CH 8 and 9

Ch8And9
Student: ___________________________________________________________________________
1. Waste on the production line will result in a materials price variance.

True False
2. (Appendix) If standard costs exceed actual costs, a credit entry would be made in the appropriate
variance account to record the variance.
True False
3. To measure controllable production inefficiencies, which of the following is the best basis for a
company to use in establishing the standard hours allowed for the output of one unit of product?
A. Average historical performance for the last several years.
B. Engineering estimates based on ideal performance.
C. Engineering estimates based on attainable performance.
D. The hours per unit that would be required for the present workforce to satisfy expected demand over
the long run.
4. Poorly trained workers could have an unfavorable effect on which of the following variances?
A.
B.
C.
D.
5. (Appendix) Richter Corp. recorded the following entry in its general ledger:
The above journal entry indicates that:

A. the materials quantity variance for the period was favorable.
B. less materials were used in production during the period than was called for at standard.
C. the materials quantity variance for the period was unfavorable.
D. the actual price paid for the materials used in production was greater than the standard price allowed.
6. (Appendix) When the actual wage rate paid to direct labor workers exceeds the standard wage rate, the
journal entry would include:
A. Debit to Wages Payable; Credit to Labor Rate Variance
B. Debit to Work-In-Process; Credit to Labor Rate Variance
C. Debit to Wages Payable; Debit to Labor Rate Variance
D. Debit to Work-In-Process; Debit to Labor Rate Variance
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7. During a recent lengthy strike at Morell Manufacturing Company, management replaced striking
assembly line workers with office workers. The assembly line workers were being paid $18 per hour
while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances
in the first month of this strike?
A.
B.
C.
D.
8. The budget for May called for production of 9,000 units. Actual output for the month was 8,500 units
with total direct materials cost of $127,500 and total direct labor cost of $77,775. The direct labor
standards call for 45 minutes of direct labor per unit at a cost of $12 per direct labor-hour. The direct
materials standards call for one pound of direct materials per unit at a cost of $15 per pound. The actual
direct labor-hours were 6,375. Variance analysis of the performance for the month of May would
indicate:
A. $7,500 favorable materials quantity variance.
B. $1,275 favorable direct labor efficiency variance.
C. $1,275 unfavorable direct labor efficiency variance.
D. $1,275 unfavorable direct labor rate variance.
9. Matt Company uses a standard cost system. Information for raw materials for Product RBI for the month
of October follows:
What is the materials purchase price variance?

A. $90 favorable
B. $90 unfavorable
C. $100 favorable
D. $100 unfavorable
10. Buckler Company manufactures desks with vinyl tops. The standard material cost for the vinyl used per
Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production
run of 1,000 desks in March resulted in usage of 12,600 square feet of vinyl at a cost of $2.00 per square
foot, a total cost of $25,200. The materials quantity variance resulting from the above production run
was:
A. $1,200 unfavorable
B. $1,350 unfavorable
C. $1,800 favorable
D. $3,150 favorable
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11. Magno Cereal Corporation uses a standard cost system to collect costs related to the production of its
"crunchy pickle" cereal. The pickle (materials) standards for each batch of cereal produced are 1.4
pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased
78,000 pounds of pounds at a total cost of $253,500. Magno used all of these pickles to produce 60,000
batches of cereal. What is Magno's materials quantity variance for the month of August?
B. $18,000 favorable
C. $19,500 unfavorable
D. $54,000 unfavorable
12. The standard cost card for one unit of a finished product shows the following:
If the total standard variable cost for one unit of finished product is $78, then the standard price per foot
for direct materials is:
A. $2
B. $3
C. $4
D. $5
13. Zanny Electronics Company uses a standard cost system to collect costs related to the production of its
water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per
hour is $7.20.
During the month of August, Zanny's water ski radio production used 6,600 direct labor-hours at a total
direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is
Zanny's labor rate variance for the month of August?
A. $972 favorable
C. $2,160 favorable
14. Elliott Company makes and sells a single product. Last period the company's labor rate variance was
$14,400 U. During the period, the company worked 36,000 actual direct labor-hours at an actual cost of
$338,400. The standard labor rate for the product in dollars per hour is:
A. $9.40
B. $9.00
C. $8.50
D. $8.10
3
15. Tub Co. uses a standard cost system. The following information pertains to direct labor for product B for
the month of October:
What were the actual hours worked during October?

A. 1,800
B. 1,810
C. 2,190
D. 2,200
16. Warp Manufacturing Corporation uses a standard cost system to collect costs related to the production of
its ski lift chairs. Warp uses machine hours as an overhead base. The variable overhead standards for
each chair are 1.2 machine hours at a standard cost of $18 per hour.
During the month of September, Warp incurred 34,000 machine hours in the production of 32,000 ski
lift chairs. The total variable overhead cost was $649,400. What is Warp's variable overhead spending
variance for the month of September?
C. $79,200 favorable
D. $84,040 favorable
Lange Company manufactures abstract-shaped sculptures made out of liquid jade. Each sculpture
requires two (2) gallons of liquid jade. Because of the instability of the liquid jade at times, some
sculptures crack or shatter during the production process. The jade used in the broken sculptures cannot
be reused and is discarded. On the average, one sculpture is expected to be lost for every nine sculptures
produced. In other words, eight good sculptures are generated from every nine production attempts.
17. Under traditional standard costing, what amount should Lange use for the standard quantity of liquid
jade per sculpture?
A. 2.000 gallons
B. 2.125 gallons
C. 2.222 gallons
D. 2.250 gallons
18. Under a total quality management (TQM) approach to standard costing, what amount should Lange use
for the standard quantity of liquid jade per sculpture?
A. 2.000 gallons
B. 2.125 gallons
C. 2.222 gallons
D. 2.250 gallons
4
Ravena Labs., Inc. makes a single product which has the following standards:
Variable manufacturing overhead is applied on the basis of direct labor hours. The following data are
available for October:
• 3,750 units of compound were produced during the month.
• There was no beginning direct materials inventory.
• The ending direct materials inventory was 2,000 ounces.
• Direct materials purchased: 12,000 ounces for $225,000.
• Direct labor hours worked: 5,600 hours at a cost of $67,200.
• Variable manufacturing overhead costs incurred amounted to $18,200.
• Variable manufacturing overhead applied to products: $18,375.
19. The direct materials price variance for October is:
20. The direct materials quantity variance for October is:
21. The direct labor efficiency variance for October is:
A. $1,400 favorable
C. $3,750 favorable
Grub Chemical Company has developed cost standards for the production of its new cologne, ChocO.
The variable cost standards below relate to each 10 gallon batch of ChocO:
Variable manufacturing overhead at Grub is applied based on direct labor hours. The actual results for
last month were as follows:
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22. What is ChocO's materials (milk chocolate) price variance?
A. $56 favorable
B. $450 favorable
C. $502 unfavorable
D. $740 unfavorable
23. What is ChocO's materials (milk chocolate) quantity variance?
A. $238 unfavorable
B. $476 unfavorable
C. $952 favorable
24. What is ChocO's labor rate variance?
A. $902 favorable
B. $2,880 favorable
C. $3,782 favorable
25. What is ChocO's variable overhead efficiency variance?
(Appendix) Widman, Inc. makes and sells only one product and uses standard costing. The standard cost
sheet for one unit of product includes the following:
• Direct materials: 5 grams at $0.35 per gram
• Direct labor: 1 hour at $8 per hour
Last period the company had the following results:
• 5,000 grams of direct materials purchased at $0.40 per gram
• 4,000 grams of direct materials used in production
• 900 units of product were made
• 850 hours of direct labor were used at $8.50 per hour
26. The journal entry to record the purchase of direct materials last period would include:
A. Raw materials $2,000, Debit; material price variance $250, Credit
B. Raw materials $1,750, Debit; material price variance $250, Credit
C. Raw materials $2,000, Debit; material price variance $250, Debit
D. Raw materials $1,750, Debit; material price variance $250, Debit
27. The journal entry to record the use of direct materials in production last period would include:
A. Work in process $1,400, Debit; material quantity variance $175, Debit
B. Work in process $1,575, Debit; material quantity variance $175, Credit
C. Work in process $1,400, Debit; material quantity variance $175, Credit
D. Work in process $1,575, Debit; material quantity variance $175, Debit
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28. The journal entry to record the incurrence of direct labor cost last period would include:
A. Work in process $7,200, Debit; labor efficiency variance $400, Credit
B. Work in process $7,200, Debit; labor efficiency variance $400, Debit
C. Work in process $6,800, Debit; labor rate variance $425, Debit
D. Work in process $6,800, Debit; labor rate variance $425, Credit
(Appendix) The Johnson Company makes a single product called a Pef. The company uses a standard
cost system and has established the following standards for one Pef:
There was no direct materials inventory on June 1. Variable manufacturing overhead is assigned on the
basis of direct labor hours. The following events occurred in June:
• Purchased 5,000 gallons of direct materials at a cost of $13,000
• Used 4,700 gallons of direct materials to produce 1,200 Pefs
• Used 670 hours of direct labor at a cost of $6,365
• Incurred $2,510 in variable manufacturing overhead cost
29. The journal entry to record the material quantity variance for June would include:
A. Material quantity variance $500, debit
B. Material quantity variance $250, credit
C. Material quantity variance $250, debit
D. Material quantity variance $185, credit
30. The journal entry to record the labor efficiency variance for June would include:
A. Labor efficiency variance $700, credit
B. Labor efficiency variance $700, debit
C. Labor efficiency variance $430, debit
D. Labor efficiency variance $980, credit
31. The amount debited to Work in Process to record the use of direct materials in production in June is:
A. $13,000
B. $11,750
C. $12,000
D. $13,520
32. The amount credited to Direct Materials Inventory to record the use of direct materials in June is:
A. $12,500
B. $11,750
C. $12,000
D. $10,750
7
Dudley, Inc. makes a single product which has the following standards:
• Direct materials: 2 kilograms at $4.30 per kilogram
• Direct labor: 3 hours at $6 per hour
• Variable manufacturing overhead: $19.50 per unit of output
At the beginning of June there were no inventories. The following data pertain to June's operations:
• Direct labor was $820,500 for 147,000 hours worked.
• Direct material purchases were 110,000 kilograms for $485,000.
• Variable manufacturing overhead incurred was $986,000.
• 92,000 kilograms of direct materials were used.
• The company sold 42,000 units at $130 each.
• Variable manufacturing overhead is applied based on direct labor hours.
• 46,000 units were produced during the year.
33. The material quantity variance is:
A. $77,400 U
B. $0
C. $14,800 F
D. $14,800 U
34. The labor rate variance is:
A. $61,500 U
B. $54,000 U
C. $54,000 F
D. $61,500 F
(Appendix) Schaper Corporation has provided the following data concerning its most important raw
material, compound D30X:
The raw material was purchased on account.

35. The debits to the Raw Materials account for December would total:
A. $117,120
B. $154,070
C. $116,144
D. $151,280
36. The credits to the Raw Materials account for December would total:
A. $116,144
B. $151,280
C. $117,120
D. $154,070
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37. The Materials Price Variance for December would be recorded as a:
A. Credit of $2,142
B. Credit of $2,790
C. Debit of $2,142
D. Debit of $2,790
38. The Materials Quantity Variance for December would be recorded as a:
A. Credit of $976
B. Credit of $35,136
C. Debit of $35,136
D. Debit of $976
(Appendix) Compound Q83C is a raw material used to make Mctier Corporation's major product. The
standard cost of compound Q83C is $23.70 per ounce and the standard quantity is 7.2 ounces per unit of
output. Data concerning the compound for January appear below:
The raw material was purchased on account.

39. The debits to the Raw Materials account for January would total:
A. $33,180
B. $17,064
C. $14,694
D. $32,340
40. The credits to the Raw Materials account for January would total:
A. $33,180
B. $14,694
C. $32,340
D. $17,064
41. The Materials Price Variance for January would be recorded as a:
A. Credit of $372
B. Credit of $840
C. Debit of $840
D. Debit of $372
42. The Materials Quantity Variance for January would be recorded as a:
A. Debit of $18,486
C. Debit of $2,370
D. Credit of $2,370
9
(Appendix) Milnes Corporation has provided the following data concerning its direct labor costs for
November:
43. The journal entry to record the incurrence of direct labor costs in November would include the following
for Work in Process:
A. Debit of $281,400
C. Credit of $281,400
D. Debit of $281,680
44. The Labor Rate Variance for November would be recorded as a:
A. Debit of $12,072
B. Debit of $12,600
D. Credit of $12,600
45. The Labor Efficiency Variance for November would be recorded as a:
A. Debit of $12,320
B. Debit of $11,792
D. Credit of $12,320
(Appendix) Santiesteban Corporation's standard wage rate is $13.00 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 7.9 DLHs. In March, 8,600 units were produced,
the actual wage rate was $12.30 per DLH, and the actual hours were 65,600 DLHs.
46. In the journal entry to record the incurrence of direct labor costs in March, the Work in Process entry
would consist of a:
A. credit of $806,880.
B. debit of $806,880.
C. debit of $883,220.
D. credit of $883,220.
47. The Labor Rate Variance for March would be recorded as a:
A. debit of $47,558.
B. debit of $45,920.
C. credit of $47,558.
48. The Labor Efficiency Variance for March would be recorded as a:
A. debit of $28,782.
B. debit of $30,420.
C. credit of $30,420.
10
Bulkboy Fitness Equipment, Inc. was recently created to produce and sell its "Biception" arm machine.
Bulkboy decided to use a standard cost system to record costs related to the production of this product.
The material standard for each machine produced is 1.1 pounds of a special aluminum tubing at a
standard cost of $12 per pound.
During the first month of operations, Bulkboy purchased 25,000 pounds of this aluminum tubing at $11
per pound. Bulkboy used 22,000 pounds to produce 20,250 Biception machines.
49. What is the balance in Bulkboy's materials inventory account at the end of the first month of
operations?
A. $11,000
B. $32,700
C. $33,000
D. $36,000
50. How much material cost should Bulkboy have assigned to work in process during the first month of
operations?
A. $243,000
B. $245,025
C. $264,000
D. $267,300
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51. Lido Company's standard and actual costs per unit for the most recent period, during which 500 units
were actually produced, are given below:
All of the material purchased during the period was used in production during the period.
Required:
From the foregoing information, compute the following variances. Indicate whether the variance is
favorable (F) or unfavorable (U):
a. Material price variance.
b. Material quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
d. Variable overhead spending variance.
f. Variable overhead efficiency variance.
12
52. Bronfenbrenner Co. uses a standard cost system for its single product in which variable overhead is
applied on the basis of direct labor hours. The following information is given:
Required:
Compute the following variances for raw materials, direct labor, and variable overhead, assuming that
the price variance for materials is recognized at point of purchase:
a. Direct materials price variance.
b. Direct materials quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
e. Variable overhead spending variance.
f. Variable overhead efficiency variance.
13
53. (Appendix) Allen Company produces and sells a single product. Standards for materials and labor
follow:
• Direct materials: 4.8 ounces @ $3.50 per ounce = $16.80
• Direct labor: 1.4 hours @ $10 per hour = $14.00
The company recognizes the materials price variance at the time materials are purchased. Data relating
to production for the last month follow:
Required:
Prepare journal entries to record:
a. The purchase of materials.
b. The usage of materials in production.
c. The incurrence of direct labor cost.
14
54. Zee Corporation has developed the following cost standards for the production of its leather backpacks:
Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month
were as follows:
Required:
Compute the following variances for Zee. Show and label your computations.
a. Materials price variance.
b. Materials quantity variance.
c. Labor efficiency variance.
d. Variable overhead spending variance.
15
55. (Appendix) The following standards have been established for a raw material used in the production of
product D43:
The following data pertain to a recent month's operations:
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw
materials are purchased on account.)
56. (Appendix) The standards for product T89 call for 7.2 meters of a raw material that costs $11.70 per
meter. Last month, 8,700 meters of the raw material were purchased for $98,745. The actual output of
the month was 1,200 units of product T89. A total of 8,100 meters of the raw material were used to
produce this output.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Prepare journal entries to record the purchase and use of the raw material during the month. (All raw
materials are purchased on account.)
16
57. Sizzle Company uses a standard cost system to collect costs related to the production of its "No-Stick"
lawn chairs. The direct material for the chairs is teflon. Sizzle uses a standard direct material cost of
$40.00 per chair (0.8 pounds of teflon at $50.00 per pound). During April, Sizzle purchased 2,100
pounds of teflon for $106,575. Sizzle used 1,750 pounds of this teflon in April to produce 1,800 lawn
chairs.
Required:
Calculate Sizzle's materials price and materials quantity variances for April. Then prepare the journal
entries to record these variances.
58. (Appendix) The following direct labor standards have been established for product M80A:
The following data pertain to the most recent month's operations during which 2,000 units of product
M80A were made:
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?
c. Prepare a journal entry to record direct labor costs during the month, including the direct labor
variances.
17
59. (Appendix) The standards for product H81C specify 6.5 direct labor-hours per unit at $12.90 per direct
labor-hour. Last month 1,240 units of product H81C were produced using 8,200 direct labor-hours at a
total direct labor wage cost of $100,040.
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?
c. Prepare a journal entry to record direct labor costs during the month, including the direct labor
variances.
60. In a flexible budget, when the activity declines, the variable costs per unit also declines.
True False
61. Fixed costs should not be included in a flexible budget because they do not change when the level of
activity changes.
True False
62. To assess how well a production manager has controlled costs, actual costs should be compared to what
the costs should have been for the planned level of production.
True False
63. The variable overhead efficiency variance provides a measure of how efficiently the activity base which
underlies the flexible budget is being utilized in production.
True False
64. A company has a standard cost system in which fixed and variable manufacturing overhead costs are
applied to products on the basis of direct labor-hours. The company's choice of the denominator level of
activity affects the fixed overhead volume variance.
True False
65. When fixed manufacturing overhead cost is applied to work in process, it is treated as if it were a
variable cost.
True False
66. A company has a standard cost system in which fixed and variable manufacturing overhead costs are
applied to products on the basis of direct labor-hours. The company's choice of the denominator level of
activity has no effect on the variable portion of the predetermined overhead rate.
True False
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67. There can be a volume variance for either variable manufacturing overhead or fixed manufacturing
overhead.
True False
68. If the denominator level of activity is less than the standard hours allowed for the output of the period,
then the volume variance is unfavorable, indicating an overutilization of available facilities.
True False
69. The fixed manufacturing overhead budget variance equals:
A. Actual fixed manufacturing overhead cost - Applied fixed manufacturing overhead cost.
B. Actual fixed manufacturing overhead cost - Budgeted fixed manufacturing overhead cost.
C. Budgeted fixed manufacturing overhead cost - Applied fixed manufacturing overhead cost.
D. Actual fixed manufacturing overhead cost - (Actual hours Standard fixed overhead rate).
70. Which of the following variances is least significant from a standpoint of cost control?
A. materials price variance.
B. labor efficiency variance.
C. fixed overhead volume variance.
D. variable overhead spending variance.
71. The manufacturing overhead variance that is a measure of capacity utilization is:
A. the overhead spending variance.
B. the overhead efficiency variance.
C. the overhead budget variance.
D. the overhead volume variance.
72. If the denominator activity is less than the standard hours allowed for the actual output, one would
expect that:
A. the variable overhead efficiency variance would be unfavorable.
B. the fixed overhead volume variance would be favorable.
C. the fixed overhead budget variance would be unfavorable.
D. the variable overhead efficiency variance would be favorable.
73. The volume variance is nonzero whenever:
A. standard hours allowed for the output of a period differ from the denominator level of activity.
B. actual hours differ from the denominator level of activity.
C. standard hours allowed for the output of a period differ from the actual hours during the period.
D. actual fixed overhead costs incurred during a period differ from budgeted fixed overhead costs as
contained in the flexible budget.
74. Riggs Enterprise's flexible budget cost formula for indirect materials, a variable cost, is $0.45 per unit of
output. If the company's performance report for last month shows a $90 favorable variance for indirect
materials and if 8,700 units of output were produced last month, then the actual costs incurred for
indirect materials for the month must have been:
A. $4,005
B. $3,915
C. $3,825
D. $3,735
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75. Chmielewski Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted
level of activity was 1,560 patient-visits and the actual level of activity was 1,530 patient-visits. The
clinic's director budgets for variable overhead costs of $1.10 per patient-visit and fixed overhead costs of
$19,900 per month. The actual variable overhead cost last month was $1,400 and the actual fixed
overhead cost was $21,720. In the clinic's flexible budget performance report for last month, what would
have been the variance for the total overhead cost?
A. $33 F
B. $1,504 U
C. $1,537 U
D. $283 F
76. Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on
the basis of standard machine-hours (MHs). The company has provided the following data for the most
recent month:
What was the variable overhead spending variance for the month?
A. $2,000 favorable
B. $720 favorable
D. $1,980 favorable
77. Teall Corporation has a standard cost system in which it applies manufacturing overhead to products on
the basis of standard machine-hours (MHs). The company has provided the following data for the most
recent month:
What was the fixed overhead budget variance for the month?
B. $4,000 favorable
C. $570 favorable
D. $570 unfavorable
20
78. Alapai Corporation has a standard cost system in which it applies manufacturing overhead to products
on the basis of standard machine-hours (MHs). The company has provided the following data for the
most recent month:
What was the total of the variable overhead spending and fixed overhead budget variances for the
month?
A. $3,720 favorable
C. $1,840 favorable
79. Goolden Electronics Corporation has a standard cost system in which it applies manufacturing overhead
to products on the basis of standard machine-hours (MHs). The company had budgeted its fixed
manufacturing overhead cost at $58,000 for the month and its level of activity at 2,500 MHs. The actual
total fixed manufacturing overhead was $61,200 for the month and the actual level of activity was 2,600
MHs. What was the fixed overhead budget variance for the month to the nearest dollar?
A. $880 unfavorable
B. $880 favorable
C. $3,200 favorable
80. Mongar Corporation applies manufacturing overhead to products on the basis of standard
machine-hours. Budgeted and actual overhead costs for the most recent month appear below:
The original budget was based on 4,200 machine-hours. The company actually worked 4,350
machine-hours during the month and the standard hours allowed for the actual output were 4,190
machine-hours. What was the overall variable overhead efficiency variance for the month?
A. $130 unfavorable
B. $950 favorable
C. $1,310 favorable
81. The Marlow Company uses a standard cost system and applies manufacturing overhead to products on
the basis of standard direct labor-hours. The denominator activity is set at 40,000 direct labor-hours per
year. Budgeted fixed manufacturing overhead cost is $40,000 per year, and 0.5 direct labor-hours are
required to manufacture one unit. The standard cost card would indicate fixed manufacturing overhead
cost per unit to be:
A. $1.00
B. $2.00
C. $1.50
D. $0.50
21
82. Mclellan Corporation applies manufacturing overhead to products on the basis of standard
machine-hours. Budgeted and actual overhead costs for the month appear below:
The company based its original budget on 6,100 machine-hours. The company actually worked 6,480
machine-hours during the month. The standard hours allowed for the actual output of the month totaled
6,370 machine-hours. What was the overall fixed overhead budget variance for the month?
A. $500 favorable
B. $500 unfavorable
C. $1,570 favorable
83. Songster Corporation applies manufacturing overhead to products on the basis of standard
machine-hours. Budgeted and actual overhead costs for the most recent month appear below:
3,820 machine-hours. What was the overall fixed overhead budget variance for the month?
A. $2,432 favorable
C. $420 favorable
D. $420 unfavorable
84. Hoag Corporation applies manufacturing overhead to products on the basis of standard machine-hours.
Budgeted and actual fixed overhead costs for the most recent month appear below:
2,080 machine-hours. What was the overall fixed overhead volume variance for the month?
A. $4,352 favorable
D. $7,072 favorable
22
A manufacturing company has a standard costing system based on standard direct labor-hours (DLHs) as
the measure of activity. Data from the company's flexible budget for manufacturing overhead are given
below:
The following data pertain to operations for the most recent period:
85. What is the predetermined overhead rate to the nearest cent?

A. $14.03
B. $16.83
C. $15.04
D. $18.05
86. How much overhead was applied to products during the period to the nearest dollar?
A. $18,050
B. $16,830
C. $15,974
D. $21,660
87. What was the variable overhead spending variance for the period to the nearest dollar?
A. $180 U
B. $180 F
C. $580 U
D. $580 F
88. What was the variable overhead efficiency variance for the period to the nearest dollar?
A. $133 U
B. $580 U
C. $1,150 U
D. $1,197 U
89. What was the fixed overhead budget variance for the period to the nearest dollar?
A. $1,800 F
B. $3,268 F
C. $161 U
D. $4,650 U
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90. What was the fixed overhead volume variance for the period to the nearest dollar?
A. $4,489 U
B. $1,618 U
C. $2,850 F
D. $1,639 U
Azzurra Company manufactures computer chips used in aircraft and automobiles. Manufacturing
overhead at Azzurra is applied to production on the basis of standard machine-hours.
91. Which overhead variance(s) at Azzurra would be affected in a favorable manner if more computer chips
are produced during the year than originally budgeted?
A. variable overhead spending variance
B. variable overhead efficiency variance
C. fixed overhead budget variance
D. fixed overhead volume variance
E. none of these would be affected favorably
92. Which overhead variance(s) at Azzurra would be affected in an unfavorable manner if some indirect
materials were "inadvertently" taken home by a few of the indirect laborers?
E. none of these would be affected unfavorably
93. Which overhead variance(s) at Azzurra would be affected in an unfavorable manner if fire and theft
insurance rates increase by 25% unexpectedly during the period?
E. both C and D above
Single Company has a standard cost system in which manufacturing overhead is applied to units of
product on the basis of standard direct labor-hours. The company has provided the following data
concerning its manufacturing overhead costs for last year:
94. Given these data, the variable overhead spending variance for the year would be:
A. $1,000 U
B. $6,000 U
C. $1,000 F
D. $16,000 U
24
A manufacturing company that has only one product has established the following standards for its
variable manufacturing overhead. The company uses machine-hours as its measure of activity.
The following data pertain to operations for the last month:
95. What is the variable overhead spending variance for the month?
A. $9,855 U
B. $1,125 F
C. $1,125 U
D. $9,855 F
96. What is the variable overhead efficiency variance for the month?
A. $8,842 U
B. $1,013 F
C. $8,843 F
D. $8,730 U
Crispy Company manufactures smoke detectors and has developed the following flexible budget for its
overhead costs. Manufacturing overhead at Crispy is applied to production on the basis of standard
direct labor-hours:
Crispy was expecting to produce 40,000 detectors last year. The actual results for the year were as
follows:
97. What was Crispy's variable overhead spending variance?

A. $3,132 favorable
25
Bagley Company has a standard cost system in which manufacturing overhead is applied to units of
product on the basis of standard machine-hours. The company has provided the following data
98. The volume variance for the year was:

A. $12,000 F
B. $4,000 F
C. $4,000 U
D. $16,000 U
99. The denominator activity level used to compute predetermined overhead rates was:
A. 32,000 hours
B. 22,500 hours
C. 30,000 hours
D. it is impossible to determine from the data given
A furniture manufacturer has a standard costing system based on standard direct labor-hours (DLHs) as
the measure of activity. Data from the company's flexible budget for manufacturing overhead are given
below:
100.What is the predetermined overhead rate to the nearest cent?

A. $12.91
B. $13.10
C. $12.76
D. $13.25
101.How much overhead was applied to products during the period to the nearest dollar?
A. $109,715
B. $112,625
C. $113,619
D. $113,950
26
102.What was the fixed overhead budget variance for the period to the nearest dollar?
A. $265 F
B. $1,850 F
C. $2,671 U
D. $2,945 U
103.What was the fixed overhead volume variance for the period to the nearest dollar?
A. $274 U
B. $1,095 F
C. $798 F
D. $821 F
A manufacturer of playground equipment has a standard costing system based on standard
machine-hours (MHs) as the measure of activity. Data from the company's flexible budget for
manufacturing overhead are given below:
104.What is the predetermined fixed overhead rate to the nearest cent?

A. $8.41
B. $8.12
C. $8.15
D. $8.44
105.How much fixed overhead was applied to products during the period to the nearest dollar?
A. $71,470
B. $69,275
C. $71,720
D. $69,731
106.What was the fixed overhead budget variance for the period to the nearest dollar?
A. $1,739 F
B. $471 U
C. $250 F
D. $2,195 F
107.What was the fixed overhead volume variance for the period to the nearest dollar?
A. $2,038 U
B. $456 F
C. $2,445 U
D. $1,989 U
27
Rodriquez Manufacturing Company uses a standard cost system with machine-hours as the activity base
for overhead. Rodriquez used a denominator activity level of 15,000 machine-hours last year. At this
level, budgeted variable manufacturing overhead totaled $108,000 and budgeted fixed manufacturing
overhead totaled $378,000. During the year, 18,000 machine-hours were actually incurred. The standard
machine-hours allowed for actual output were 20,000. Total actual manufacturing overhead was
$135,000 for variable overhead and $394,200 for fixed overhead.
108.What was Rodriquez's fixed overhead budget variance?
C. $109,800 favorable
A manufacturer of industrial equipment has a standard costing system based on standard direct
labor-hours (DLHs) as the measure of activity. Data from the company's flexible budget for
manufacturing overhead are given below:
109.What is the predetermined overhead rate to the nearest cent?

A. $18.98
B. $20.27
C. $19.88
D. $19.35
110.How much overhead was applied to products during the period to the nearest dollar?
A. $42,570
B. $40,790
C. $40,635
D. $41,750
Kasteron Corporation has a standard cost system in which manufacturing overhead is applied to units of
product on the basis of standard machine-hours. The company has provided the following data
28
111.The volume variance would be:
A. $180 F
B. $240 F
C. $150 U
D. $200 U
112.Flick Company uses a standard cost system in which manufacturing overhead is applied to units of
product on the basis of standard direct labor-hours. The company's total budgeted variable and fixed
manufacturing overhead costs at the denominator level of activity are $20,000 for variable overhead and
$30,000 for fixed overhead. The predetermined overhead rate, including both fixed and variable
components, is $2.50 per direct labor-hour. The standards call for two direct labor-hours per unit of
output produced. Last year, the company produced 11,500 units of product and worked 22,000 direct
labor-hours. Actual costs were $22,500 for variable overhead and $31,000 for fixed overhead.
Required:
a. What is the denominator level of activity?
b. What were the standard hours allowed for the output last year?
c. What was the variable overhead spending variance?
d. What was the variable overhead efficiency variance?
e. What was the fixed overhead budget variance?
f. What was the fixed overhead volume variance?
29
Ch8And9 Key
1. FALSE
2. TRUE
3. C
4. C
5. C
6. D
7. D
8. D
9. C
10. B
11. B
12. C
13. B
14. B
15. D
16. A
17. D
18. A
19. B
20. C
21. D
22. B
23. A
24. A
25. B
26. D
27. B
28. A
29. B
30. B
1
31. C
32. B
33. B
34. D
35. D
36. A
37. D
38. A
39. A
40. B
41. B
42. D
43. A
44. A
45. C
46. C
47. D
48. C
49. D
50. D
51. a. & b. Raw Materials:

Price variance = AQ(AP - SP) (based on quantity purchased)
= *950($1.60 - $1.50) = $95 U
* AQ = 1.9 feet per unit × 500 units = 950 feet
Quantity variance = SP(AQ - SQ) (based on quantity used)
= $1.50(950 - *1,000) = $75 F
* SQ = 2 feet per unit × 500 units = 1,000 feet
c. & d. Direct Labor:
Rate variance = AH(AR - SR) = *850($6.30 - $6.00) = $255 U
* AH = 1.7 hours per unit × 500 units = 850 hours
Efficiency variance = SR(AH - SH) = $6.00(850 - *750) = $600 U
* SH = 1.5 hours per unit × 500 units = 750 hours
e. & f. Variable Overhead:
Spending variance = AH(AR - SR) = 850($3.00 - $3.40) = $340 F
Efficiency variance = SR(AH - SH) = $3.40(850 - 750) = $340 U
2
52. a. & b. Raw Materials:
Price variance = AQ(AP - SP) (based on quantity purchased)
= 21,000 ($17 - $16) = $21,000 U
Quantity variance = SP(AQ - SQ) (based on quantity used)
= $16(33,400 - *33,600) = $3,200 F
* SQ = 22,400 units at 1.5 grams per unit = 33,600
c. & d. Direct labor:
Rate variance = AH(AR - SR) = 16,750($8 - $8) = 0
Efficiency variance = SR(AH - SH) = $8(16,750 - *16,800) = $400 F
* SH = 22,400 units at 0.75 hours per unit = 16,800
e. & f. Variable overhead:
Spending variance = AH(AR - SR) = 16,750(*$2.90 - $3) = $1,675 F
* AR = $48,575/16,750 hours = $2.90
Efficiency variance = SR(AH - SH) = $3(16,750 - *16,800) = $150 F
* SH = 22,400 units at 0.75 hours per unit = 16,800
53. a.
b.
c.
54. a. Materials price variance = $306,675 - (14,500 × $22) = $12,325 F

b. Materials quantity variance = (14,100 × $22) - (15,000 × 0.9 × $22)
= $13,200 U
c. Labor efficiency variance = (18,800 × $9.00) - (15,000 × 1.3 × $9.00)
= $6,300 F
d. Variable overhead spending variance = $285,760 - (18,800 × $15.00)
= $3,760 U
3
55. a. Materials price variance = (AQ × AP) - (AQ × SP)
= $108,750 - (7,500 × $14.10) = $3,000 U
b. Materials quantity variance = SP(AQ - SQ*)
= $14.10(7,200 - 7,520) = $4,512 F
*SQ = Standard quantity per unit × Actual output = 4.0 × 1,880 = 7,520
c. Journal entries to record the purchase and use of the raw material:
56. a. Materials price variance = (AQ × AP) - (AQ × SP)

= $98,745 - (8,700 × $11.70) = $3,045 F
b. Materials quantity variance = SP(AQ - SQ*)
= $11.70(8,100 - 8,640) = $6,318 F
*SQ = Standard quantity per unit × Actual output = 7.2 × 1,200 = 8,640
c. Journal entries to record the purchase and use of the raw material:
57. Materials price variance = $106,575 - (2,100 × $50.00) = $1,575 U

Materials quantity variance = (1,750 × $50) - (1,800 × 0.8 × $50) = $15,500 U
58. a. Labor rate variance = (AH × AR) - (AH × SR)

= $36,450 - (2,700 × $14.10) = $1,620 F
b. Labor efficiency variance = SR(AH - SH*)
= $14.10 (2,700 - 2,600) = $1,410 U
*SH = Standard hours per unit × Actual output = 1.3 × 2,000 = 2,600
c. Journal entries to record the direct labor costs:
4
59. a. Labor rate variance = (AH × AR) - (AH × SR)
= $100,040 - (8,200 × $12.90) = $5,740 F
b. Labor efficiency variance = SR(AH - SH*)
= $12.90 (8,200 - 8,060) = $1,806 U
*SH = Standard hours per unit × Actual output = 6.5 × 1,240 = 8,060
c. Journal entries to record the direct labor costs:
60. FALSE
61. FALSE
62. FALSE
63. TRUE
64. TRUE
65. TRUE
66. TRUE
67. FALSE
68. FALSE
69. B
70. C
71. D
72. B
73. A
74. C
75. C
76. D
77. A
78. A
79. D
80. D
81. D
82. A
83. C
84. C
85. D
5
86. C
87. B
88. D
89. A
90. D
91. D
92. A
93. C
94. A
95. C
96. D
97. A
98. A
99. C
100. D
101. C
102. B
103. D
104. C
105. D
106. C
107. D
108. A
109. D
110. B
111. C
6
112. a.
b.
c. Computation of variable overhead spending variance:

Spending variance = (AH AR) - (AH SR)
= ($22,500) - (22,000 $1.00*) = $500 U
* $20,000 20,000 DLHs = $1.00
d. Computation of variable overhead efficiency variance:
Spending variance = (AH SR) - (SH SR)
= (22,000 $1.00) - (23,000* $1.00) = $1,000 F
* 2 DLHs per unit 11,500 units = 23,000 DLHs
e. Computation of the fixed overhead budget variance:
Budget variance = Actual fixed overhead - Budgeted Fixed overhead
= $31,000 - $30,000 = $1,000 U
f. Computation of the fixed overhead volume variance:
Volume variance = Fixed portion of predetermined overhead rate
(Denominator hours - Standard hours allowed)
= $1.50* (20,000 - 23,000) = $4,500 F
*$30,000 20,000 DLH = $1.50 per DLH
7
Ch8And9 Summary
Category # of Questions
AACSB: Analytic 101
AACSB: Reflective Thinking 11
AICPA BB: Critical Thinking 112
AICPA BB: Resource Management 1
AICPA FN: Reporting 112
Brewer - Chapter 008 70
Learning Objective: 1 5
Level: Medium 112
Source: CMA, adapted 1
Source: CPA, adapted 4

CH 8 and 9

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CH 8 and 9

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Ch8And9

1. Waste on the production line will result in a materials price variance.

The above journal entry indicates that:

What is the materials purchase price variance?

What were the actual hours worked during October?

The raw material was purchased on account.

The raw material was purchased on account.

The following data pertain to a recent month's operations:

85. What is the predetermined overhead rate to the nearest cent?

The following data pertain to operations for the last month:

97. What was Crispy's variable overhead spending variance?

98. The volume variance for the year was:

100.What is the predetermined overhead rate to the nearest cent?

104.What is the predetermined fixed overhead rate to the nearest cent?

109.What is the predetermined overhead rate to the nearest cent?

51. a. & b. Raw Materials:

54. a. Materials price variance = $306,675 - (14,500 × $22) = $12,325 F

56. a. Materials price variance = (AQ × AP) - (AQ × SP)

57. Materials price variance = $106,575 - (2,100 × $50.00) = $1,575 U

58. a. Labor rate variance = (AH × AR) - (AH × SR)

c. Computation of variable overhead spending variance:

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