CHAPTER10

STANDARDCOSTING

MULTI
PLECHOI
CE

1. Apr
ima
rypur
pos
eofus
ingas
tanda
rdc
osts
yst
emi
s

a. t
oma kethi
ngsea s
ierf
orma na
ger
si ntheproduc
ti
onf
aci
li
ty.
b. t
oprovideadist
inctmeasur
eofcostcontr
ol.
c. t
omi ni
mizethecostperuni
tofproducti
on.
d. bandca r
ecorre
c t
.

ANSWER: b EASY

2. Thes
tanda
rdc
ostc
ardc
ont
ai
nsqua
nti
ti
esa
ndc
ost
sfor

a. di
rec
tmate
ria
lonly.
b. di
rec
tla
boronly.
c. di
rec
tmate
ria
la nddir
ectla
boronly.
d. di
rec
tmate
ria
l,dire
ctlabor
,andover
hea
d.

ANSWER: d EASY

3. Whi
choft
hef
oll
owi
ngs
tat
eme
ntsr
ega
rdi
ngs
tanda
rdc
osts
yst
emsi
str
ue?

a. Favorablevaria
ncesa r
enotnec
essar
ilygoodvari
ances.
b. Ma nagerswilli
nve s
ti
gateal
lvar
ianc
e sf
roms t
andard.
c. Thepr oduct
ionsup er
visori
sge
neral
lyrespons
ibl
eforma t
eri
alpr
iceva
ria
nce
s.
d. St
a ndardcostscannotbeusedf
orplanni
ngpurposessi
ncecost
snormal
lycha
nge
i
nt hefutur
e.

ANSWER: a EASY

4. I
nas
tanda
rdc
osts
yst
em,Wor
kinPr
oce
ssI
nve
ntor
yisor
dina
ril
yde
bit
edwi
th

a. ac
tualcost
sofmate
ria
landlabora ndapre
det
erminedover
headcostforove
rhe
ad.
b. st
andardcost
sba
sedonthelevelofinputa
cti
vit
y(suchasdi
rectl
aborhours
worked).
c. st
andardcost
sba
sedonproductionout
put.
d. ac
tualcost
sofmate
ria
l,l
abor,andoverhea
d.

ANSWER: c EASY

10–1
10–2 Cha
pte
r10 St
anda
rdCos
ti
ng

5. As
tanda
rdc
osts
yst
emma
ybeus
edi
n

a. jobordercosti
ng,butnotpr
ocesscost
ing.
b. proce
ssc ost
ing,butnotj
obordercost
ing.
c. eit
herjobordercosti
ngorproces
sc os
ting.
d. neit
herjobordercosti
ngnorproces
sc ost
ing.

ANSWER: c EASY

6. St
anda
rdc
ost
sma
ybeus
edf
or

a. produc tcos
ti
ng.
b. planning.
c. controlli
ng.
d. allofthea b
ove.

ANSWER: d EASY

7. Apur
pos
eofs
tanda
rdc
ost
ingi
sto

a. r
eplacebudge t
sandbudge t
ing.
b. si
mplifyc os
ti
ngprocedures
.
c. el
iminatetheneedforactua
lc os
ti
ngforext
erna
lrepor
ti
ngpur
poses
.
d. el
iminatetheneedtoac c
ountforyea
r-e
ndunderappl
ie
dorover
appl
ied
manufacturi
ngoverhead.

ANSWER: b EASY

8. St
anda
rdc
ost
s

a. a
reest
ima t
esofcostsat
tainabl
eonl yunderthemos ti
dealcondi
ti
ons.
b. a
redi
fficul
ttousewi t
hapr ocesscost
ingsystem.
c. c
an,i
fproperlyused,helpmotivateemployees.
d. r
equi
rethatsigni
fi
cantunfavorabl
eva r
iancesbeinvest
igat
ed,butdonotr
equi
re
t
hats
ignifi
cantfa
vorablevaria
nc e
sbei nves
tigat
ed.

ANSWER: c EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–3

9. Abi
llofma
ter
ialdo
esnoti
ncl
ude

a. quanti
tyofcomponentinputs
.
b. pric
eofcomponentinputs.
c. quali
tyofcomponentinputs
.
d. typeofproduc
toutput
.

ANSWER: b EASY

10. Anope
rat
ionsf
lowdoc
ume
nt

a. t
rac
ksthecostandquant
it
yofma t
eri
althr
ougha nopera
ti
on.
b. t
rac
ksthenetworkofcont
rolpoint
sfromrecei
ptofac ust
omer’
sorde
rthrough
t
hedeli
ver
yoft hefi
nis
hedproduct.
c. s
pecif
iest
askst
oma keaunitandthetimesall
owe dforeac
htas
k.
d. c
hart
stheshort
estpat
hbywhi chtoarr
angema chine
sforcomple
ti
ngproducts
.

ANSWER: c MEDI
UM

11. At
ota
lva
ria
ncei
sbe
stde
fine
dast
hedi
ff
ere
ncebe
twe
ent
ota
l

a. a
ctualcos
tandtot
alcos
tappli
edforthest
andardoutputoftheperi
od.
b. s
tandar
dc os
tandtot
alcos
tappli
edtoproduct
ion.
c. a
ctualcos
tandtot
alst
andar
dc os
toftheactua
linputoftheperi
od.
d. a
ctualcos
tandtot
alcos
tappli
edfortheact
ualoutputoftheperi
od.

ANSWER: d EASY

12. Thet
erms
tanda
rdhour
sal
lowe
dme
asur
es

a. budget
edoutputa
tactualhours
.
b. budget
edoutputa
tstandardhours
.
c. act
ualout
putatst
andardhours.
d. act
ualout
putatact
ualhours.

ANSWER: c EASY
10–4 Cha
pte
r10 St
anda
rdCos
ti
ng

13. Al
argel
abore
ffi
ci
enc
yva
ria
ncei
spr
ora
tedt
owhi
choft
hef
oll
owi
nga
tye
ar-
end?

WIP FG
Cos
tofGoodsSol
d I
nvent
ory I
nvent
ory
a. no no no
b. no yes ye
s
c. ye
s no no
d. ye
s yes ye
s

ANSWER: d EASY

14. Whi
chofthef
oll
owingfa
ctor
sshoul
dnotbec
ons
ide
redwhe
nde
cidi
ngwhe
the
rto
i
nve
sti
gat
eavari
anc
e ?

a. magnit
udeofthevaria
nce
b. tr
endofthevari
ancesoverti
me
c. li
kel
ihoodtha
taninvesti
gati
onwil
lre
duceorel
imi
nat
efut
ureoc
cur
renc
esoft
he
var
iance
d. whethert
hevari
anceisfavor
abl
eorunfa
vora
ble

ANSWER: d EASY

15. Att
hee
ndofape
riod,as
igni
fi
cantma
ter
ialqua
nti
tyva
ria
nces
houl
dbe

a. cl
osedt
oCostofGoodsSold.
b. al
loc
ate
damongRa wMa t
eria
l,Worki nProce
ss,Finishe
dGoods ,andCos
tof
GoodsSol
d.
c. al
loc
ate
damongWor kinProces
s,Finishe
dGoods ,andCos tofGoodsSol
d.
d. ca
rri
edfor
wardasabal
ancesheetac
c ounttot
hene xtperi
od.

ANSWER: c EASY

16. Whe ncomputi

ngvari
ancesf
romstandar
dcos
ts,t
hediff
ere
ncebe
twe
ena
ctua
land
s
tandar
dpricemult
ipl
iedbyact
ualquant
it
yusedyie
ldsa

a. combinedprice
-quant
it
yva
ria
nce
.
b. pri
ceva r
ianc
e.
c. quant
ityvari
ance.
d. mixva r
iance
.

ANSWER: b EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–5

17. Acompanywis
hingt
ois
olat
evari
ancesatt
hepoi
ntc
los
estt
othepoi
ntofr
espons
ibi
li
ty
wi
llde
ter
minei
tsmat
eri
alpr
iceva
ria
nc ewhen

a. mat
eri
alisp
ur cha
sed.
b. mat
eri
alisi
ssuedtoproducti
on.
c. mat
eri
alisu
se dinproduct
ion.
d. pr
oduct
ioni
sc omp l
eted.

ANSWER: a EASY

18. Thema
ter
ialpr
icev
ari
anc
e(c
omput
eda
tpoi
ntofpur
cha
se)i
s

a
. thedi
ff
erencebe t
weentheactualc
os tofmate
ria
lpurc
has
eda
ndt
hes
tanda
rdc
ost
ofmater
ialpurchase
d.
b. thedi
ff
erencebe t
weentheactualc
os tofmate
ria
lpurc
has
eda
ndt
hes
tanda
rdc
ost
ofmater
ialused.
c. pri
mari
lythere s
ponsibi
li
tyoftheproduct
ionma na
ger
.
d. bothaandc .

ANSWER: a EASY

19. Thesumofthemat
eri
alpr
iceva
ria
nce(
cal
cul
at
eda
tpoi
ntofpur
cha
se)a
ndma
ter
ial
qua
ntit
yva
rianc
eequa
ls

a. thet
ota
lcos tvar
iance
.
b. themat
erialmixva r
iance.
c. themat
erialyie
ldvariance
.
d. nome a
ningfulnumbe r.

ANSWER: d EASY

20. Acompanywoul
dmostli
kel
yha
vea
nunf
avor
abl
ela
borr
ateva
ria
ncea
ndaf
avor
abl
e
l
abore
ffi
ci
enc
yvari
anc
eif

a
. themi xofwor ker
sus edintheproduct
ionproce
sswasmoreexperi
encedt hanthe
norma lmi x.
b. themi xofwor ker
sus edintheproduct
ionproce
sswasles
sexperi
ence
dt ha nthe
norma lmi x.
c
. worker sfromanotherpartofthepla
ntwe r
eusedduetoanext
raheavypr oducti
on
schedule .
d. thepurc hasi
ngagentacquire
dve r
yhighqua l
it
ymater
ialt
hatr
esul
tedinle ss
spoi
lage .

ANSWER: a EASY
10–6 Cha
pte
r10 St
anda
rdCos
ti
ng

21. Ifa
ctua
ldi
rectl
aborhour
s(DLHs
)a r
eles
stha
nst
anda
rddi
rec
tla
borhour
sal
lowe
dand
over
headi
sappl
iedonaDLHba s
is,a(
n)

a. favorabl
evaria
bleove
rheadspendingvar
ianceexis
ts.
b. favorabl
evaria
bleove
rheadeff
icie
nc yva
rianceexi
sts
.
c. favorabl
evolumevari
anceexis
ts.
d. unfavorabl
evolumevari
anceexist
s.

ANSWER: b EASY

22. I
fal
lsub-
var
ianc
esa
rec
alc
ula
tedf
orl
abor
,whi
choft
hef
oll
owi
ngc
annotbede
ter
mine
d?

a. l
aborrat
evariance
b. a
ctualhour
sofl aborus
ed
c. r
easonforthelaborvar
ianc
es
d. e
ffi
ciencyofthelaborf
orce

ANSWER: c EASY

23. (
Appe
ndi
x)Thet
ota
lla
borva
ria
ncec
anbes
ubdi
vide
dint
oal
loft
hef
oll
owi
nge
xce
pt

a. ra
tevari
ance.
b. yie
ldvari
ance.
c. le
arni
ngcurvevar
ianc
e.
d. mixvari
ance.

ANSWER: c EASY

24. Thestandar
dpr e
domi na
ntl
yusedinWe
ste
rnc
ult
ure
sformot
iva
ti
ona
lpur
pos
esi
sa(
n)
_____________________st
andar
d.

a. expect
edannua
l
b. ideal
c. pract
ica
l
d. theor
eti
cal

ANSWER: c EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–7

25. Whi
chofthef
oll
owi
ngst
anda
rdscanc
ommonl
yber
eac
hedors
li
ght
lye
xce
ede
dby
wor
ker
sinamoti
vat
edworke
nvir
onment
?

I
dea
l Pr
act
ica
l Expe
ctedannua
l
a. no no no
b. no ye
s yes
c. yes ye
s no
d. no ye
s no

ANSWER: b EASY

26. Manage
me ntwoul
dgene
ral
lyexpe
ctunfa
vor
abl
eva
ria
nce
sifs
tanda
rdswe
reba
sedon
whi
chofthefol
lowi
ngcapa
cit
yme a
sure
s?

I
dea
l Pr
act
ica
l Expe
cte
dannua
l
a. yes no no
b. no no ye
s
c. no ye
s ye
s
d. no no no

ANSWER: a EASY

27. Whichoft
hef
oll
owingcapa
cit
yle
vel
sha
str
adi
ti
ona
ll
ybe
enus
edt
ocomput
ethef
ixe
d
ove
rhea
dappl
ic
ati
onrat
e?

a. expect
edannua
l
b. normal
c. theor
eti
cal
d. pri
oryear

ANSWER: a EASY

28. Ac ompa nyha safavor

ablevaria
bleoverhea
ds pe
ndingvari
ance
,anunfa
vorabl
evari
abl
e
overheadeffi
cienc
yva r
iance,andunderappl
iedvari
ableove
rheada
ttheendofaperi
od.
Thej our
nalentrytorec
ordthesevari
ance sa
ndc l
osethevar
iabl
eover
headcont
rol
acc
ountwi llshowwhi chofthefoll
owing?

VOHs pending VOHeffic

ienc
y
var
iance var
iance VMOH
a. debit credi
t cr
e di
t
b. credit debit cr
e di
t
c. debit credi
t debit
d. credit debit debit

ANSWER: b MEDI
UM
10–8 Cha
pte
r10 St
anda
rdCos
ti
ng

29. RonaldCorp.i
ncurr
ed2,300dir
ectlaborhourstoproduce600unit
sofproduct
.Ea
chuni
t
shoul
dtake4direc
tlaborhour
s.Rona l
da ppl
iesvar
iabl
eoverheadt
oproducti
onona
dir
ectla
borhourbasi
s.Thevari
ableoverheade f
fi
ci
e nc
yva r
ianc
e

a. wil
lbeunf a
vorabl
e.
b. wil
lbefavorabl
e.
c. wil
ldepe
ndupont hecapac
it
yme as
uresel
ecte
dtoa s
signove
rhe
adt
opr
oduc
ti
on.
d. i
simpossibl
etodeter
minewit
houtaddi
ti
onalinf
ormati
on.

ANSWER: b MEDI
UM

30. Ava
ria
bleove
rhe
ads
pendi
ngva
ria
ncei
sca
use
dby

a
. usingmor eorf e
we ra ct
ualhour
sthanthesta
ndar
dhoursa l
lowedf ort
he
productionachieved.
b. payingahi gher/
lowe ravera
geactua
loverheadpr
iceperunitoftheact
ivi
tybase
thanthes t
andardp ri
cea l
lowedperuni
toftheact
ivit
ybase.
c
. lar
ge r
/sma l
lerwa s
tea ndshri
nka
gea s
sociat
edwit
htheresourcesinvol
vedtha
n
expected.
d. bothba ndca r
ec aus
e s.

ANSWER: d MEDI
UM

31. Whi
choft
hef
oll
owi
nga
rec
ons
ide
redc
ont
rol
la
bleva
ria
nce
s?

VOHs
pendi
ng Tot
alover
headbu
dge
t Vol
ume
a. ye
s yes ye
s
b. no no ye
s
c. no yes no
d. ye
s yes no

ANSWER: d MEDI
UM

32. Acompanymaysetpr
edete
rmine
doverheadrat
esbasedonnor
ma l
,expe
cte
da nnua
l,or
t
heor
eti
calc
apa
cit
y.Attheendofape
riod,thef
ixedoverhe
adspe
ndingvar
ianc
ewoul d

a. bethesameregardlessoftheca pa
cit
ylevelse
lec
ted.
b. bethel
arges
tifthe oret
ic
alc a
pa ci
tyhadbeensel
ecte
d.
c. bethesmal
lestiftheoret
icalcapaci
tyhadbeensel
ected.
d. notocc
urifactualc a
pacit
ywe rethesamea st
hecapacit
yle
vels
ele
cte
d.

ANSWER: a EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–9

33. Theva
ria
ncel
eas
tsi
gni
fi
cantf
orpur
pos
esofc
ont
rol
li
ngc
ost
sist
he

a. materi
alquanti
tyvari
ance.
b. var
iableoverhe
ade f
fi
c i
enc
yva r
iance
.
c. fi
xedove r
headspendingvar
iance.
d. fi
xedove r
headvolumeva r
iance
.

ANSWER: d EASY

34. Fi
xedove
rhe
adc
ost
sar
e

a. bestcontroll
edonauni t
-by-unitba si
sofproduct
spr oduced.
b. mos t
lyinc urr
edt
oprovidet heca paci
tytoproduceanda rebe s
tcont
rol
ledona
tot
alba si
sa tt
heti
met heya reoriginal
lynegoti
at
e d.
c. const
a ntonape r
-uni
tba si
sa talldiff
erentac
ti
vitylevelswithi
ntherel
evantr
ange
.
d. bestcontroll
edastospendingdur ingtheproduct
ionpr ocess
.

ANSWER: b MEDI
UM

35. Theva
ria
ncemos
tus
efuli
neva
lua
ti
ngpl
antu
til
iz
ati
oni
sthe

a. var
iabl
eover
headspendingvari
ance.
b. fi
xedover
headspe
ndingva ri
ance.
c. var
iabl
eover
headeff
icie
nc yvar
iance
.
d. fi
xedover
headvol
umeva r
iance
.

ANSWER: d EASY

36. Af
avor
abl
efi
xedove
rhe
advol
umeva
ria
nceoc
cur
sif

a. ther
eisafa
vorabl
elaboref
fici
encyvar
ianc
e.
b. ther
eisafa
vorabl
elaborra
tevaria
nce
.
c. produc
ti
onisle
ssthanpla
nned.
d. produc
ti
onisgrea
tert
hanplanned.

ANSWER: d EASY
10–10 Cha
pte
r10 St
anda
rdCos
ti
ng

37. Thefixedoverhea
dappli
cati
onrat
eisaf
unc
ti
onofapredet
ermine
da c
tivi
tyl
evel.I
f
st
andardhoursall
owedforgoodout
pute
qua
lthepr
ede
terminedact
ivi
tyle
velforagive
n
per
iod,thevolumevar
iancewil
lbe

a. zero.
b. favorabl
e.
c. unfavorabl
e.
d. ei
therf a
vorabl
eorunf
avor
abl
e,de
pendi
ngont
hebudge
tedove
rhe
ad.

ANSWER: a EASY

38. Ac
tua
lfi
xedove
rhe
admi
nusbudge
tedf
ixe
dove
rhe
ade
qua
lst
he

a. fi
xedoverheadvolumeva r
iance
.
b. fi
xedoverheadspendingvar
iance.
c. noncont
roll
abl
eva ri
ance.
d. cont
roll
ablevar
iance.

ANSWER: b EASY

39. Tota
lac
tua
love
rhe
admi
nust
ota
lbudge
tedove
rhe
ada
tthea
ctua
linputpr
oduc
ti
onl
eve
l
equa
lst
he

a. var
iabl
eover
headspendingvari
ance.
b. tot
alove
rhe
adeffi
cie
nc yvari
ance.
c. tot
alove
rhe
adspendingvari
ance.
d. tot
alove
rhe
advolumeva ri
ance.

ANSWER: c EASY

40. Af
avor
abl
efi
xedove
rhe
ads
pendi
ngva
ria
ncei
ndi
cat
est
hat

a. budget
edfix
edoverhe
adislessthanact
ualf
ixedove
rhea
d.
b. budget
edfix
edoverhe
adisgreat
e rt
hanappl
iedfi
xedover
hea
d.
c. appl
iedfi
xedover
headisgre
aterthanbudge
tedfi
xedover
hea
d.
d. act
ualfi
xedover
headisle
ssthanbudgetedf
ixedove
rhea
d.

ANSWER: d EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–11

41. Anunf
avor
abl
efi
xedove
rhe
advol
umeva
ria
ncei
smos
tof
tenc
aus
edby

a. act
ualfi
xedoverheadincur
rede xceedi
ngbudge te
dfixe
dove
rhe
ad.
b. anover-
appli
cat
ionoff i
xedove rhea
dtopr oduct
ion.
c. anincr
easeint
hel e
velofthefinishedinventor
y.
d. nor
ma lcapa
cit
ye xcee
dingactualproducti
onl e
vels.

ANSWER: d EASY

42. Inasta
ndardcos
tsyst
em,whenproduc
ti
onisgr
eat
ert
hant
hee
sti
mat
eduni
tor
denomina
torl
evelofa
cti
vit
y,t
her
ewi l
lbea
(n)

a. unfavorabl
ecapac i
tyvar
ianc
e.
b. favorabl
ema t
erialandla
borusa
gevar
ianc
e.
c. favorabl
evolumeva ri
ance.
d. unfavorabl
ema nufact
uri
ngover
hea
dvaria
nce
.

ANSWER: c EASY

43. Inana
lyz
ingma
nuf
act
uri
ngove
rhe
adva
ria
nce
s,t
hevol
umeva
ria
ncei
sthedi
ff
ere
nce
bet
weenthe

a
. amounts howni nthef l
exiblebudge ta
ndt heamounts howni ndebitsi
deofthe
overhe a
dc ontrolaccount.
b. predetermi nedove rheada ppli
cati
onr at
eandt hef
lexiblebudge tappl
ica
ti
onrat
e
ti
me sa ctualhour swor ked.
c
. budge tallowa nc ebasedons tandardhoursall
owedf oractualproduct
ionfort
he
perioda ndt hea mountbudge t
edtobea pplieddur
ingt hepe r
iod.
d. act
ua lamounts pentforove r
headitemsdur i
ngthepe r
ioda ndtheoverhead
amounta ppliedt oproductionduringthepe r
iod.

ANSWER: c MEDI
UM

44. Va
ria
ncea
nal
ysi
sforove
rhe
adnor
mal
lyf
ocus
eson

a. eff
ici
encyvari
ancesformachi
ner
ya ndi
ndir
ectproduct
ioncost
s.
b. volumevari
ancesforfi
xedover
headcost
s.
c. thecont
rol
la
bleva r
iancea
salump-sumamount.
d. thedif
fer
encebetweenbudget
edandappl
iedvari
ableoverhe
ad.

ANSWER: a MEDI
UM
10–12 Cha
pte
r10 St
anda
rdCos
ti
ng

45. Thee
ffi
ci
enc
yva
ria
ncec
omput
edonat
hre
e-va
ria
ncea
ppr
oac
his

a
. equaltothevari
ableoverhea
de ff
icien
c yva r
ianc ecomputedont hefour-
vari
ance
approach.
b. equaltothevari
ableoverhea
ds pendingva r
ianc epl
ust hevar
iableoverhead
eff
icie
nc yvar
iancecomputedont hefour-vari
a ncea ppr
oach.
c
. compute dast
hediffer
encebetwe enappliedvar i
ableoverhea
da ndac t
ualvar
iabl
e
overhead.
d. compute dasact
ualvari
ableoverheadmi nusthef le
xi bl
ebudgetforvaria
ble
overheadbasedona ct
ualhourswor ke
d.

ANSWER: a EASY

46. Theus
eofsepa
rat
evari
abl
eandf
ixe
dove
rhe
adr
ate
sisbe
tt
ert
hanac
ombi
nedr
ate
bec
aus
esuc
has ys
tem

a. isl
essexpens
ivetooper
a t
eandma i
nta
in.
b. doesnotre
sulti
nunderappli
edorover
appl
iedove
rhea
d.
c. ismoreeff
ect
iveinass
igningover
headcos
tstopr
oduct
s.
d. iseas
iert
od e
velop.

ANSWER: c MEDI
UM

47. Unde rt
hetwo-
var
ianc
ea ppr
oach,t
hevolumeva
r i
anc
ei sc
omput
edbysubtr
act
ing
_________bas
edonstandar
dinputal
lowedf
ortheproduc
ti
onac
hie
vedfrombudget
ed
overhea
d.

a. appl
iedover
head
b. act
ualover
head
c. budget
edfi
xedover
headpl
usa
ctua
lva
ria
bleove
rhe
ad
d. budget
edvari
abl
eover
head

ANSWER: a EASY

48. Theoverhea
dvari
ancec
alc
ula
tedast
otalbudget
edove
rheadatt
heact
uali
nput
product
ionl
eve
lminust
ota
lbudge
tedoverheadatt
hes
tandar
dhour
sall
owedfora
ctua
l
outputi
sthe

a. eff
icie
nc yvar i
ance
.
b. spendingvariance.
c. volumeva ri
a nce.
d. budgetva r
iance.

ANSWER: a EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–13

49. Ana
lyz
ingove
rhe
adva
ria
nce
swi
llnothe
lpi
n

a. controll
ingcosts.
b. evaluati
ngpe rf
orma nce.
c. determiningwhyva r i
ancesoccur
red.
d. planningc os
tsforfutureproduct
ioncyc
les
.

ANSWER: c EASY

50. I
naj
ust
-i
n-t
imei
nve
ntor
ysys
tem,

a. pract
ic
als ta
ndardsbecomei dealst
andards
.
b. idea
lstandardsbecomee xpec t
edsta
nd a
rds.
c. vari
anceswi l
lnotoccurbe c
a useofthezer
o-de
fec
tsba
sisofJ
IT.
d. sta
ndardc ost
ingcannotbeus ed.

ANSWER: b MEDI
UM

51. Ac
ompa
nyus
ingve
ryt
ight(
high)s
tanda
rdsi
nas
tanda
rdc
osts
yst
ems
houl
dexpe
ctt
hat

a. noincent
ivebonuswi l
lbepai
d.
b. mostvari
anceswillbeunfa
vorabl
e.
c. employeeswil
lbes t
rongl
ymot i
vat
edtoa
tta
inthest
anda
rds.
d. cos
tswi l
lbecontr
olledbet
te
rthanifl
owers
tandar
dswereus
ed.

ANSWER: b EASY
10–14 Cha
pte
r10 St
anda
rdCos
ti
ng

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons52–55.(
Rounda
lla
nswe
rst
othene
are
stdol
la
r.)

Thef
oll
owi
ngJ
ulyi
nfor
mat
ioni
sforKi
ngs
tonComp
any:

St
andar
ds:
Ma t
eri
al 3.
0fee
tperuni
t@ $4.20pe
rfoot
Labor 2.
5hourspe
runit@ $7.
50perhour

Ac
tual:
Pr
oduction 2,
750unit
sproduc
edduri
ngthemonth
Ma t
eri
al 8,
700fee
tused;9,
000fee
tpurcha
sed@ $4.50pe
rfoot
Labor 7,
000dir
ectl
aborhour
s@ $7.90perhour

52. Wha
tist
hema
ter
ialpr
iceva
ria
nce(
cal
cul
at
eda
tpoi
ntofpur
cha
se)
?

a. $2,
700U
b. $2,
700F
c. $2,
610F
d. $2,
610U

ANSWER: a EASY

53. Wha
tist
hema
ter
ialqua
nti
tyva
ria
nce
?

a. $3,
105F
b. $1,
050F
c. $3,
105U
d. $1,
890U

ANSWER: d MEDI
UM

54. Wha
tist
hel
aborr
ateva
ria
nce
?

a. $3,
480U
b. $3,
480F
c. $2,
800U
d. $2,
800F

ANSWER: c EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–15

55. Wha
tist
hel
abore
ffi
ci
enc
yva
ria
nce
?

a. $1,875U
b. $938U
c. $1,875U
d. $1,125U

ANSWER: b MEDI
UM

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons56–60.

Ti
mothyCompa nyhast
hefoll
owi
nginf
ormat
iona
vai
la
blef
orOc
tobe
rwhe
n3,
500uni
tswe
re
pr
oduce
d(roundanswer
stothene
are
stdol
la
r).

St
andards
:
Mater
ial 3.
5poundsperuni
t@ $4.
50perpound
La
bor 5.
0hoursperuni
t@ $10.
25pe
rhour

Act
ual:
Mater
ialpur
chas
ed 12,300pounds@ $4.
25
Mater
ialuse
d 11,
750pounds
17,
300direc
tla
borhour
s@ $10.
20perhour

56. Wha
tist
hel
aborr
ateva
ria
nce
?

a. $875F
b. $865F
c. $865U
d. $875U

ANSWER: b EASY

57. Wha
tist
hel
abore
ffi
ci
enc
yva
ria
nce
?

a. $2,
050F
b. $2,
050U
c. $2,
040U
d. $2,
040F

ANSWER: a EASY
10–16 Cha
pte
r10 St
anda
rdCos
ti
ng

58. Wha
tist
hema
ter
ialpr
iceva
ria
nce(
bas
edonqua
nti
typur
cha
sed)
?

a. $3,
075U
b. $2,
938U
c. $2,
938F
d. $3,
075F

ANSWER: d EASY

59. Wha
tist
hema
ter
ialqua
nti
tyva
ria
nce
?

a. $2,250F
b. $2,250U
c. $225F
d. $2,475U

ANSWER: a EASY

60. Assumetha
tthecompanycomput
est
hemat
eria
lpri
c evar
ianc
eont
heba
sisofma
ter
ial
i
ssuedt
oproduct
ion.Whatist
het
ota
lmat
eri
alvar
iance?

a. $2,
850U
b. $5,
188U
c. $5,
188F
d. $2,
850F

ANSWER: c MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–17

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons61–64.

Thefol
lowi
ngMa r
chinf
orma
ti
oni
sava
il
abl
eforBa
ttMa
nuf
act
uri
ngCompa
nywhe
nit
pr
oduced2,
100uni
ts:

St
andard:
Mater
ial 2poundsperuni
t@ $5.
80perpound
La
bor 3dir
ectl
aborhour
speruni
t@ $10.00pe
rhour

Act
ual:
Mate
ria
l 4,
250poundspur
chase
dandused@ $5.
65pe
rpound
La
bor 6,
300dir
ectl
aborhour
sat$9.
75pe
rhour

61. Wha
tist
hema
ter
ialpr
iceva
ria
nce
?

a. $637.
50U
b. $637.
50F
c. $630.
00U
d. $630.
00F

ANSWER: b EASY

62. Wha
tist
hema
ter
ialqua
nti
tyva
ria
nce
?

a. $275F
b. $290F
c. $290U
d. $275U

ANSWER: c EASY

63. Wha
tist
hel
aborr
ateva
ria
nce
?

a. $1,
575U
b. $1,
575F
c. $1,
594U
d. $0

ANSWER: b EASY
10–18 Cha
pte
r10 St
anda
rdCos
ti
ng

64. Wha
tist
hel
abore
ffi
ci
enc
yva
ria
nce
?

a. $731.
25F
b. $731.
25U
c. $750.
00F
d. noneoft
hea
bove

ANSWER: d EASY

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons65–74.

ReddCo.usesasta
ndar
dcostsys
temfori
tspr
oduc
ti
onprocessa
ndappl
ie
soverhe
adba s
edon
dir
ectl
aborhour
s.Thef
oll
owinginf
ormat
ioni
savai
la
bleforAugus
twhenReddma de4,
500
unit
s:

St
andar
d:
DLHp erunit 2.50
Vari
abl
eove r
he a
dperDLH $1.75
Fi
xedoverheadperDLH $3.10
Budget
edva r
iabl
eover
head $21,875
Budget
edfixedover
head $38,750

Act
ual:
Di
rectl
aborhour
s 10,000
Var
iabl
eoverhea
d $26,250
Fi
xedoverhe
ad $38,000

65. Us
ingt
heone
-va
ria
ncea
ppr
oac
h,wha
tist
het
ota
love
rhe
adva
ria
nce
?

a. $6,
062.
50U
b. $3,
625.
00U
c. $9,
687.
50U
d. $6,
562.
50U

ANSWER: c EASY

66. Us
ingt
het
wo-
var
ianc
eappr
oac
h,wha
tist
hec
ont
rol
la
bleva
ria
nce
?

a. $5,
812.
50U
b. $5,
812.
50F
c. $4,
375.
00U
d. $4,
375.
00F

ANSWER: a EASY
Cha
pte
r10 St
anda
rdCo
sti
ng 10–19

67. Us
ingt
het
wo-
var
ianc
eappr
oac
h,wha
tist
hen
onc
ont
rol
la
bleva
ria
nce
?

a. $3,
125.
00F
b. $3,
875.
00U
c. $3,
875.
00F
d. $6,
062.
50U

ANSWER: b EASY

68. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hes
pendi
ngva
ria
nce
?

a. $4,375U
b. $3,625F
c. $8,000U
d. $15,750U

ANSWER: c MEDI
UM

69. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hee
ffi
ci
enc
yva
ria
nce
?

a. $9,
937.
50F
b. $2,
187.
50F
c. $2,
187.
50U
d. $2,
937.
50F

ANSWER: b MEDI
UM

70. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hevol
umeva
ria
nce
?

a. $3,
125.
00F
b. $3,
875.
00F
c. $3,
875.
00U
d. $6,
062.
50U

ANSWER: c MEDI
UM

71. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
heva
ria
bleove
rhe
ads
pendi
ngva
ria
nce
?

a. $4,
375.
00U
b. $4,
375.
00F
c. $8,
750.
00U
d. $6,
562.
50U

ANSWER: c MEDI
UM
10–20 Cha
pte
r10 St
anda
rdCos
ti
ng

72. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
heva
ria
bleove
rhe
ade
ffi
ci
enc
yva
ria
nce
?

a. $2,
187.
50U
b. $9,
937.
50F
c. $2,
187.
50F
d. $2,
937.
50F

ANSWER: c MEDI
UM

73. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
hef
ixe
dove
rhe
ads
pendi
ngva
ria
nce
?

a. $7,000U
b. $3,125F
c. $750U
d. $750F

ANSWER: d EASY

74. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
hevol
umeva
ria
nce
?

a. $3,
125F
b. $3,
875F
c. $6,
063U
d. $3,
875U

ANSWER: d MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–21

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons75–84.

Spot
sInc.use
sasta
ndardc
ostsys
temforit
sproduc
tionproce
ss.Spot
sappl
ie
sove
rhe
adba
sed
ondi
rectla
borhour
s.Thef
oll
owinginf
ormati
onisavail
ablef
orJuly:

St
andar
d:
Di
rectl
aborhour
speruni
t 2.
20
Var
iabl
eoverhea
dperhour $2.
50
Fi
xedoverhe
adperhour
(bas
edon11,990DLHs ) $3.
00

Act
ual:
Unit
sproduc
ed 4,
400
Dir
ectl
aborhour
s 8,
800
Var
iabl
eoverhea
d $29,
950
Fi
xedoverhe
ad $42,
300

75. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
heva
ria
bleove
rhe
ads
pendi
ngva
ria
nce
?

a. $7,950U
b. $25F
c. $7,975U
d. $10,590U

ANSWER: a MEDI
UM

76. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
heva
ria
bleove
rhe
ade
ffi
ci
enc
yva
ria
nce
?

a. $9,
570F
b. $9,
570U
c. $2,
200F
d. $2,
200U

ANSWER: c MEDI
UM

77. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
hef
ixe
dove
rhe
ads
pendi
ngva
ria
nce
?

a. $15,900U
b. $6,330U
c. $6,930U
d. $935F

ANSWER: b MEDI
UM
10–22 Cha
pte
r10 St
anda
rdCos
ti
ng

78. Us
ingt
hef
our
-va
ria
ncea
ppr
oac
h,wha
tist
hevol
umeva
ria
nce
?

a. $6,930U
b. $13,260U
c. $0
d. $2,640F

ANSWER: a MEDI
UM

79. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hes
pendi
ngva
ria
nce
?

a. $23,
850U
b. $23,
850F
c. $14,
280F
d. $14,
280U

ANSWER: d MEDI
UM

80. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hee
ffi
ci
enc
yva
ria
nce
?

a. $11,770F
b. $2,200F
c. $7,975U
d. $5,775U

ANSWER: b MEDI
UM

81. Us
ingt
het
hre
e-va
ria
ncea
ppr
oac
h,wha
tist
hevol
umeva
ria
nce
?

a. $13,260U
b. $2,640F
c. $6,930U
d. $0

ANSWER: c MEDI
UM

82. Us
ingt
het
wo-
var
ianc
eappr
oac
h,wha
tist
hec
ont
rol
la
bleva
ria
nce
?

a. $21,650U
b. $16,480U
c. $5,775U
d. $12,080U

ANSWER: d MEDI
UM

83. Us
ingt
het
wo-
var
ianc
eappr
oac
h,wha
tist
hen
onc
ont
rol
la
bleva
ria
nce
?
Cha
pte
r10 St
anda
rdCo
sti
ng 10–23

a. $26,040F
b. $0
c. $6,930U
d. $13,260U

ANSWER: c MEDI
UM

84. Us
ingt
heone
-va
ria
ncea
ppr
oac
h,wha
tist
het
ota
lva
ria
nce
?

a. $19,010U
b. $6,305U
c. $12,705U
d. $4,730U

ANSWER: a MEDI
UM

85. Actua
lfi
xedoverhea
dis$33,
300(12,
000ma chi
nehours
)andfixedove r
headwa s
est
imat
edat$34,
000whenthepre
de t
ermi
nedrat
eof$3.00perma chinehourwasset
.If
11,
500sta
ndardhourswe
real
lowedforact
ualproduc
ti
on,appl
iedfixedoverhe
adis

a. $33,
300.
b. $34,
000.
c. $34,
500.
d. notde
ter
mina
blewi
thoutknowi
ngt
hea
ctua
lnumbe
rofuni
tspr
oduc
ed.

ANSWER: c EASY

86. Oneuni tr
equire
s2di r
ectl
aborhour
stoproduce.Standa
rdvar
iabl
eover
headperuni
tis
$1.
25a ndstandardfi
xedoverhe
adperuni
tis$1.75.If330uni
tswerepr
oduce
dthis
month,wha tt
otalamountofover
headi
sapplie
dt otheunit
spr
oduced?

a. $990
b. $1,980
c. $660
d. cannotbede
ter
mine
dwi
thoutknowi
ngt
hea
ctua
lhour
swor
ked

ANSWER: a EASY
10–24 Cha
pte
r10 St
anda
rdCos
ti
ng

87. UnionCompanyusesast
andar
dcosta
ccount
ings
yst
em.Thef
oll
owi
ngove
rhe
adc
ost
s
andproduc
ti
ondat
aa r
eavai
la
blef
orAugust:

St
andardfixedOHr ateperDLH $1
St
andardva r
iableOHr a
teperDLH $4
Budget
edmont hl
yDLHs 40,
000
Actua
lDLHswor ked 39,
500
St
andardDLHsa ll
owedfor
ac
tualproduct i
on 39,
000
Overa
llOHva riance—favor
able $2,
000

Thet
ota
lappl
ie
dma
nuf
act
uri
ngove
rhe
adf
orAugus
tshoul
dbe

a. $195,
000.
b. $197,
000.
c. $197,
500.
d. $199,
500.

ANSWER: a EASY

88. Unive
rsalCompanyuse
sasta
nda
rdc
osts
yst
ema
ndpr
epa
redt
hef
oll
owi
ngbudge
tat
nor
ma lc
a pa
cit
yforJ
anuar
y:

Dir
ectl
aborhour
s 24,000
Var
iabl
eOH $48,000
Fi
xedOH $108,000
Tot
alOHpe rDLH $6.50

Act
ualdat
aforJanuar
ywe r
easf
oll
ows
:
Dir
ectl
aborhour
swor ke
d 22,
000
Tot
alOH $147,
000
St
andar
dDLHsa llowedfor
c
apaci
tyat
tai
ned 21,
000

Usingthet
wo-
waya
nal
ysi
sofove
rhe
adva
ria
nce
s,wha
tist
hec
ont
rol
la
bleva
ria
ncef
or
Ja
nua r
y?

a. $3,000F
b. $5,000F
c. $9,000F
d. $10,500U

ANSWER: a MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–25

89. Thef
oll
owi
ngi
nfor
mat
ioni
sava
il
abl
efr
omt
heTyr
oCompa
ny:

Act
ualOH $15,000
Fi
xedOHe xpe
nses
,act
ual $7,200
Fi
xedOHe xpe
nses
,budge
ted $7,000
Act
ualhour
s 3,500
St
andar
dhours 3,800
Var
iabl
eOHr at
eperDLH $2.50

AssumingthatTyrous
esathr
ee-
waya
nal
ysi
sofove
rhe
adva
ria
nce
s,wha
tist
he
ove
r he
adspendingvar
ianc
e?

a. $750F
b. $750U
c. $950F
d. $1,500U

ANSWER: a MEDI
UM

90. Mar
tinCompanyusesatwo-
wayanal
ysi
sofo
ver
hea
dva
ria
nce
s.Se
lec
tedda
taf
ort
he
Apr
ilpr
oduc
ti
ona c
ti
vityar
easf
oll
ows:

Act
ualvar
iabl
eOHi ncur
red $196,
000
Var
iabl
eOHr ateperMH $6
St
andar
dMHsa l
lowed 33,
000
Act
ualMHs 32,
000

Assumingtha
tbudget
edf
ixe
dove r
hea
dcos
tsa
ree
qua
ltoa
ctua
lfi
xedc
ost
s,t
he
cont
rol
labl
evari
ancef
orApri
lis

a. $2,
000F.
b. $4,
000U.
c. $4,
000F.
d. $6,
000F.

ANSWER: a MEDI
UM
10–26 Cha
pte
r10 St
anda
rdCos
ti
ng

91. Ai
rInc
.us
esas
tanda
rdc
osts
yst
em.Ove
rhe
adc
osti
nfor
mat
ionf
orOc
tobe
risa
sfol
lows
:

Tot
alact
ualoverheadincur
red $12,
600
Fi
xedoverheadbudgeted $3,
300
Tot
alst
andardove r
headrat
eperMH $4
Var
iabl
eoverheadr a
teperMH $3
St
andar
dMHsa llowedforact
ualpr
oduc
ti
on3,
500

Wha
tist
het
ota
love
rhe
adva
ria
nce
?

a. $1,
200F
b. $1,
200U
c. $1,
400F
d. $1,
400U

ANSWER: c EASY

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons92–95.

St
andar
dCompanyhasde
vel
ope
dst
anda
rdove
rhe
adc
ost
sba
sedonac
apa
cit
yof180,
000
machi
nehour
sasf
oll
ows:

St
andar
dcost
speruni
t:
Var
iabl
eport
ion 2hour
s@ $3=$6
Fi
xedport
ion 2hour
s@ $5= 10
$16

Duri
ngApri
l,85,
000uni
tswer
esche
dul
edforpr
oduc
ti
on,butonl
y80,
000uni
tswe
rea
ctua
ll
y
pr
oduce
d.Thefol
lowi
ngdatar
ela
tet
oApri
l:

Ac
tualmachi
nehoursusedwere165,000.
Ac
tualover
headi
ncurr
edtota
led$1,378,000(
$518,
000va
ria
blepl
us$860,
000f
ixe
d).
Al
linvent
ori
esar
ecarr
iedatst
andardcos t
.

92. Theva
ria
bleove
rhe
ads
pendi
ngva
ria
ncef
orApr
ilwa
s

a. $15,
000U.
b. $23,
000U.
c. $38,
000F.
d. $38,
000U.

ANSWER: b MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–27

93. Theva
ria
bleove
rhe
ade
ffi
ci
enc
yva
ria
ncef
orApr
ilwa
s

a. $15,
000U.
b. $23,
000U.
c. $38,
000F.
d. $38,
000U.

ANSWER: a MEDI
UM

94. Thef
ixe
dove
rhe
ads
pendi
ngva
ria
ncef
orApr
ilwa
s

a. $40,
000U.
b. $40,
000F.
c. $60,
000F.
d. $60,
000U.

ANSWER: b MEDI
UM

95. Thef
ixe
dove
rhe
advol
umeva
ria
ncef
orApr
ilwa
s

a. $60,000U.
b. $60,000F.
c. $100,000F.
d. $100,000U.

ANSWER: d MEDI
UM
10–28 Cha
pte
r10 St
anda
rdCos
ti
ng

THEFOLLOWI
NGMULTIPLECHOI
CERELATETOMATERI
ALCOVEREDI
NTHE
APPENDI
XOFTHECHAPTER.

Uset
hefol
lowi
nginf
orma
ti
onforque
sti
ons96–101.(
Rounda
lla
nswe
rst
othene
are
stdol
la
rand
pe
rce
ntst
othenea
res
twholepe
rce
nt.
)

XtraKl e
anma nuf act
uresacl
e aningsol
vent
.Thecompa nyemploysbothski
ll
edandunskil
led
worke r
s.Skil
ledwor kerscl
assCa repa
id$12perhour,whil
eunskil
le
dwor ker
scla
ssDa repai
d
$7pe rhour.Topr oduceone55- gall
ondrumofsol
ventrequi
res4hoursofski
ll
edlaborand2
hoursofuns ki
ll
e dlabor
.Thes olventre
quir
es2dif
fere
ntma t
eri
als:AandB.Thes t
andar
da nd
act
ualma teri
alinformati
onisgive nbel
ow:

St
andard:
Mater
ialA:30.
25ga
llons@ $1.
25pe
rga
llon
Mater
ialB:24.
75ga
ll
ons@ $2.00pe
rga
ll
on

Act
ua l
:
Materi
alA:10,716ga ll
onspurc
hasedandused@ $1.
50perga
llon
Materi
alB:17,484ga ll
onspurc
hasedandused@ $1.
90perga
llon
Ski
lledlaborhours:1,
950@ $11.90perhour
Unskil
ledlaborhours:1,
300@ $7.15perhour
Dur
ingt hecurrentmonthXtraKlea
nma nufa
ctur
ed50055-
gal
londrums
.(Rou
nda
ll
a nswerstothene a
res
twholedoll
ar.
)

96. Wha
tist
het
ota
lma
ter
ialpr
iceva
ria
nce
?

a. $877F
b. $877U
c. $931U
d. $931F

ANSWER: c MEDI
UM

97. Wha
tist
het
ota
lma
ter
ialmi
xva
ria
nce
?

a. $3,
596F
b. $3,
596U
c. $4,
864F
d. $4,
864U

ANSWER: b DI
FFI
CULT
Cha
pte
r10 St
anda
rdCo
sti
ng 10–29

98. Wha
tist
het
ota
lma
ter
ialyi
el
dva
ria
nce
?

a. $1,
111U
b. $1,
111F
c. $2,
670U
d. $2,
670F

ANSWER: a DI
FFI
CULT

99. Wha
tist
hel
aborr
ateva
ria
nce
?

a. $0
b. $1,
083U
c. $2,
583U
d. $1,
083F

ANSWER: a MEDI
UM

100. Wha
tist
hel
abormi
xva
ria
nce
?

a. $1,
083U
b. $2,
588U
c. $1,
083F
d. $2,
588F

ANSWER: c DI
FFI
CULT

101. Wha
tist
hel
aboryi
el
dva
ria
nce
?

a. $2,
583U
b. $2,
583F
c. $1,
138F
d. $1,
138U

ANSWER: a DI
FFI
CULT

102. Thes
umoft
hema
ter
ialmi
xandma
ter
ialyi
el
dva
ria
nce
sequa
ls

a. themat
erialpurchas
epri
cevari
anc
e.
b. themat
erialquanti
tyvar
ianc
e.
c. thet
ota
lma teri
alvari
anc
e.
d. noneoftheabove .

ANSWER: b EASY
10–30 Cha
pte
r10 St
anda
rdCos
ti
ng

103. Thes
umoft
hel
abo
rmi
xandl
aboryi
el
dva
ria
nce
sequa
ls

a. thelaboreff
ici
encyvari
anc
e.
b. thetotall
aborvar
iance
.
c. thelaborrat
evari
ance.
d. nothingbecaus
ethesetwovar
ianc
esc
annotbea
dde
dsi
ncet
heyus
edi
ff
ere
nt
cost
s.

ANSWER: a EASY

SHORTANSWER/
PROBLEMS

1. Li
sta
nddi
scus
sbr
ief
lyt
het
hre
est
anda
rdsofa
tt
ai
nabi
li
ty.

ANSWER: Expe ct
eds
tandar
dsre
fle
ctwhati
sactual
lyexpect
edt
ooccuri
nthefut
ure
peri
od.Thisst
anda
rdt
ake
sintocons
ider
ati
onwast
ea ndine
ffi
ci
enci
esa
ndma kes
al
lowancesfort
hem.

Pra
cti
calst
anda
rdsca
nber e
achedorexce
e dedmos
toft
het
imewithr
eas
ona
blee
ffor
t.
Thi
sstanda
rdall
owsfornor
mal,una
voidableti
mepr
obl
emsorde
lays
.

Ide
alst
anda
rdspr
ovi
defornoine
ffi
ci
enci
esofa
nyt
ype
.Thi
sst
anda
rddoe
snota
ll
owf
or
norma
lopera
ti
ngdel
aysorhumanli
mita
ti
ons
.

MEDI
UM

2. Dis
cussbri
efl
ythet
ypeofi
nfor
mat
ionc
ont
ai
nedon(
a)abi
llofma
ter
ial
sand(
b)a
n
ope
rat
ionsfl
owdocument
.

ANSWER: ( a )Abillofmater
ial
sconta
instheident
if
icat
ionofc ompone nt
s,a
desc
ripti
onofc omp onent
s,andthequant
it
yofe a
chma t
eri
alrequir
edf oraproduct
.(b)
Anope rat
ionsflowdoc umentcont
ainsanide
ntific
ati
onnumbe r,de
s c
ripti
onsofthetas
ks
tobepe r
formed,t hede
partment
sdoingthewor k,andst
andardnumbe rofhoursand/or
minutestoperf
or me ac
hta s
k.

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–31

3. Defi
nethef
oll
owin
gter
ms :st
anda
rdc
osts
yst
em,t
ota
lva
ria
nce
,ma
ter
ialpr
iceva
ria
nce
,
andl
aboref
fi
cie
ncyva
ria
nc e
.

ANSWER: As t
andardcostsys
temr
ecordsbothst
andar
dcost
sandac
tualc
ost
sinthe
ac
count
ingr
ecor
ds.Thisproc
e s
sall
owsforbet
tercos
tcont
rolbe
caus
eact
ualcos
tsca
nbe
ea
sil
ycompar
edtostandar
dcosts.

Atota
lvar
ianc
eist
hedif
fere
nc ebe
twe
enact
ualinputc
ostf
orma
ter
ialorl
abora
ndt
he
s
tandar
dcostf
ormat
eri
alorlaborf
ort
heout
putproduc
ed.

Themat
eri
alpr
icev
ari
anc
eist
hedi
ffe
renc
ebe t
weentheact
ualpr
icepa
idf
ormat
eri
al
andt
hest
andar
dpri
ceoft
hemat
eri
alt
imestheact
ualqua
nti
tyuse
dorpurc
has
ed.

Thela
boref
fi
cie
ncyvar
ianc
ecompar
esthenumberofhour
sact
uall
yworkedwit
hthe
st
anda
rdhour
sall
owedfort
hepr
oduct
ionachi
eve
da ndval
uest
hisdi
ff
erenc
eatt
he
st
anda
rdla
borrat
e.

MEDI
UM

4. Dis
cusshowest
abl
is
hingst
andar
dsbe
nefi
tst
hef
oll
owi
ngma
nage
mentf
unc
ti
ons
:
pe
rfor
ma nc
eeval
uat
ionanddec
isi
onmaki
ng.

ANSWER: Pe rf
orma ncee val
uati
onisenhance
dbyt heuseofs
tandardcostsbe
causeit
al
lowsma na
gementtopi npointdevi
ati
onsfr
oms ta
ndardcost
sandpointsoutvari
ances
.
Theva r
iancesar
eana l
yze dandindivi
dualre
sponsi
bil
it
yc a
nbea s
sessedforthevar
iance
s,
dependi
ngont henatureo ft
hec auses
.

Theavail
abil
it
yofs tandardcosti
nfor
mati
onfacil
it
atesmanydecis
ions.Thesecost
sc a
n
beusedinbudgeting,costest
imate
sforj
obs,anddeter
miningcont
ribut
ionsmadeby
var
iousproductl
ines;and,thus,c
anbeusedtodecidewhethert
oaddne wl i
nesordrop
ol
dl i
nes
.

MEDI
UM

5. Dis
c us
swhyst
anda
rdsma
yne
edt
obec
hange
daf
tert
heyha
vebe
eni
nef
fec
tfors
ome
pe
riodoft
ime
.

ANSWER: St andar
dsma yneedtobechange dfr
omtimetoti
mebe c
auseofchangi
ng
economiccondit
ions,avai
labi
li
tyofmate
ria
ls,quali
tyofmat
eri
als
,andlaborr
ate
sor
skil
lle
vels
.Standardsshouldberevi
ewedperiodic
all
ytoas
suremanagementt
hatcurr
ent
sta
ndardsar
ebe i
nge st
a bl
is
hedandused.

MEDI
UM
10–32 Cha
pte
r10 St
anda
rdCos
ti
ng

6. Di
scus
showva
ria
blea
ndf
ixe
dove
rhe
ada
ppl
ic
ati
onr
ate
sar
eca
lcul
at
ed.

ANSWER: Theva r
iabl
eover
he a
da ppl
icat
ionr a
teiscalc
ulatedbydividingtot
al
budgete
dva r
iabl
eover
he a
dbyitsrel
atedlevelofact
ivi
ty.Anyl evelofacti
vitywit
hin
there
levantrangemaybes el
ect
edsinceVOHc os
tperunitisconstantt
hroughoutt
he
rel
evantrange.Thefi
xedo ve
rhe
a dappli
cati
onr at
eiscalc
ulatedbydi vi
dingtota
l
budgete
df ixedover
headbythespecif
iccapacit
ylevelexpecte
df ortheperi
od.

MEDI
UM

7. Di
scus
showva
ria
nce
sar
edi
spos
edofa
tthee
ndofapr
oduc
ti
onc
ycl
e.

ANSWER: Af t
e rvari
a nc
e sar
ecalculat
eda ndrecorded,journalentri
esmustbe
prepar
eda tt
heendoft hepe ri
odtoproperlydisposeofthoseva ri
ance s
.Unfavorabl
e
varia
nceshavedebitbalancesandfavorablevaria
ncesha vec r
editbalances
.Disposi
ti
on
ofthesevari
anc
esde pendsont hei
rcombi nedlevelofma ter
iali
ty.Ifthevari
ancesare
imma te
ria
l,t
heyarec l
ose dt
oCGS.I ftheyaresignif
icantinamount ,thema t
eri
alpri
ce
varia
nceispror
atedamongt heRM,WI P,FG,a ndCGSa c
count s
.Al lot
hervari
ancesar
e
prorat
edamongWI P,FG,a ndCGS.

MEDI
UM

8. Whya
ref
ixe
dove
rhe
adva
ria
nce
scons
ide
rednonc
ont
rol
la
ble
?

ANSWER: Ma nagementhasli
mite
da bi
li
tytoc ont
rolfi
xedoverheadcost
sinthe
shortr
unbe causethes
ecostsar
eincur
redtoprovidethecapac
it
yt oproduce
.Fixedcos
ts
canbec ont
rolla
bletoali
mi t
edexte
ntatthepointofcommi t
ment;the
refor
e,theFOH
spendi
ngva ri
ancec a
nbec ons
ider
ed,i
npa rt
,control
labl
e.

Ont heotherha nd,thevolumevari

ancear i
sessol
elybe caus ema nageme nthass el
ecteda
specifi
clevelofa ct
ivit
yonwhi c
ht ocalc
ulatetheFOHa ppl ic
ationrate.Ifactualacti
vit
y
diff
ersatallfromt hissel
ect
edbase,avolumeva ri
a ncewil loccur.Produc t
ionl e
velsare
control
labletoave rylimit
edext
entinthepr oduct
iona r
ea .Produc t
ioni smoreof te
n
rel
atedtoa bi
litytos el
landdemand;thus,t
hes el
eve l
sarenotc ont r
ollablebyt he
producti
onma nager.

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–33

9. Pr
ovi
det
hec
orr
ectt
ermf
ore
achoft
hef
oll
owi
ngde
fini
ti
ons
:

a. ac os tthatfluct
uate
swit
hla r
gec hangesi nl e
velofactivit
y
b. ara ngeofa cti
vit
yoverwhichc ostsbeha veaspr e
dicte
d
c. thec a paci
tyl e
velatwhi
chaf ir
mbe li
eve sitwi l
loperateatduri
ngthec oming
produc t
ionc ycl
e
d. thedi fferencebetweena
ctualva r
iableove rheadandbudge tedvari
ableoverhe
ad
base doni nputs
e
. thedi fferencebetweent
otalact
ua loverhe a
da ndtotalappliedover
head
f
. thedi fferencebetweent
otalbudge t
edove r
he a
dba se
doni nput
sanda ppli
ed
ove rhe ad
g. thedi fferencebetweent
otalact
ua loverhe a
da ndtotalbudge t
edoverheadbased
onout put
h. thedi fferencebetweena
ctualfi
xe dove rheada ndbudge te
df i
xedoverhead

ANSWERS:
a. ste
pf i
xedc ost e. tota
loverheadvari
anc
e
b. rel
evantrange f. volumeva ri
ance
c. expect
eda nnualca
pac
it
y g. effi
cie
nc yvari
anc
e
d. vari
ableove r
head h. fixedoverhe
ad
spendi
ngva ria
nce spendingvari
ance

MEDI
UM
10–34 Cha
pte
r10 St
anda
rdCos
ti
ng

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons10a
nd11.

ABCCompa
nyha
sthef
oll
owi
ngi
nfor
mat
iona
vai
la
blef
ort
hec
urr
entye
ar:

St
andard:
Mater
ial 3.
5feetperuni
t@ $2.
60pe
rfoot
La
bor 5dir
ectla
borhour
s@ $8.
50peruni
t

Act
ual:
Mate
ria
l 95,625fee
tused(100,
000fee
tpurcha
sed@ $2.
50perf
oot
)
La
bor 122,400dir
ectl
aborhour
sincur
redperuni
t@ $8.
35pe
rhour
25,500unit
swereproduc
ed

10. Comput
ethema
ter
ialpur
cha
sepr
icea
ndqua
nti
tyva
ria
nce
s.

ANSWER: Ma t
eri
alpr
icevar
iance:
100,
000×$2. 50= $250,
000
100,
000×$2. 60= 260,000
$10,000 F

Mater
ialqua
nti
tyva
ria
nce:
95,
625×$2.60= $248,625
89,
250×$2.60= 232, 050
$16,575 U

MEDI
UM

11. Comput
ethel
aborr
atea
nde
ffi
ci
enc
yva
ria
nce
s.

ANSWER: Laborr
ateva
ria
nce
:
122,
400×$8.35=$1,
022,040
122,
400×$8.50= 1,040,400
$ 18, 360F

Labore
ffi
ci
encyva
ria
nce:
122,
400×$8.50=$1,
040,
400
127,
500×$8.50= 1,
083,
750
$ 43,350 F
Cha
pte
r10 St
anda
rdCo
sti
ng 10–35

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons12–14.

OPCo.a
ppli
esove
rhe
adba
sedondi
rec
tla
borhour
sandha
sthef
oll
owi
nga
vai
la
blef
or
Nove
mber:

Standar
d:
Directl
aborhour
sperunit 5
Va r
iabl
eoverhea
dperDLH $.
75
Fixedoverhe
adperDLH
(basedon8,900DLHs ) $1.
90

Act
ual:
Unit
sproduc
ed 1,
800
Dir
ectl
aborhour
s 8,
900
Var
iabl
eoverhea
d $6,
400
Fi
xedoverhe
ad $17,
500

MEDI
UM

12. Comput
eal
lthea
ppr
opr
iat
eva
ria
nce
sus
ingt
het
wo-
var
ianc
eappr
oac
h.

ANSWER:
Actua
l($6,400+$17,500) $23,
900
BudgetVar
iance: $240U
BFOH( 8,900×$1.90) $16,
910
VOH( 1,800×5×$. 75) 6,
750$23,
660
VolumeVariance: $190F
Appli
edOH:
(
1,800×5×$2. 65) $23,
850

MEDI
UM
10–36 Cha
pte
r10 St
anda
rdCos
ti
ng

13. Comput
eal
lthea
ppr
opr
iat
eva
ria
nce
sus
ingt
het
hre
e-va
ria
ncea
ppr
oac
h.

ANSWER:
Actual $23,
900
SpendingVa riance: $315U
Fle
xibl
eBudge tBasedonAc t
ualInput
BFOH $16,910
VOH( 8,900×$. 75
) 6,
675 $23,585
Effi
cie
nc yVa riance
: $75F
Fle
xibl
eBudge tBasedonSt andar
dDLHs
BFOH $16,910
VOH( 1,800×5×$. 75) 6,
750 $23,660
VolumeVa ri
a nce: $190F
Appli
edOH:
(1,
800×5×$2. 65) $23,
850

MEDI
UM

14. Comput
eal
lthea
ppr
opr
iat
eva
ria
nce
sus
ingt
hef
our
-va
ria
ncea
ppr
oac
h.

ANSWER:
Ac tua
lVOH $6,
400
Va
ria
bleSpendingVa r
iance: $275F
Fl e
x.Bud.BasedonAc tual
InputHours(8,
900×$.75 ) $6,
675
Va
ria
bleEff
icie
nc yVari
a nc
e: $75F
Appl i
edVOH
( 1,
800×5×$. 75) $6,
750

Act
ualFOH $17,
500
FOHSpe
ndi
ngVar
iance: $590U
BUDGETEDFOH $16,
910
FOHVol
umeVar
iance
: $190F
Appl
iedFOH
(1,
800×5×$1.
90) $17,
100

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–37

15. TheHa wa
iiCo.ha
sma dethefol
lowi
nginf
ormati
ona vai
la
bleforit
sproducti
onfaci
li
ty
forJ
une2001.Fi
xedoverhea
dwa ses
ti
ma t
edat19,
000ma chinehoursfort
heproduct
ion
cycl
e.Act
ualmachi
nehoursfort
heperi
odwere18,900,whichgener
a t
ed3,900uni
ts.

Mat
e r
ia lpurchased(80,000piece
s) $314,
000
Mat
e r
ia lquantit
yvariance $6,
400U
Machinehour sused( 18,900hours
)
VOHs pendingva r
iance $50U
Act
ualf ixedove r
head $60,
000
Act
uall aborc os
t $40,
120
Act
uall aborhours 5,
900

Ha
wai
i’
sst
anda
rdc
ost
sar
easf
oll
ows
:

Di
rectmater
ial 20pi
ece
s@ $4pe
rpie
ce
Di
rectl
abor 1.
5hour
s@ $6pe
rhour
Var
iabl
eoverhead
(appl
iedonama c
hinehourba
sis
) 4.
8hour
s@ $2.
50pe
rhour
Fi
xedoverhead
(appl
iedonama c
hinehourba
sis
) 4.
8hour
s@ $3pe
rhour

Dete
rminethef oll
owi ngi tems :
a. ma teri
alpurc hasepr iceva r
iance
b. standardqua ntitya llowe dforma ter
ial
c. totalst
a ndardc ostofma ter
ialall
owed
d. ac t
ualqua nt
ityofma t
e ri
alused
e. laborrateva ria
nc e
f. standardhour sa ll
owe df orlabor
g. totalst
a ndardc ostofl aborallowed
h. laboreff i
cie
nc yva r i
a nc e
i. ac t
ualva ri
ableove rhe adincurred
j. standardma c hinehour sal
lowe d
k. va r
iableove r
he ade ffi
c ie
ncyva ri
ance
l. budge t
e dfixedove rhe ad
m. a ppliedf i
xedove rhe ad
n. fixedove rheads pe ndi ngva r
iance
o. volumeva ri
anc e
p. totalove r
headva r
ia nc e
10–38 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:
a. ac
tualma t
eri
a lc
ost $314,
000
ac
tualpiece
sa tst
anda
rdc
ost(80,
000×$4) 320,
000
mate
rialpurchas
epric
evar
iance $ 6,
000 F
b. 3,
900uni
ts×20pi
ece
spe
runi
t=78,
000s
tanda
rdqua
nti
tya
ll
owe
d
c
. t
ota
lst
anda
rdc
ostofma
ter
ial(
78,
000×$4)$312,
000
d. st
andar
dcos
tofact
ualmat
eri
alused
$312,
000+$6,
400Uquantit
yvari
ance $318,
400
$318,
400$4=79,600a
ctualpi
ecesu
sed
e
. act
uall
aborcos
t $40,
120
5,
900actua
lDLHs×$6 35,
400
la
borra
tevari
ance $4,720 U
f
. 3,
900uni
ts×1.
5st
anda
rdhour
spe
runi
t 5,
850SHA
g. 5,
850SHA×$6 $35,
100
h. a
ctualhours×s t
andardrat
e(fr
ome) $35,
400
s
tandardcostofla
bora l
lowed(f
romg) 35,
100
l
aboreffi
ciencyvari
ance $ 300 U
i
. ac
tua
lma c
hinehours×sta
nda
rdVOHr
ate(
18,
900×$2.
50) $47,
250
VOHs pe
ndingvari
ance 50U
ac
tua
lVOH $47,
300
j
. 3,
900uni
ts×4.
8st
anda
rdhour
spe
runi
t=18,
720MHa
ll
owe
d
k. st
andar
dhour sal
lowed(fr
omj)×standardVOHr
ate
(
18,720×$2.50) $46,
800
ac
tualma c
hinehours×sta
ndar
drate(fr
omi )
(
18,900×$2.50) 47,
250
var
iabl
eove r
headeffi
ci
encyva
ria
nce $ 450 U
l
. 19,
000ma
chi
nehour
s×$3 $57,
000
m. 3,
900uni
ts×4.
8hour
spe
runi
t×$3.
00 $56,
160
n. act
ualfi
xedove
rhea
d $60,
000
budget
edfix
edover
head(f
roml) 57,
000
fi
xedoverhe
adspe
ndingvar
ianc
e $3,000 U
o. budgete
df i
xedoverhe
ad(fr
oml
) $57,
000
appli
edfixedover
head(f
romm) 56,
160
volumeva r
ianc
e $840 U
p. t
otala ct
ualoverhead $107,
300
[$60,000+$ 47,300(fr
omi)]
totalappl
iedov e
rhead(
18,
720SHA×$5.
50) 102,
960
Totaloverheadva r
ianc
e $ 4,340 U

DI
FFI
CULT
Cha
pte
r10 St
anda
rdCo
sti
ng 10–39
10–40 Cha
pte
r10 St
anda
rdCos
ti
ng

THEFOLLOWI
NGPROBLEMSRELATETOMATERI
ALCOVEREDI
NTHEAPPENDI
X
OFTHECHAPTER.

Us
ethef
oll
owi
ngi
nfor
mat
ionf
orque
sti
ons16a
nd17.

Thef
oll
owi
ngi
nfor
mat
ioni
sava
il
abl
eforRa
xcof
ort
hec
urr
entye
ar:

St
andard:
Mater
ialX:3.0poundsperunit@ $4.
20pe
rpound
Mater
ialY:4.5poundsperunit@ $3.
30pe
rpound
Cl
assSl a
bor:3hoursperunit@ $10.
50pe
rhour
Cl
assUSl abor
:7hoursperunit@ $8.
00perhour

Act
ual
:
Mat
eri
alX:3. 6poundsperunit@ $4.00perpound(pur
cha
seda
ndus
ed)
Mat
eri
alY:4. 4poundsperunit@ $3.25perpound(pur
cha
seda
ndus
ed)
Cl
assSlabor:3.8hour
speruni t@ $10.
60perhour
Cl
assUSl a
bor:5.7hoursperunit@ $7.80perhour
Ra
xcoproduc edatot
alof45,750units
.
Cha
pte
r10 St
anda
rdCo
sti
ng 10–41

16. Comput
ethema
ter
ialpr
ice
,mi
x,a
ndyi
el
dva
ria
nce
s(r
oundt
othene
are
stdol
la
r).

ANSWER:
St
anda
rd: X 3.
0/7.
5=40%
Y 4.
5/7.
5=60%

Ac
tua
l:
X 3.
6×45
,750×$4.
00= $ 658,
800
Y 4.
4×45
,750×$3.
25= 654,
225
$1,
313,
025
$43,
005Fpr
ice
Ac
tua
l×St
andar
dPri
ces
:
X 3.
6×45,
750×$4.
20= $ 691,
740
Y 4.
4×45,
750×$3.
30= 664,
290
$1,
356,
030
$16,
470Umi
x

St
anda
rdQt
y.×Actua
lMi x×St
andardPr
ice
s:
X 40%×366,
000*×$4.20= $ 614,880
Y 60%×366,
000×$3.30= 724,
680
$1,339,
560$83,
722Uyi
el
d

St
anda
rdxStandard:
X 40%×3 43,125**×$4.20=$ 576,
450
Y 60%×3 43,125×$3.30= 679,
388
$1,
255,
838

*(45,750×8=366,
000)
**(45,750×7.
5=343,125)

DI
FFI
CULT
10–42 Cha
pte
r10 St
anda
rdCos
ti
ng

17. Comput
ethel
aborr
ate
,mi
x,a
ndyi
el
dva
ria
nce
s(r
oundt
othene
are
stdol
la
r).

ANSWER: St
anda
rd:S 3/10=30% Ac
tua
l:S 3.8/9.
5=40
%
US 7/
10=70% US 5.
7/9.
5=60
%

Ac
tua
l×ActualPr
ice
s:
S 3. 8×4
5,750×$10.60= $1,
842,
810
US 5.7×4
5,750×$7.80= 2,
034,
045
$3,
876,
855
$34,
770Fr
ate
Ac
tua
l×Sta
ndardPr
ice
s:
S 3. 8×4
5,750×$10.50= $1,
825,
425
US 5.7×4
5,750×$8.00= 2,
086,
200
$3,
911,
625
$108,
656Umi
x

St
anda
rdQt
y.×Act
ualMix×St
andar
dPric
es:
S 30%×434,625*×$10.
50=$1,369,
069
US 70%×434,
625×$8.00= 2, 433,
900
$3,
802,
969
$200,
156Fyi
el
d

St
anda
rd×St
andard:
S 30%×457, 500**×$10.
50=$1,441,125
US 70%×457,500×$8.00= 2, 562,000
$4,
003,125

*(45,750×9.5=434,
625)
**(45,750×10=457,500)

DI
FFI
CULT
Cha
pte
r10 St
anda
rdCo
sti
ng 10–43

18. (
Appendix)Sa
ksenaCor
p.pr
oduc
esapr
oduc
tus
ingt
hef
oll
owi
ngs
tanda
rdpr
opor
ti
ons
a
ndcostsofmate
ria
l:

CostPer
Pounds Pound Amount
Ma
ter
ialA 50$5.00$250.00
Ma
ter
ialB 406.00 240. 00
Ma
ter
ialC 603.00 180. 00
1504.4667$670.00
St
anda
rdshr
inka
ge(331/
3%) 50 ______
Netwei
ghta
ndcost 1006.70 $670.00

Ar
ece
ntpr
oduc
ti
onr
unyi
el
ding100out
putp
oundsr
equi
reda
ninputof
:

CostPer
Amount Pound
Ma
ter
ialA 40 $5.15
Ma
ter
ialB 506.00
Ma
ter
ialC 652.80

Re
qui
red:Ma
ter
ialpr
ice
,mi
x,a
ndyi
el
dva
ria
nce
s.
10–44 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:

MATERI
ALPRI
CEVARI
ANCE

MATERI
ALA (
$5.
15–5.
00)×40=$6U
MATERI
ALB (
$6.
00–6.
00)×50= 0
MATERI
ALC (
$2.
80–3.
00)×65= 13 F
$7F

ACTQ ACTQ STDQ

ACTMIX STDMIX STDMIX
STDP STDP STDP

MI
XVARI
ANCE YI
ELDVARI
ANCE

A 40×$5=$200 512/3×$5=$258.
33 50×$5=$250
B 50×$6=$300 411/3×$6=$248.
00 40×$6=$240
C 65×$3=$195 62×$3=$186.
00 60×$3=$180
$695 $692.
33 $670

$2.
67UNF $22.
33UNF

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–45

19. Sampl
eCompa nybeganbusine
ssearl
yinJanuary,2001,usi
ngas t
andar
dc os
ti
ngfori
ts
si
ngl
eproduct
.Wi t
hstandar
dc apa
cit
ysetat10,
000s tanda
rdproduct
ivehour
spermonth,
t
hefol
lowingst
andar
dc osts
heetwassetupforoneunitofproduct
:

Di
rectmater
ial
—5pi eces@ $2.
00 $10.00
Di
rectl
abor(var
iable
)—1s ph@ $3.
00 3.00
Manufa
ctur
ingove r
head:
Fixed—1s ph@ $3.00 $3.
00
Va r
iabl
e—1s ph@ $2.00 2.
005.
00

Fi
xedcost
sar
eincur
rede
venlyt
hroughoutt
heyear.Thefol
lowi
ngunfavor
abl
e
va
ria
ncesf
romsta
ndardc
ostswer
er e
cordeddur
ingthef
ir
stmonthofopera
ti
ons
:

Ma t
eri
alpri
ce $ 0
Ma t
eri
alusage 4,
000
Laborrat
e 800
Laboreff
ici
ency 300
Overheadvolume 6,
000
Overheadbudget(
2va
ria
ncea
nal
ysi
s) 1,
000

Requi r
ed:De terminethefol
lowing:(a)fi
xedove rheadbudgetedforaye ar
;( b
)t he
numbe rofunitscomple t
edduringJanuar
ya ssumingnowor ki nprocessatJanuary31;(
c)
debitsmadetot heWor kinProc es
saccountfordirectmater
ial,di
rectla
bor,and
ma nufact
uir
ngove rhead;(d)numbe rofpiecesofma ter
iali
ssueddur i
ngJanuary;(e)
tot
a lofdi
rectlaborpayrol
lrecordedforJanuary;(f)tot
alofma nufact
uri
ngove rhead
recordedinJanuary.

ANSWER:

a
. $3×10,
000×12=$360,
000

b. $6,
000/
$3=2,
000unde
r10,
000–2,
000=8,
000uni
ts

c
. DM =8,
000×$10=$80,
000,DL=8,
000×$3=$24000,
MOH=8,000×$5=$40,
000

d. STDQ=40,
000 (
X–40,
000)×$2=$4,
000unf
,X=42,
000pi
ece
sis
sue
d

e
. $24,
000+$
800+$300=$25,
100

f
. $40,
000+$
6,000+$1,
000=$47,
000

MEDI
UM
10–46 Cha
pte
r10 St
anda
rdCos
ti
ng

20. Afir
mpr oduc
ingonepr
oducthasabudget
edover
hea
dof$100,
000,ofwhi
ch$20,
000i
s
va
ria
ble
.Thebudge t
eddir
ectl
aboris10,
000hour
s.

Re
qui
red:Fi
lli
nth
ebl
anks
.

a
. Volume
Pr
oduc
ti
on Fl
exi
bleBudge
t Appli
ed Va
ria
nce

120%____________________________________

100% ____________ ____________ ____________

80%____________________________________

60%____________________________________

b. Whati
sthebudge
tva
ria
ncea
tthe80pe
rce
ntl
eve
lift
hea
ctua
love
rhe
adi
ncur
red
i
s$87,
000?

ANSWER:

TOTALCOSTEQUATI
ON=$80,
000FI
X+20,
000 (
$2)va
ria
ble
10,
000 pe
runit

a
. A=$80,
000+(
12,
000×$2)=$104,
000
B=$80,
000+(
10,
000×$2)=$100,
000
C=$80,
000+(8,
000×$2)=$96,000
D=$80,
000+(6,
000×$2)=$92,000

APPLI
CATI
ONRATE=$100,000
10,000 UNI
TS=$10/
uni
t

b. BUDGETVARIANCE=ACTUALFOH–BUDGETEDFOH
$9,
000FAV=$87,
000–$96,
000

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–47

21. Berr
yCo.manuf
act
ure
sapr
oducteff
ecti
veincont
rol
li
ngbe e
tl
es.Thecompanyus
esa
st
andar
dcos
tsys
temandaf
lexi
blebudget
.Sta
ndardcostofagal
loni
sasfol
lows:

Di
rec
tmateri
al:
2quar
tsofA $14
4quar
tsofB 16
Totaldi
rec
tma
ter
ial $30

Dir
ectl
abor
:
2hours 16
Manufa
ctur
ingove
rhe
ad 12
Tot
al $58

Thefl
exi
blebudgets
yst
empr
ovidesf
or$50,
000off
ixedover
hea
da tnormalc
apaci
tyof
10,
000di
rectl
aborhour
s.Va
ria
bleover
headi
sproj
ect
edat$1perdir
ectla
borhour
.

Ac
tua
lre
sul
tsf
ort
hepe
riodi
ndi
cat
edt
hef
oll
owi
ng:

Pr
oduct
ion: 5,
000ga
ll
ons
Di
rectmate
ria
l:
A 12,000qua r
tspurc
hase
datac os
tof$7.
20/
qua
rt;10,
500
quartsused
B 20,000qua r
tspurc
hase
datac os
tof$3.
90/
qua
rt;19,
800
quartsused
Dir
ectl
abor
: 9,800hourswor ke
datacostof$79,
380
Over
head: Fixed $48,
100
Va r
iable 21,
000
Totaloverhead $69,
100

Requi
red:
1. Wha ti
sthea pplic
a t
ionrat
epe rdir
ectl
aborhour
,thetota
lover
hea
dcos
tequa
ti
on,
thest
andardqua nti
tyforeachma ter
ial
,andthes
tandardhour
s?
2. Computethef oll
owi ngvaria
nces:
a . Totalma ter
ialpri
ceva r
iance
b. Totalma ter
ialquanti
tyvari
ance
c . Laborra t
eva ri
ance
d. Labore ff
icie
nc yvari
ance
e . MOHvol umeva ri
ance
f. MOHe ff
icie
nc yvari
ance
g. MOHs pendingvari
ance,bothfi
xedandvari
able
10–48 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:

1. Appr
ate=$6/DLH
TOHC=$50,000+$1/
DLH
St
dO(A)5,000×2=10,000
(
B)5,000×4=20,000
St
dHrs.5,000×2=10,000

2. a
. 1.(
$7.
20–$7.
00)×12,
000=$2,
400U
2.(
$3.
90–$4.
00)×20,
000= 2,
000F
$ 400U

b. 1.(
10,
500–10,
000)×$7.
00= $3,
500U
2.(
19,
800–20,
000)×$4.
00= 800F
$2,
700U

c
. $79,
380–(
9,800×$8)=$980U

d. (
9,800–10,
000)×$8=$1600F

e
. (
10,
000–10,
000)×$5=0

f
. (
9,800–10,
000)×$1=$200F

g. Fi
xSpd $48,100–$50,000=$1,900F
VarSpd $21,
000–(
9,800×$ 1)=$11,
200U

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–49

22. (Appendi
x)Ma cisc oncerneda boutthelar
geunfavora
blelaborquant
ityvar
iancethat
aros
einhi sdepartme ntla
stmont h.Heha shadasma l
lfavorabl
evari
anceforsevera
l
months,andhet hinkshisc r
ewwor kedjus
taseff
ecti
vel
yl astmont
hasi npre
vious
months.Thi sma keshi mbe l
ievet hatsomet
hingmustbewr ongwiththecal
culat
ions,but
headmitshedoe sn’tunde rs
tandt hem.Theva ri
ancewa sreport
edasfoll
ows:

St
andar
dlaborcostofoutp
ut(120,000pounds@ $0.
0645) $7,
740
Act
uall
aborhoursatsta
ndardwa gerat
e (8,
585)
La
borquanti
tyvaria
nce $(845)

Theproduc
tisma d
einbat
che
sthats
tar
twi
th1,
200poundsofma
ter
ial
.Thes
tanda
rd
cal
lsf
orthefol
lowingl
abo
rquant
it
ie
sfore
achbat
ch:

Standar
d Standa
rd St
andar
d
La
borCla
ss WageRa t
e La borHour
s LaborCost
Cl
assA $4.503 $13.50
Cl
assB 4.006 24.00
Cl
assC 3.00 9 27.00
Tot
al 18 $64.50

Thema t
eri
alisofunevenqual
it
y,a
ndthepr
oduc tyi
el
dfromabatchvar
ieswit
hthe
qual
it
yofthema t
eri
alus
ed.Thest
andar
doutputis1,
000pounds
,res
ult
inginast
anda
rd
la
borcostof$0.0645apound.

Ma c
’sworkf
orceisacr
ewof12wor ker
s.Thes ta
nda r
dcre
wconsis
tsoftwoClas
sA
worker
s,f
ourClassBworkers
,andsixClas
sCwor ker
s.Lower
-r
atedemploye
escannot
dotheworkofthehi
gher
-rat
edemployee
s,buttherever
sei
sposs
ibl
ewi t
hsomesli
ght
los
sineff
ici
enc
ya ndares
ult
inginc
reas
einlaborhours.

Thest
anda
rdworkdayi
sni
nehour
s.La
stmo
nthha
d23wor
kingda
ys,f
orat
ota
lof207
st
anda
rdworki
nghour
s.

Las
tmonth,165,
000poundsofmat
eri
alwer
euse
dtopr
oduc
e120,
000poundsofpr
oduc
t.
Theac
tua
la mount
soflaborus
edwereasf
oll
ows
:

La
borCla
ss La
borHours La borRat
e La
borCos
t
Cl
assA 390$4.50 $1,
755
Cl
assB 9804.00 3,
920
Cl
assC 9703.00 2,
910
Tot
al 2,
340 $8,
585

Mac
’sworkf
orc
elastmont
h,ass
igne
dtohimbyt
heper
sonne
lde
par
tment
,cons
ist
edof
t
woClas
sAwor ke
rs,fi
veCla
ssBwor ke
rs,a
ndf
iveCl
assCwor
ker
s.

Re
qui
red:Fi
ndt
hel
abormi
xandyi
el
dva
ria
nce
s.
10–50 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:

STDQ A 120,
000 ×3=360
1,
000

B 120 ×6=720

C 120 ×9=1,
080

ACTHRS ACTHRS STDHRS

ACTMIX STDMIX STDMIX
STDP STD P STDP

MI
XVARI
ANCE YI
ELDVARI
ANCE

A 390×$4.
50= $1,
755 390×$4.50= $1,755 360×$4.50= $1,
620
B 980×$4.
00= $3,
920 780×$4.00= $3,120 720×$4.00= $2,
880
C 970×$3.
00= $2,
910 1,170×$3.
00= $3,
510 1,080×$3.
00=$3,
240
$8,
585 $8,
385 $7,
740

$200UNF $645UNF

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–51

23. (
Appendi
x)Smit
hCorp.opera
tesafact
ory.Oneofi t
sde pa
rtment
shast
hre
eki
ndsof
e
mployee
sonit
sdir
ectla
borpayrol
l,cl
a s
sif
iedaspaygradesA,B,andC.The
e
mployee
sworkin10-
personcrewsinthefol
lowingproport
ions
:

No.of Standa
rd St
andar
d
Wor ker
sin Hourl
y Costpe
r
Pa
yGrade St
andardCrew WageRate Cre
wHour
A 6$4 $24
B 36 18
C 18 8
Tot
al 10 $50

Thewor
kc r
ewscan’
tworkshort
-handed.Tokeepaunitoperati
ngwhenoneofthe
re
gul
arcr
ewme mbersi
sabsent
,theheadofth
ede pa
rtmentfi
rstt
rie
stor
eass
ignoneof
t
hedepa
rtment
’sot
herworke
rsfromindir
ectl
aboropera
tions
.

Ifnooneinthedepart
mentisa
bletost
epi n,pl
antma nagementwillpul
lmai
nte
nanc
e
depar
tmentworke
r sof
fthei
rre
gularwork,ifposs
ible
,a ndas
signthemtempor
ari
lyt
othe
depar
tment.Thes
ema i
nte
nanc
ewor ke
rsar eal
lclas
sifi
edasGr a
deDe mpl
oyee
s,wi
tha
sta
ndardwagerat
eof$10a nhour.

Thef
oll
owi
ngda
tar
ela
tet
otheope
rat
ionsoft
hede
par
tme
ntdur
ingt
hemont
hofMa
y:

1. Ac
tua
lwor
kti
me,1,
000c
rewhour
s.

2. Ac
tua
ldir
ectl
aborhour
s:
Gr
adeA,5,400hour
s.
Gr
adeB,3,200hour
s.
Gr
adeC,1,300hour
s.
Gr
adeD, 100hours.

3. St
anda
rdc
rewhour
sfora
ctua
lout
put
,980.

Re
qui
red:Comput
ela
borr
ate
,mi
x,a
ndyi
el
dva
ria
nce
s.
10–52 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:

ACTHRS ACTHRS STDHRS

ACTMIX STDMI
X STDMIX
STDRATE STDRATE STDRATE

MI
XVARI
ANCE YI
ELDVARI
ANCE

A 5,
400×$4= $21,
6006,000×$4= $24,
0005,
880×$4= $23,
520
B 3,
200×$6= 19,2003,000×$6= 18,
0002,
940×$6= 17,
640
C 1,
300×$8= 10,4001,000×$8= 8,
000 980×$8= 7,
840
D 100×$10= 1, 000 $50,
000 $49,
000
$52,
200

MIXVARIANCE =$2 ,200UNF

YIELDVARIANCE =$1
,000UNF
RATEVARIANCE =$ 800UNF ($53,
000–$52,
200)

MEDI
UM
Cha
pte
r10 St
anda
rdCo
sti
ng 10–53

24. (Appe ndix)TheFredCompa nyma nufac

ture
sac ertai
nproductbymi xi
ngthreekindsof
ma ter
ialsinlar
gebatches.Thebl endmast
erha st
her es
ponsibil
it
yformaintai
ningthe
qua l
it
yoft heproduct,andthisoft
enrequir
esalte
ringtheproport
ionsofthevari
ous
ingredients
.Standardcostsareusedtoprovidema te
ria
lcontroli
nformat
ion.The
standardma te
ria
linputsperba t
cha r
e:

Qua nt
it
y Pr i
ce St
anda
rdCos t
(
pounds
) (
perpound) ofMate
ria
l
Ma
teri
alA 420$0.06 $25. 20
Ma
teri
alB 700.12 8.
40
Ma
teri
alC 100.25 2.
50
Tota
lbat
ch 500 $36.
10

Thef
ini
shedproducti
spa
cke
din50-
poundbo
xes
;thes
tanda
rdma
ter
ialc
ostofe
achbox
i
s,t
here
for
e,$3.61.

Dur
ingJ
anua
ry,t
hef
oll
owi
ngma
ter
ial
swe
reputi
npr
oce
ss:

Ma
teri
alA 181,
000 l
bs.
Ma
teri
alB 33,
000
Ma
teri
alC 6,
000
Tota
l 220,
000 l
bs.

Invent
orie
sinproce
s st
ota
led5,000poundsatt
hebeginni
ngofthemonthand8,
000
poundsattheendofthemonth.Itisass
ume dt
hatt
heseinvent
ori
escons
ist
edo
f
ma t
eri
alsint
heirs
tandar
dproporti
ons.Fini
she
doutputduri
ngJanua
ryamount
edto
4,100boxes.

Requi
red:Comput
ethetot
almat
eri
alqua
nti
tyva
ria
ncef
ort
hemont
handbr
eaki
tdown
i
ntomixandyie
ldcomponent
s.
10–54 Cha
pte
r10 St
anda
rdCos
ti
ng

ANSWER:

MATERI
ALQUANTI
TYVARI
ANCE

A (
181,000–172,200)×$0.06=$ 528 UNF
B (
33, 000–28,
700)×$0.12=516 UNF
C (6,000–4,
100)×$0.25= 475 UNF
$1,519

ACTQ ACTQ STDQ

ACTMix STDMIX STDMIX
STDP STDP STDP

A 181,
000×$0.06=$10,860 184, 800×$0.
06=$11, 076 172,200×$0.
06=
$10,332
B 33,
000×$0.12=3,960 30,
800×$0.
12=3,696 28,
700×$0.
12=
3,444
C 6,
000×$0.25= 1,
500 4,400×$0.
25= 1, 100 4,
100×$0.
25=
1,025
$16,320 $15, 872 $14,801

MIXVARI
ANCE=$ 436UNF
YI
ELDVARIANCE=$1,083UNF
Total$1,
519UNF

MEDI
UM