A direct material quantity standard generally includes an allowance for waste.

Level: Easy LO: 1 Ans: T

2. Practical standards allow for normal machine downtime and employee rest periods.
Level: Easy LO: 1 Ans: T

3. Ideal standards can be used in forecasting and planning whereas practical standards cannot be used for
such purposes.
Level: Easy LO: 1 Ans: F

4. Most companies compute the materials price variance when materials are placed into production.
Level: Easy LO: 2 Ans: F

5. A materials price variance is favorable if the actual price exceeds the standard price.
Level: Easy LO: 2 Ans: F

6. An unfavorable materials quantity variance occurs when the actual quantity used in production is less
than the standard quantity allowed for the actual output of the period.
Level: Easy LO: 2 Ans: F

7. An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to
work on products whose standards assume workers with low hourly wage rates.
Level: Easy LO: 3 Ans: T

8. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a

favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same
period.
Level: Medium LO: 4 Ans: T

9. (Appendix) A favorable materials quantity variance would appear as a debit in a journal entry.
Level: Medium LO: 7 Ans: F