
Actual out#ut...................... ,)(77 units
1(0. The Aournal entr' to record the incurrence of direct labor costs in "ovember would
include the following for 1ork in rocess:
A9 =ebit of C(41),77
B9 Credit of C(41)047
C9 Credit of C(41),77
=9 =ebit of C(41)047
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
1ork in #rocess J Standard rate F Standard hours F Actual out#ut
J C1*.,7 F . F ,)(77 J C(41),77
1(2. The $abor Rate >ariance for "ovember would be recorded as a:
A9 =ebit of C1()72(
B9 =ebit of C1()077
C9 Credit of C1()72(
=9 Credit of C1()077
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J 8(7)1(7 F C1,9 L 8(7)1(7 F C1*.,79 J C1()72( unfavorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7$
Chapter 10 Standard Costs and the Balanced Scorecard
1(4. The $abor &fficienc' >ariance for "ovember would be recorded as a:
A9 =ebit of C1()*(7
B9 =ebit of C11)25(
C9 Credit of C11)25(
=9 Credit of C1()*(7
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J . F ,)(77 J (1)777
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1*.,7 F 8(7)1(7 L (1)7779 J C11)25( favorable
Dse the following to answer +uestions 1(5:1*1:
8A##endi-9 Santiesteban Cor#orationEs standard wage rate is C1*.77 #er direct labor:hour
8=$39 and according to the standards) each unit of out#ut re+uires 2.5 =$3s. In /arch) 4)077
units were #roduced) the actual wage rate was C1(.*7 #er =$3) and the actual hours were
0.)077 =$3s.
1(5. In the Aournal entr' to record the incurrence of direct labor costs in /arch) the 1ork in
rocess entr' would consist of a:
A9 credit of C470)447.
B9 debit of C470)447.
C9 debit of C44*)((7.
=9 credit of C44*)((7.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
1ork in #rocess J Standard rate F Standard hours F Actual out#ut
J C1* F 2.5 F 4)077 J C44*)((7
10-7% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1*7. The $abor Rate >ariance for /arch would be recorded as a:
A9 debit of C,2)..4.
B9 debit of C,.)5(7.
C9 credit of C,2)..4.
=9 credit of C,.)5(7.
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
$abor rate variance J Actual hours F 8Actual rate L Standard rate9
J 0.)077 F 8C1(.*7 L C1*.779 J C,.)5(7 favorable
1*1. The $abor &fficienc' >ariance for /arch would be recorded as a:
A9 debit of C(4)24(.
B9 debit of C*7),(7.
C9 credit of C*7),(7.
=9 credit of C(4)24(.
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: *6 2 $evel: /edium
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J 2.5 F 4)077 J 02)5,7
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1* F 80.)077 L 02)5,79 J C*7),(7 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-77
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 1*(:1**:
The following labor standards have been established for a #articular #roduct:
Standard labor hours #er unit of out#ut................. ,.( hours
Standard labor rate................................................. C1*.07 #er hour
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual hours worked.......... ()577 hours
Actual total labor cost........ C*4)21.
Actual out#ut...................... 477 units
1*(. 1hat is the labor rate variance for the month<
A9 C2(. !
B9 C(77 D
C9 C(77 !
=9 C2(. D
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
$abor rate variance J 8Actual hours F Actual rate9 L 8Actual hours F Standard rate9
J C*4)21. L 8()577 F C1*.079 J C2(. favorable
1**. 1hat is the labor efficienc' variance for the month<
A9 C0)541 D
B9 C0)(.0 !
C9 C0)1,1 !
=9 C0)541 !
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: * $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J ,.( F 477 J *)*07
$abor efficienc' variance J Standard rate F 8Actual hours L Standard hours9
J C1*.07 F 8()577 L *)*079 J C0)(.0 favorable
10-78 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 1*,:1*.:
The following standards for variable manufacturing overhead have been established for a
com#an' that makes onl' one #roduct:
Standard hours #er unit of out#ut............... ..( hours
Standard variable overhead rate................. C1,.17 #er hour
The following data #ertain to o#erations for the last month:
Actual hours............................................... 0),77 hours
Actual total variable overhead cost............ C44)*(7
Actual out#ut.............................................. 1)(77 units
1*,. 1hat is the variable overhead s#ending variance for the month<
A9 C**0 !
B9 C**0 D
C9 C1)5(7 !
=9 C1)5(7 D
Ans: C AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
>ariable overhead s#ending variance J 8Actual hours F Actual rate9 L 8Actual hours F
Standard rate9 J C44)*(7 L 80),77 F C1,.179 J C1)5(7 favorable
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7
Chapter 10 Standard Costs and the Balanced Scorecard
1*.. 1hat is the variable overhead efficienc' variance for the month<
A9 C()(74 !
B9 C()(.0 D
C9 C1)42( D
=9 C()(74 D
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: , $evel: &as'
Solution:
Standard hours J Standard hours #er unit F Actual out#ut
J ..( F 1)(77 J 0)(,7
>ariable overhead efficienc' variance J Standard rate F 8Actual hours L Standard
+uantit'9 J C1,.17 F 80),77 L 0)(,79 J C()(.0 unfavorable
Dse the following to answer +uestions 1*0:1*2:
1olk Cor#oration is a highl' automated manufacturing com#an'. The vice #resident of
finance has decided that traditional standards are ina##ro#riate for #erformance measures in
an automated environment. $abor is insignificant in terms of the total cost of #roduction and
tends to be fi-ed. /aterial +ualit' is considered more im#ortant than minimiBing material
cost. And customer satisfaction is the number one #riorit'. As a result) deliver' #erformance
measures have been chosen to evaluate manufacturing #erformance. The following data are
considered to be t'#ical of the time to com#lete orders.
• 1ait time to the start of #roduction: 17.7 da's
• Ins#ection time: 1.. da's
• rocess time: *.7 da's
• ?ueue time during the #roduction #rocess: ..7 da's
• /ove time: (.. da's
10-80 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1*0. The manufacturing c'cle efficienc' is closest to:
A9 (..7;
B9 1*.0;
C9 *2..;
=9 05.(;
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium Source: C/A) ada#ted
Solution:
/C& J rocess time K Through#ut time
J rocess time K 8rocess time P Ins#ection time P /ove time P ?ueue time9
J * K 8* P 1.. P (.. P .9 J (..7;
1*2. The deliver' c'cle time is closest to:
A9 2 da's
B9 1( da's
C9 15 da's
=9 (( da's
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium Source: C/A) ada#ted
Solution:
=eliver' c'cle time J 1ait time P Through#ut time
J 1ait time P 8rocess time P Ins#ection time P /ove time P ?ueue time9
J 17 P 8* P 1.. P (.. P .9 J ((
Dse the following to answer +uestions 1*4:1*5:
The management of International Cookwares believes that deliver' #erformance measures
must be im#roved if the com#an' is to maintain its com#etitive edge. The following data are
considered to be t'#ical of the time to com#lete orders.
• rocess time: ,.7 da's
• 1ait time to the start of #roduction: 1..7 da's
• /ove time: *.7 da's
• Ins#ection time: (.7 da's
• ?ueue time during the #roduction #rocess: 4.7 da's
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-81
Chapter 10 Standard Costs and the Balanced Scorecard
1*4. 1hat is the manufacturing c'cle efficienc'<
A9 1(..;
B9 (*.0;
C9 20.,;
=9 42..;
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J , P ( P * P 4 J 12
/C& J rocess time K Through#ut time J , K 12 J (*.0;
1*5. 1hat is the deliver' c'cle time<
A9 , da's
B9 1. da's
C9 12 da's
=9 *( da's
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: /edium
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J , P ( P * P 4 J 12
=eliver' c'cle time J 1ait time P Through#ut time J 1. P 12 J *(
Dse the following to answer +uestions 1,7:1,(:
Tingcade Cor#oration kee#s careful track of the time re+uired to fill orders. =ata concerning
a #articular order a##ear below:
3ours
1ait time............................ 14.*
rocess time....................... 1.1
Ins#ection time................... 7.1
/ove time.......................... (.7
?ueue time......................... 5.1
10-8! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1,7. The through#ut time was:
A9 *7.0 hours
B9 *.( hours
C9 (2., hours
=9 1(.* hours
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.1 P 7.1 P (.7 P 5.1 J 1(.*
1,1. The manufacturing c'cle efficienc' 8/C&9 was closest to:
A9 7.75
B9 7.1(
C9 7.02
=9 7.7,
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.1 P 7.1 P (.7 P 5.1 J 1(.*
/C& J rocess time K Through#ut time J 1.1 K 1(.* J 7.75
1,(. The deliver' c'cle time was:
A9 *7.0 hours
B9 ( hours
C9 (5., hours
=9 11.1 hours
Ans: A AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.1 P 7.1 P (.7 P 5.1 J 1(.*
=eliver' c'cle time J 1ait time P Through#ut time J 14.* P 1(.* J *7.0
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-8"
Chapter 10 Standard Costs and the Balanced Scorecard
Dse the following to answer +uestions 1,*:1,.:
Rotan Cor#oration kee#s careful track of the time re+uired to fill orders. The times recorded
for a #articular order a##ear below:
3ours
/ove time.............. *.(
1ait time................ 17.5
?ueue time............. ..1
rocess time........... 1.(
Ins#ection time....... 7.(
1,*. The deliver' c'cle time was:
A9 15.( hours
B9 (7.0 hours
C9 4.* hours
=9 *.( hours
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.( P 7.( P *.( P ..1 J 5.2
=eliver' c'cle time J 1ait time P Through#ut time
J 17.5 P 5.2 J (7.0
1,,. The through#ut time was:
A9 ,.0 hours
B9 5.2 hours
C9 (7.0 hours
=9 10 hours
Ans: B AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Solution:
Through#ut time J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.( P 7.( P *.( P ..1 J 5.2
10-8# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1,.. The manufacturing c'cle efficienc' 8/C&9 was closest to:
A9 7.45
B9 7.70
C9 7.(5
=9 7.1(
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 0 $evel: &as'
Dse the following to answer +uestions 1,0:1,2:
Bulkbo' !itness &+ui#ment) Inc. was recentl' created to #roduce and sell its NBice#tionO arm
machine. Bulkbo' decided to use a standard cost s'stem to record costs related to the
#roduction of this #roduct. The material standard for each machine #roduced is 1.1 #ounds of
a s#ecial aluminum tubing at a standard cost of C1( #er #ound.
=uring the first month of o#erations) Bulkbo' #urchased (.)777 #ounds of this aluminum
tubing at C11 #er #ound. Bulkbo' used (()777 #ounds to #roduce (7)(.7 Bice#tion machines.
1,0. 1hat is the balance in Bulkbo'Es materials inventor' account at the end of the first
month of o#erations<
A9 C11)777
B9 C*()277
C9 C**)777
=9 C*0)777
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 2 $evel: /edium
Solution:
&nding inventor' of raw materials J 8Raw materials #urchased L Raw materials used9
F Standard #rice J 8(.)777 L (()7779 F C1( J C*0)777
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-8$
Chapter 10 Standard Costs and the Balanced Scorecard
1,2. 3ow much material cost should Bulkbo' have assigned to work in #rocess during the
first month of o#erations<
A9 C(,*)777
B9 C(,.)7(.
C9 C(0,)777
=9 C(02)*77
Ans: = AACSB: Anal'tic AICA BB: Critical Thinking
AICA !": Re#orting $%: 2 $evel: /edium
Solution:
1ork in #rocess J Standard #rice F Standard +uantit' F Actual out#ut
J C1( F 1.1 F (7)(.7 J C(02)*77
10-8% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Essay Questions
1,4. Ra#oni Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires an
in#ut that is #urchased for C47.77 #er kilogram from the su##lier. B' #a'ing cash) the
com#an' gets a discount of *; off this #urchase #rice. Shi##ing costs from the
su##lierEs warehouse amount to C0.00 #er kilogram. Receiving costs are C7.,. #er
kilogram. &ach unit of out#ut re+uires 7.40 kilogram of this in#ut. The allowance for
waste and s#oilage is 7.7. kilogram of this in#ut for each unit of out#ut. The
allowance for reAects is 7.75 kilogram of this in#ut for each unit of out#ut.
Re+uired:
a. =etermine the standard #rice #er kilogram of this in#ut. Show 'our workY
b. =etermine the standard kilograms of this in#ut #er unit of out#ut. Show 'our
workY
Ans:
a. Standard #rice
urchase #rice................................................................. C47.77
$ess cash discount........................................................... 8(.,79
Shi##ing costs from the su##lierGs warehouse................ 0.00
Receiving costs................................................................ 7.,.
Standard #rice #er kilogram............................................ C4,.21
b. Standard +uantit'
/aterial re+uirement #er unit of out#ut) in kilograms.... 7.40
Allowance for waste and s#oilage) in kilograms............. 7.7.
Allowance for reAects) in kilograms................................ 7.75
Standard +uantit' #er unit of out#ut) in kilograms.......... 1.77
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-87
Chapter 10 Standard Costs and the Balanced Scorecard
1,5. ortsche Cor#oration is develo#ing standards for its #roducts. %ne #roduct re+uires an
in#ut that is #urchased for C4,.77 #er kilogram from the su##lier. B' #a'ing cash) the
com#an' gets a discount of 5; off this #urchase #rice. Shi##ing costs from the
su##lierEs warehouse amount to C2.., #er kilogram. Receiving costs are C7.7. #er
kilogram.
Re+uired:
=etermine the standard #rice #er kilogram of this in#ut. Show 'our workY
Ans:
urchase #rice........................................................ C4,.77
$ess cash discount.................................................. 82..09
Shi##ing costs from the su##lierGs warehouse....... 2..,
Receiving costs...................................................... 7.7.
Standard #rice #er kilogram................................... C4,.7*
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
1.7. Behunin Cor#oration is develo#ing standards for a #roduct. &ach unit of out#ut of the
#roduct re+uires 7.,7 kilogram of a #articular in#ut. The allowance for waste and
s#oilage is 7.72 kilogram of this in#ut for each unit of out#ut. The allowance for
reAects is 7.11 kilogram of this in#ut for each unit of out#ut.
Re+uired:
=etermine the standard kilograms of this in#ut #er unit of out#ut. Show 'our workY
Ans:
/aterial re+uirement #er unit of out#ut) in kilograms.... 7.,7
Allowance for waste and s#oilage) in kilograms............ 7.72
Allowance for reAects) in kilograms................................ 7.11
Standard +uantit' #er unit of out#ut) in kilograms......... 7..4
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
10-88 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1.1. Hiles Cor#oration is develo#ing direct labor standards. The basic direct labor wage rate
is C1(.,7 #er hour. &m#lo'ment ta-es are 11; of the basic wage rate. !ringe benefits
are C*..1 #er hour. A #articular #roduct re+uires 7.4* direct labor:hours #er unit. The
allowance for breaks and #ersonal needs is 7.7* direct labor:hours #er unit. The
allowance for cleanu#) machine downtime) and reAects is 7.17 direct labor:hours #er
unit.
Re+uired:
a. =etermine the standard rate #er direct labor:hour. Show 'our workY
b. =etermine the standard direct labor:hours #er unit of #roduct. Show 'our workY
c. =etermine the standard labor cost #er unit of #roduct to the nearest cent. Show
'our workY
Ans:
a. Standard rate #er direct labor:hour:
Basic wage rate #er hour.................................................... C1(.,7
&m#lo'ment ta-es.............................................................. 1.*0
!ringe benefits.................................................................... *..1
Standard rate #er direct labor:hour..................................... C12.(2
b. Standard direct:labor hours #er unit of out#ut:
Basic labor time #er unit.................................................... 7.4* =$3s
Allowance for breaks and #ersonal needs.......................... 7.7* =$3s
Allowance for cleanu#) machine downtime) and reAects.... 7.17 =$3s
Standard direct:labor hours #er unit................................... 7.50 =$3s
c. Standard labor cost #er unit:
Standard rate #er direct labor:hour 8a9............................... C12.(2
Standard direct:labor hours #er unit 8b9............................. 7.50
Standard labor cost #er unit 8a9 F 8b9................................. C10..4
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-8
Chapter 10 Standard Costs and the Balanced Scorecard
1.(. Cantlow Cor#oration is develo#ing direct labor standards. The basic direct labor wage
rate is C1*.7. #er hour. &m#lo'ment ta-es are 17; of the basic wage rate. !ringe
benefits are C*.50 #er hour.
Re+uired:
=etermine the standard rate #er direct labor:hour. Show 'our workY
Ans:
Basic wage rate #er hour.......................... C1*.7.
&m#lo'ment ta-es.................................... 1.*1
!ringe benefits......................................... *.50
Standard rate #er direct labor:hour.......... C14.*(
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
1.*. Bersch Cor#oration is develo#ing direct labor standards. A #articular #roduct re+uires
7.04 direct labor:hours #er unit. The allowance for breaks and #ersonal needs is 7.7,
direct labor:hours #er unit. The allowance for cleanu#) machine downtime) and reAects
is 7.1* direct labor:hours #er unit.
Re+uired:
=etermine the standard direct labor:hours #er unit of #roduct. Show 'our workY
Ans:
Basic labor time #er unit..................................................... 7.04 =$3s
Allowance for breaks and #ersonal needs.......................... 7.7, =$3s
Allowance for cleanu#) machine downtime) and reAects.... 7.1* =$3s
Standard direct:labor hours #er unit................................... 7.4. =$3s
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 1 $evel: &as'
10-0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1.,. $ido Com#an'Es standard and actual costs #er unit for the most recent #eriod) during
which .77 units were actuall' #roduced) are given below:
Standard Actual
/aterials:
Standard: ( feet at C1..7 #er foot.................. C *.77
Actual: 1.5 feet at C1.07 #er foot.................. C *.7,
=irect labor:
Standard: 1.. hours at C0.77 #er hour........... 5.77
Actual: 1.2 hours at C0.*7 #er hour.............. 17.21
>ariable manufacturing overhead:
Standard: 1.. hours at C*.,7 #er hour........... ..17
Actual: 1.2 hours at C*.77 #er hour.............. ..17
Total unit cost................................................... C12.17 C14.4.
All of the material #urchased during the #eriod was used in #roduction during the
#eriod.
Re+uired:
!rom the foregoing information) com#ute the following variances. Indicate whether
the variance is favorable 8!9 or unfavorable 8D9:
a. /aterial #rice variance.
b. /aterial +uantit' variance.
c. =irect labor rate variance.
d. =irect labor efficienc' variance.
e. >ariable overhead s#ending variance.
f. >ariable overhead efficienc' variance.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-1
Chapter 10 Standard Costs and the Balanced Scorecard
Ans:
a. Z b. Raw /aterials:
rice variance J A?8A L S9 8based on +uantit' #urchased9
J [5.78C1.07 L C1..79 J C5. D
[ A? J 1.5 feet #er unit F .77 units J 5.7 feet
?uantit' variance J S8A? L S?9 8based on +uantit' used9
J C1..785.7 L [1)7779 J C2. !
[ S? J ( feet #er unit F .77 units J 1)777 feet
c. Z d. =irect $abor:
Rate variance J A38AR L SR9 J [4.78C0.*7 L C0.779 J C(.. D
[ A3 J 1.2 hours #er unit F .77 units J 4.7 hours
&fficienc' variance J SR8A3 L S39 J C0.7784.7 L [2.79 J C077 D
[ S3 J 1.. hours #er unit F .77 units J 2.7 hours
e. Z f. >ariable %verhead:
S#ending variance J A38AR L SR9 J 4.78C*.77 L C*.,79 J C*,7 !
&fficienc' variance J SR8A3 L S39 J C*.,784.7 L 2.79 J C*,7 D
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: (6 *6 , $evel: /edium
10-! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1... Bronfenbrenner Co. uses a standard cost s'stem for its single #roduct in which
variable overhead is a##lied on the basis of direct labor hours. The following
information is given:
Standard costs #er unit:
Raw materials 81.. grams at C10 #er gram9............................. C(,.77
=irect labor 87.2. hours at C4 #er hour9.................................. C0.77
>ariable overhead 87.2. hours at C* #er hour9......................... C(.(.
Actual e-#erience for current 'ear:
Dnits #roduced......................................................................... ((),77 units
urchases of raw materials 8(1)777 grams at C12 #er gram9... C*.2)777
Raw materials used.................................................................. **),77 grams
=irect labor 810)2.7 hours at C4 #er hour9.............................. C1*,)777
>ariable overhead cost incurred............................................... C,4).2.
Re+uired:
Com#ute the following variances for raw materials) direct labor) and variable
overhead) assuming that the #rice variance for materials is recogniBed at #oint of
#urchase:
a. =irect materials #rice variance.
b. =irect materials +uantit' variance.
c. =irect labor rate variance.
d. =irect labor efficienc' variance.
e. >ariable overhead s#ending variance.
f. >ariable overhead efficienc' variance.
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-"
Chapter 10 Standard Costs and the Balanced Scorecard
Ans:
a. Z b. Raw /aterials:
rice variance J A?8A L S9 8based on +uantit' #urchased9
J (1)777 8C12 L C109 J C(1)777 D
?uantit' variance J S8A? L S?9 8based on +uantit' used9
J C108**),77 L [**)0779 J C*)(77 !
[ S? J ((),77 units at 1.. grams #er unit J **)077
c. Z d. =irect labor:
Rate variance J A38AR L SR9 J 10)2.78C4 L C49 J 7
&fficienc' variance J SR8A3 L S39 J C4810)2.7 L [10)4779 J C,77 !
[ S3 J ((),77 units at 7.2. hours #er unit J 10)477
e. Z f. >ariable overhead:
S#ending variance J A38AR L SR9 J 10)2.78[C(.57 L C*9 J C1)02. !
[ AR J C,4).2. V 10)2.7 hours J C(.57
&fficienc' variance J SR8A3 L S39 J C*810)2.7 L [10)4779 J C1.7 !
[ S3 J ((),77 units at 7.2. hours #er unit J 10)477
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: (6 *6 , $evel: /edium
10-# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1.0. Allen Com#an' #roduces and sells a single #roduct. Standards for materials and labor
follow:
• =irect materials: ,.4 ounces U C*..7 #er ounce J C10.47
• =irect labor: 1., hours U C17 #er hour J C1,.77
The com#an' recogniBes the materials #rice variance at the time materials are
#urchased. =ata relating to #roduction for the last month follow:
roduction in units................................................. 1).77
=irect materials #urchased 817)777 ounces9.......... C*4).77
=irect materials used 84)777 ounces9..................... <
=irect labor cost 8()777 hours9.............................. C(*)777
Re+uired:
re#are Aournal entries to record:
a. The #urchase of materials.
b. The usage of materials in #roduction.
c. The incurrence of direct labor cost.
Ans:
a. Raw /aterials 817)777 ounces U C*..7 #er ounce9 *.)777
/aterials rice >ariance
817)777 ounces U C7.*. #er ounce D9 *).77
Accounts a'able *4).77
b. 1ork in rocess 82)(77 ounces U C*..7 #er ounce9 (.)(77
/aterials ?uantit' >ariance
8477 ounces D U C*..7 #er ounce9 ()477
Raw /aterials 84)777 ounces U C*..7 #er ounce9 (4)777
c. 1ork in rocess 8()177 hours U C17 #er hour9 (1)777
$abor Rate >ariance 8()777 hours U C1..7 #er hour D9 *)777
$abor &fficienc' >ariance
8177 hours ! U C17 #er hour9 1)777
1ages a'able 8()777 hours U C11..7 #er hour9 (*)777
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: (6 *6 2 $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-$
Chapter 10 Standard Costs and the Balanced Scorecard
1.2. A #artial standard cost card for the single #roduct #roduced b' /ercer Com#an' is
given below:
• =irect materials: * #ounds U C4 #er #ound
• =irect labor: < hours U < #er hour
$ast #eriod the com#an' #roduced ,)777 units of #roduct. Cost and other data
associated with this #roduction are given below:
=irect materials #urchased and used) at cost...... C17*)*(7
=irect labor cost incurred 817),77 hours9........... C1(7)0,7
/aterials #rice variance...................................... C().(7 Dnfavorable
$abor efficienc' variance.................................... C,)477 Dnfavorable
Total labor variance............................................. C0,7 Dnfavorable
Re+uired:
a. =etermine the number of #ounds of direct materials #urchased and used during the
#eriod.
b. =etermine the materials +uantit' variance.
c. =etermine the standard direct labor rate #er direct labor hour.
d. =etermine the standard hours allowed for the #roduction of the #eriod.
10-% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
Ans:
a. Cost of materials #urchased and used................. C17*)*(7
=educt unfavorable #rice variance...................... ().(7
/aterials used at standard #rice.......................... C177)477
C177)477 K C4 #er #ound J 1()077 #ounds
b. /aterials +uantit' variance J S 8A? L S?9
J C481()077 L 1()777[9 J C,)477 D
[,)777 units F * #oundsVunit J 1()777 #ounds
c. If the total labor variance is C0,7 D) and if the labor efficienc' variance is C,)477
D) then the labor rate variance must be C,)107 !. Therefore:
A3 8AR L SR9 J $abor rate variance
17),778C11.07[ L SR9 J C,)107 !
C1(7)0,7 L 17),77 SR J :C,)107
17),77 SR J C1(,)477
SR J C1(
[C1(7)0,7 K 17),77 hours J C11.07.
d. SR 8A3 L S39 J $abor efficienc' variance
C1( 817),77 L S39 J C,)477 D
C1(,)477 L C1( S3 J C,)477
C1( S3 J C1(7)777
S3 J 17)777
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: (6 * $evel: 3ard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-7
Chapter 10 Standard Costs and the Balanced Scorecard
1.4. Qee Cor#oration has develo#ed the following cost standards for the #roduction of its
leather back#acks:
Standard Cost er
Back#ack
$eather 87.5 'ards U C(( #er 'ard9............................. C15.47
=irect labor 81.* hours U C5.77 #er hour9................... C11.27
>ariable overhead 81.* hours U C1..77 #er hour9....... C15..7
>ariable overhead at Qee is a##lied on the basis of direct labor hours. The actual
results for last month were as follows:
"umber of back#acks #roduced................. 1.)777
=irect labor hours incurred........................ 14)477
@ards of leather #urchased......................... 1,).77
@ards of leather used in #roduction........... 1,)177
Cost of leather #urchased........................... C*70)02.
=irect labor cost......................................... C1.5)477
>ariable overhead cost............................... C(4.)207
Re+uired:
Com#ute the following variances for Qee. Show and label 'our com#utations.
a. /aterials #rice variance.
b. /aterials +uantit' variance.
c. $abor efficienc' variance.
d. >ariable overhead s#ending variance.
Ans:
a. /aterials #rice variance J C*70)02. L 81,).77 F C((9 J C1()*(. !
b. /aterials +uantit' variance J 81,)177 F C((9 L 81.)777 F 7.5 F C((9
J C1*)(77 D
c. $abor efficienc' variance J 814)477 F C5.779 L 81.)777 F 1.* F C5.779
J C0)*77 !
d. >ariable overhead s#ending variance J C(4.)207 L 814)477 F C1..779
J C*)207 D
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: (6 * $evel: /edium
10-8 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
1.5. The following standards have been established for a raw material used in the
#roduction of #roduct =,*:
Standard +uantit' of the material #er unit of out#ut........ ,.7 #ounds
Standard #rice of the material.......................................... C1,.17 #er #ound
The following data #ertain to a recent monthGs o#erations:
Actual material #urchased.................... 2).77 #ounds
Actual cost of material #urchased........ C174)2.7
Actual material used in #roduction...... 2)(77 #ounds
Actual out#ut........................................ 1)447 units of #roduct =,*
Re+uired:
a. 1hat is the materials #rice variance for the month<
b. 1hat is the materials +uantit' variance for the month<
c. re#are Aournal entries to record the #urchase and use of the raw material during
the month. 8All raw materials are #urchased on account.9
Ans:
a. /aterials #rice variance J 8A? F A9 L 8A? F S9
J C174)2.7 L 82).77 F C1,.179 J C*)777 D
b. /aterials +uantit' variance J S8A? L S?[9
J C1,.1782)(77 L 2).(79 J C,).1( !
[S? J Standard +uantit' #er unit F Actual out#ut J ,.7 F 1)447 J 2).(7
c. Hournal entries to record the #urchase and use of the raw material:
Record the #urchase of the raw material:
Raw /aterials 17.)2.7
/aterials rice >ariance *)777
Accounts a'able 174)2.7
Record the use of the raw material:
1ork In rocess 170)7*(
/aterials ?uantit' >ariance ,).1(
Raw /aterials 171).(7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: (6 2 $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-
Chapter 10 Standard Costs and the Balanced Scorecard
107. The standards for #roduct T45 call for 2.( meters of a raw material that costs C11.27
#er meter. $ast month) 4)277 meters of the raw material were #urchased for C54)2,..
The actual out#ut of the month was 1)(77 units of #roduct T45. A total of 4)177 meters
of the raw material were used to #roduce this out#ut.
Re+uired:
a. 1hat is the materials #rice variance for the month<
b. 1hat is the materials +uantit' variance for the month<
c. re#are Aournal entries to record the #urchase and use of the raw material during
the month. 8All raw materials are #urchased on account.9
Ans:
a. /aterials #rice variance J 8A? F A9 L 8A? F S9
J C54)2,. L 84)277 F C11.279 J C*)7,. !
b. /aterials +uantit' variance J S8A? L S?[9
J C11.2784)177 L 4)0,79 J C0)*14 !
[S? J Standard +uantit' #er unit F Actual out#ut J 2.( F 1)(77 J 4)0,7
c. Hournal entries to record the #urchase and use of the raw material:
Record the #urchase of the raw material:
Raw /aterials 171)257
/aterials rice >ariance *)7,.
Accounts a'able 54)2,.
Record the use of the raw material:
1ork In rocess 171)744
/aterials ?uantit' >ariance 0)*14
Raw /aterials 5,)227
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: (6 2 $evel: /edium
10-100 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
101. &gner Cor#oration has #rovided the following data concerning its most im#ortant raw
material) com#ound D**:
Standard cost) #er liter................................................. C(0.47
Standard +uantit') liters #er unit of out#ut................... 4.7
Cost of material #urchased in %ctober) #er liter.......... C(2.27
/aterial #urchased in %ctober) liters........................... ()777
/aterial used in #roduction in %ctober) liters............. 1)0,7
Actual out#ut in %ctober) units.................................... (77
The raw material was #urchased on account.
Re+uired:
a. Record the #urchase of the raw material in a Aournal entr'.
b. Record the use of the raw material in #roduction in a Aournal entr'.
Ans:
a. &ntr' to record #urchase of materials:
Raw /aterials 8()777 liters at C(0.47 #er liter9 .*)077
/aterials rice >ariance 8()777 liters at C7.57 #er liter D9 1)477
Accounts a'able 8()777 liters at C(2.27 #er liter9 ..),77
b. &ntr' to record use of materials:
Standard +uantit' allowed for the actual out#ut 8(77 units at 4.7 liters #er unit9 J
1)077 liters
1ork In rocess 81)077 liters at C(0.47 #er liter9 ,()447
/aterials ?uantit' >ariance 8,7 liters at C(0.47 #er liter
D9 1)72(
Raw /aterials 81)0,7 liters at C(0.47 #er liter9 ,*)5.(
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: (6 2 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-101
Chapter 10 Standard Costs and the Balanced Scorecard
10(. Com#ound ?.2T is used b' Cestone Cor#oration to make one of its #roducts. The
standard cost of com#ound ?.2T is C,0.77 #er ounce and the standard +uantit' is (..
#er unit of out#ut. =ata concerning the com#ound in the most recent month a##ear
below:
Cost of material #urchased in Hul') #er ounce................. C,..*7
/aterial #urchased in Hul') ounces.................................. 1).77
/aterial used in #roduction in Hul') ounces.................... 1)*(7
Actual out#ut in Hul') units.............................................. 077
The raw material was #urchased on account.
Re+uired:
a. Record the #urchase of the raw material in a Aournal entr'.
b. Record the use of the raw material in #roduction in a Aournal entr'.
Ans:
a. &ntr' to record #urchase of materials:
Raw /aterials 81).77 ounces at C,0.77 #er ounce9 05)777
/aterials rice >ariance 81).77 ounces at C7.27 #er
ounce !9 1)7.7
Accounts a'able 81).77 ounces at C,..*7 #er ounce9 02)5.7
b. &ntr' to record use of materials:
Standard +uantit' allowed for the actual out#ut 8077 units at (.. ounces #er unit9 J
1).77
1ork In rocess 81).77 ounces at C,0.77 #er ounce9 05)777
/aterials ?uantit' >ariance 8147 ounces at C,0.77
#er ounce !9 4)(47
Raw /aterials 81)*(7 ounces at C,0.77 #er ounce9 07)2(7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: (6 2 $evel: &as'
10-10! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
10*. SiBBle Com#an' uses a standard cost s'stem to collect costs related to the #roduction
of its N"o:StickO lawn chairs. The direct material for the chairs is teflon. SiBBle uses a
standard direct material cost of C,7.77 #er chair 87.4 #ounds of teflon at C.7.77 #er
#ound9. =uring A#ril) SiBBle #urchased ()177 #ounds of teflon for C170).2.. SiBBle
used 1)2.7 #ounds of this teflon in A#ril to #roduce 1)477 lawn chairs.
Re+uired:
Calculate SiBBleEs materials #rice and materials +uantit' variances for A#ril. Then
#re#are the Aournal entries to record these variances.
Ans:
/aterials #rice variance J C170).2. L 8()177 F C.7.779 J C1).2. D
/aterials +uantit' variance J 81)2.7 F C.79 L 81)477 F 7.4 F C.79 J C1.).77 D
Raw /aterials 17.)777
/aterial #rice variance 1).2.
Accounts #a'able 170).2.
1ork in #rocess 2()777
/aterial +uantit' variance 1.).77
Raw materials 42).77
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: ( $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-10"
Chapter 10 Standard Costs and the Balanced Scorecard
10,. The following materials standards have been established for a #articular #roduct:
Standard +uantit' #er unit of out#ut.......... 2.7 grams
Standard #rice............................................ C1(.07 #er gram
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual materials #urchased........................ 5).77 grams
Actual cost of materials #urchased............ C1(2)*77
Actual materials used in #roduction.......... 5)777 grams
Actual out#ut.............................................. 1)*,7 units
Re+uired:
a. 1hat is the materials #rice variance for the month<
b. 1hat is the materials +uantit' variance for the month<
Ans:
/aterials #rice variance J 8A? F A9 L 8A? F S9
J C1(2)*77 \ 85).77 F C1(.079 J C2)077 D
S? J Standard +uantit' #er unit F Actual out#ut J 2.7 F 1)*,7 J 5)*47
/aterials +uantit' variance J S8A? L S?9 J C1(.0785)777 \ 5)*479 J C,)244 !
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: ( $evel: &as'
10-10# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
10.. The following standards have been established for a raw material used to make
#roduct %4,:
Standard +uantit' of the material #er unit of out#ut....... 2.1 meters
Standard #rice of the material......................................... C14.*7 #er meter
The following data #ertain to a recent monthGs o#erations:
Actual material #urchased.......................... *),77 meters
Actual cost of material #urchased.............. C0,)757
Actual material used in #roduction............ *)177 meters
Actual out#ut.............................................. .77 units of #roduct %4,
Re+uired:
a. 1hat is the materials #rice variance for the month<
b. 1hat is the materials +uantit' variance for the month<
Ans:
a. /aterials #rice variance J 8A? F A9 L 8A? F S9
J C0,)757 L 8*),77 F C14.*79 J C1)427 D
b. /aterials +uantit' variance J S8A? L S?[9
J C14.*78*)177 L *)..79 J C4)(*. !
[S? J Standard +uantit' #er unit F Actual out#ut J 2.1 F .77 J *)..7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: ( $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-10$
Chapter 10 Standard Costs and the Balanced Scorecard
100. The standards for #roduct >(4 call for 2.. #ounds of a raw material that costs C14.17
#er #ound. $ast month) 1),77 #ounds of the raw material were #urchased for C(,)557.
The actual out#ut of the month was 107 units of #roduct >(4. A total of 1)*77 #ounds
of the raw material were used to #roduce this out#ut.
Re+uired:
a. 1hat is the materials #rice variance for the month<
b. 1hat is the materials +uantit' variance for the month<
Ans:
a. /aterials #rice variance J 8A? F A9 L 8A? F S9
J C(,)557 L 81),77 F C14.179 J C*.7 !
b. /aterials +uantit' variance J S8A? L S?[9
J C14.1781)*77 L 1)(779 J C1)417 D
[S? J Standard +uantit' #er unit F Actual out#ut J 2.. F 107 J 1)(77
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: ( $evel: &as'
10-10% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
102. The following direct labor standards have been established for #roduct /47A:
Standard direct labor:hours............ 1.* hours #er unit of /47A
Standard direct labor wage rate...... C1,.17 #er hour
The following data #ertain to the most recent monthGs o#erations during which ()777
units of #roduct /47A were made:
Actual direct labor:hours worked.... ()277
Actual direct labor wages #aid........ C*0),.7
Re+uired:
a. 1hat was the labor rate variance for the month<
b. 1hat was the labor efficienc' variance for the month<
c. re#are a Aournal entr' to record direct labor costs during the month) including the
direct labor variances.
Ans:
a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9
J C*0),.7 L 8()277 F C1,.179 J C1)0(7 !
b. $abor efficienc' variance J SR8A3 L S3[9
J C1,.17 8()277 L ()0779 J C1),17 D
[S3 J Standard hours #er unit F Actual out#ut J 1.* F ()777 J ()077
c. Hournal entries to record the direct labor costs:
1ork In rocess *0)007
$abor &fficienc' >ariance 1),17
$abor Rate >ariance 1)0(7
1ages a'able 8or Cash9 *0),.7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: *6 2 $evel: /edium
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-107
Chapter 10 Standard Costs and the Balanced Scorecard
104. The standards for #roduct 341C s#ecif' 0.. direct labor:hours #er unit at C1(.57 #er
direct labor:hour. $ast month 1)(,7 units of #roduct 341C were #roduced using 4)(77
direct labor:hours at a total direct labor wage cost of C177)7,7.
Re+uired:
a. 1hat was the labor rate variance for the month<
b. 1hat was the labor efficienc' variance for the month<
c. re#are a Aournal entr' to record direct labor costs during the month) including the
direct labor variances.
Ans:
a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9
J C177)7,7 L 84)(77 F C1(.579 J C.)2,7 !
b. $abor efficienc' variance J SR8A3 L S3[9
J C1(.57 84)(77 L 4)7079 J C1)470 D
[S3 J Standard hours #er unit F Actual out#ut J 0.. F 1)(,7 J 4)707
c. Hournal entries to record the direct labor costs:
1ork In rocess 17*)52,
$abor &fficienc' >ariance 1)470
$abor Rate >ariance .)2,7
1ages a'able 8or Cash9 177)7,7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: *6 2 $evel: /edium
10-108 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
105. 1inberr' Cor#oration has #rovided the following data concerning its direct labor costs
for A#ril:
Standard wage rate............. C11.(7 #er =$3
Standard hours................... (.7 =$3s #er unit
Actual wage rate................ C1(.77 #er =$3
Actual hours....................... 4),27 =$3s
Actual out#ut...................... ,)*77 units
Re+uired:
re#are the Aournal entr' to record the incurrence of direct labor costs.
Ans:
Standard +uantit' allowed for the actual out#ut 8,)*77 units at (.7 =$3s #er unit9 J
4)077=$3s
1ork In rocess 84)077 =$3s at C11.(7 #er ounce9 50)*(7
$abor Rate >ariance 84),27 =$3s at C7.47 #er =$3 D9 0)220
$abor &fficienc' >ariance 8:1*7 =$3s D at C11.(7
#er =$3 D9 1),.0
1ages a'able 84),27 =$3s at C1(.77 #er =$39 171)0,7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: *6 2 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-10
Chapter 10 Standard Costs and the Balanced Scorecard
127. The direct labor standards at ointde-ter Cor#oration are C1(.,7 #er direct labor:hour
8=$39 and (.* =$3s #er unit of out#ut. In August) 2)177 units were #roduced) the
actual wage rate was C1*.77 #er =$3) and the actual hours were 1.).07 =$3s.
Re+uired:
re#are the Aournal entr' to record the incurrence of direct labor costs.
Ans:
Standard +uantit' allowed for the actual out#ut 82)177 units at (.* =$3s #er unit9 J
10)**7=$3s
1ork In rocess 810)**7 =$3s at C1(.,7 #er ounce9 (7(),5(
$abor Rate >ariance 81.).07 =$3s at C7.07 #er =$3
D9 5)**0
$abor &fficienc' >ariance 8227 =$3s ! at C1(.,7
#er =$3 !9 5).,4
1ages a'able 81.).07 =$3s at C1*.77 #er =$39 (7()(47
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
A##endi-: 17 $%: *6 2 $evel: &as'
10-110 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
121. The following labor standards have been established for a #articular #roduct:
Standard labor hours #er unit of out#ut................. ,.7 hours
Standard labor rate................................................. C14.*. #er hour
The following data #ertain to o#erations concerning the #roduct for the last month:
Actual hours worked.......... 5)*77 hours
Actual total labor cost........ C121).4.
Actual out#ut...................... ()*77 units
Re+uired:
a. 1hat is the labor rate variance for the month<
b. 1hat is the labor efficienc' variance for the month<
Ans:
$abor rate variance J 8A3 F AR9 L 8A3 F SR9
J C121).4. \ 85)*77 F C14.*.9J C5*7 D
S3 J Standard hours #er unit F Actual out#ut J ,.7 F ()*77 J 5)(77
$abor efficienc' variance J SR8A3 L S39
J C14.*.85)*77 \ 5)(779 J C1)4*. D
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: * $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-111
Chapter 10 Standard Costs and the Balanced Scorecard
12(. The following direct labor standards have been established for #roduct %0,$:
Standard direct labor:hours............ 2.( hours #er unit of %0,$
Standard direct labor wage rate...... C1(.47 #er hour
The following data #ertain to last monthGs o#erations:
Actual out#ut of #roduct %0,$............ 577 units
Actual direct labor:hours worked........ 0)077
Actual direct labor wages #aid............. C24).,7
Re+uired:
a. 1hat was the labor rate variance for the month<
b. 1hat was the labor efficienc' variance for the month<
Ans:
$abor rate variance J 8A3 F AR9 L 8A3 F SR9
J C24).,7 L 80)077 F C1(.479 J C.)5,7 !
$abor efficienc' variance J SR8A3 L S3[9
J C1(.47 80)077 L 0),479 J C1).*0 D
[S3 J Standard hours #er unit F Actual out#ut J 2.( F 577 J 0),47
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: * $evel: &as'
10-11! Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
12*. The standards for #roduct I24> s#ecif' ,.1 direct labor:hours #er unit at C1(.17 #er
direct labor:hour. $ast month 1)077 units of #roduct I24> were #roduced using 0)077
direct labor:hours at a total direct labor wage cost of C22)((7.
Re+uired:
a. 1hat was the labor rate variance for the month<
b. 1hat was the labor efficienc' variance for the month<
Ans:
a. $abor rate variance J 8A3 F AR9 L 8A3 F SR9
J C22)((7 L 80)077 F C1(.179 J C()0,7 !
b. $abor efficienc' variance J SR8A3 L S3[9
J C1(.17 80)077 L 0).079 J C,4, D
[S3 J Standard hours #er unit F Actual out#ut J ,.1 F 1)077 J 0).07
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: * $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-11"
Chapter 10 Standard Costs and the Balanced Scorecard
12,. The following standards for variable manufacturing overhead have been established
for a com#an' that makes onl' one #roduct:
Standard hours #er unit of out#ut............... 0.( hours
Standard variable overhead rate................. C1*.(. #er hour
The following data #ertain to o#erations for the last month:
Actual hours............................................... 4)(77 hours
Actual total variable overhead cost............ C175),27
Actual out#ut.............................................. 1)*77 units
Re+uired:
a. 1hat is the variable overhead s#ending variance for the month<
b. 1hat is the variable overhead efficienc' variance for the month<
Ans:
>ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9
J C175),27 \ 84)(77 F C1*.(.9 J C4(7 D
S3 J Standard hours #er unit F Actual out#ut J 0.( F 1)*77 J 4)707
>ariable overhead efficienc' variance J SR8A3 L S39
J C1*.(.84)(77 \ 4)7079 J C1)4.. D
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: , $evel: &as'
10-11# Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
12.. !re'tag Cor#orationEs variable manufacturing overhead is a##lied on the basis of
direct labor:hours. The com#an' has established the following variable manufacturing
overhead standards for #roduct "70C:
• Standard direct labor:hours: ... hours #er unit of "70C
• Standard variable manufacturing overhead rate: C,.17 #er hour
The following data #ertain to the most recent monthEs o#erations during which 1)077
units of #roduct "70C were made:
Actual direct labor:hours worked: 4)277
Actual variable manufacturing overhead incurred: C*0).,7
Re+uired:
a. 1hat was the variable overhead s#ending variance for the month<
b. 1hat was the variable overhead efficienc' variance for the month<
Ans:
>ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9
J C*0).,7 L 84)277 F C,.179 J C427 D
>ariable overhead efficienc' variance J SR8A3 L S3[9
J C,.1784)277 L 4)4779 J C,17 !
[S3 J Standard hours #er unit F Actual out#ut J ... F 1)077 J 4)477
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: , $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-11$
Chapter 10 Standard Costs and the Balanced Scorecard
120. 3ighfill Cor#orationEs variable manufacturing overhead is a##lied on the basis of
direct labor:hours. The standard cost card for #roduct =47= s#ecifies 4., direct labor:
hours #er unit of =47=. The standard variable manufacturing overhead rate is C..07
#er direct labor:hour. =uring the most recent month) 477 units of #roduct =47= were
made and 0)477 direct labor:hours were worked.
The actual variable manufacturing overhead incurred was C,1)1,7.
Re+uired:
a. 1hat was the variable overhead s#ending variance for the month<
b. 1hat was the variable overhead efficienc' variance for the month<
Ans:
a. >ariable overhead s#ending variance J 8A3 F AR9 L 8A3 F SR9
J C,1)1,7 L 80)477 F C..079 J C*)707 D
b. >ariable overhead efficienc' variance J SR8A3 L S3[9
J C..0780)477 L 0)2(79 J C,,4 D
[S3 J Standard hours #er unit F Actual out#ut J 4., F 477 J 0)2(7
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: , $evel: &as'
122. 1h' are man' com#anies su##lementing) or even re#lacing) standard cost s'stems
with o#erating #erformance measures<
Ans:
There are a number of reasons wh' com#anies are su##lementing) or even re#lacing)
their standard cost s'stems with o#erating #erformance measures. These reasons
include:
$abor is less significant in man' com#anies and tends to be fi-ed. Thus) the traditional
labor variances are of little value.
1hen labor is essentiall' fi-ed) a focus on labor efficienc' variances ma' #rom#t
#roduction of needless inventories.
reoccu#ation with standard costs ma' result in low +ualit' and #oor deliver'
#erformance.
/an' managers would argue that continual im#rovement is necessar') not Aust
meeting standards.
AACSB: Anal'tic AICA BB: Critical Thinking6 Resource /anagement
AICA !": Re#orting $%: 0 $evel: /edium
10-11% Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
124. Schlarbaum Cor#orationEs management kee#s track of the time it takes to #rocess
orders. =uring the most recent month) the following average times were recorded #er
order:
=a's
1ait time................ *.2
Ins#ection time....... 7.(
rocess time........... 1.*
/ove time.............. 7.4
?ueue time............. 0.5
Re+uired:
a. Com#ute the through#ut time.
b. Com#ute the manufacturing c'cle efficienc' 8/C&9.
c. 1hat #ercentage of the #roduction time is s#ent in non:value:added activities<
d. Com#ute the deliver' c'cle time.
Ans:
a. Through#ut time
J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.* da's P 7.( da's P 7.4 da's P 0.5 da's J 5.( da's
b. /C& J >alue:added time 8rocess time9 K Through#ut time
J 1.* da's K 5.( da's J 7.1,
c. ercentage of time s#ent on non:value:added activities
J 177; \ /C&; J 177; \ 1,; J 40;
=eliver' c'cle time J 1ait time P Through#ut time
J *.2 da's P 5.( da's J 1(.5 da's
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 0 $evel: &as'
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-117
Chapter 10 Standard Costs and the Balanced Scorecard
125. =uring the most recent month at Schwab Cor#oration) +ueue time was 2.4 da's)
ins#ection time was 7.* da') #rocess time was 1.* da's) wait time was 5.2 da's) and
move time was 7.2 da'.
Re+uired:
a. Com#ute the through#ut time.
b. Com#ute the manufacturing c'cle efficienc' 8/C&9.
c. 1hat #ercentage of the #roduction time is s#ent in non:value:added activities<
d. Com#ute the deliver' c'cle time.
Ans:
a. Through#ut time
J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.* da's P 7.* da's P 7.2 da's P 2.4 da's J 17.1 da's
b. /C& J >alue:added time 8rocess time9 K Through#ut time
J 1.* da's K 17.1 da's J 7.1*
c. ercentage of time s#ent on non:value:added activities
J 177; \ /C&; J 177; \ 1*; J 42;
d. =eliver' c'cle time J 1ait time P Through#ut time
J 5.2 da's P 17.1 da's J 15.4 da's
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 0 $evel: /edium
10-118 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition
Chapter 10 Standard Costs and the Balanced Scorecard
147. SchurB Cor#orationEs management re#orts that its average deliver' c'cle time is (0.2
da's) its average through#ut time is 17.7 da's) its manufacturing c'cle efficienc'
8/C&9 is 7.(() its average move time is 7.0 da') and its average +ueue time is 0.2
da's.
Re+uired:
a. 1hat is the wait time<
b. 1hat is the #rocess time<
c. 1hat is the ins#ection time<
Ans:
a. =eliver' c'cle time J 1ait time P Through#ut time
(0.2 da's J 1ait time P 17.7 da's
1ait time J (0.2 da's L 17.7 da's J 10.2 da's
b. /C& J rocess time K Through#ut time
7.(( J rocess time K 17.7 da's
rocess time J 7.(( F 17.7 da's J (.( da's
c. Through#ut time
J rocess time P Ins#ection time P /ove time P ?ueue time
17.7 da's J (.( da's P Ins#ection time P 7.0 da's P 0.2 da's
Ins#ection time J 17.7 da's L (.( da's L 7.0 da's L 0.2 da's
J 7.. da's
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 0 $evel: 3ard
Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition 10-11
Chapter 10 Standard Costs and the Balanced Scorecard
141. Alghamdi Cor#oration kee#s careful track of the time re+uired to fill orders. The times
re+uired for a #articular order a##ear below:
3ours
1ait time................ 17.,
rocess time........... 1.1
Ins#ection time....... 7.1
/ove time.............. (.,
?ueue time............. 5.*
Re+uired:
a. =etermine the through#ut time. Show 'our workY
b. =etermine the manufacturing c'cle efficienc' 8/C&9. Show 'our workY
c. =etermine the deliver' c'cle time. Show 'our workY
Ans:
a. Through#ut time
J rocess time P Ins#ection time P /ove time P ?ueue time
J 1.1 hours P 7.1 hours P (., hours P 5.* hours
J 1(.5 hours
b. /C& J >alue:added timeVThrough#ut time
J 1.1 hoursV1(.5 hours J 7.75
c. =eliver' c'cle time J 1ait time P Through#ut time
J 17., hours P 1(.5 hours J (*.* hours
AACSB: Anal'tic AICA BB: Critical Thinking AICA !": Re#orting
$%: 0 $evel: &as'
10-1!0 Garrison/Noreen/Brewer, Managerial Accounting, Twelfth Edition