Question

1. The Hill Company produced 5,000 units of X. The standard time per unit is 0.25 hours. The actual hours used to produce 5,000 units of X were 1,350 hours. The standard labor rate is $12 per hour. The actual labor cost was $18,900. What is the total direct labor cost variance?

a. $1,200 unfavorable

b. $3,900 unfavorable

c. $1,400 unfavorable

d. $2,700 unfavorable

2. The cost associated with the difference between the standard quantity and the actual quantity of direct materials used in producing a commodity is called the:

a. direct materials quantity variance

b. direct materials price variance

c. direct materials volume variance

d. controllable materials variance

3. The cost associated with the difference between the standard hours and the actual hours of direct labor spent producing a commodity is called the:

a. direct labor quantity variance

b. direct labor volume variance

c. direct labor rate variance

d. direct labor time variance

4. The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed overhead for the actual production achieved during the period is called the:

a. efficiency variance

b. controllable variance

c. volume variance

d. total overhead variance

5. An unfavorable volume variance might be caused by which of the following factors?

a. an uneven work flow

b. machine breakdowns

c. repairs leading to work stoppages d. all of the above

6. Which of the following is an example of a nonfinancial performance measure?

a. number of customer complaints

b. direct labor time variance

c. controllable overhead variance d. all of the above

7. A quantity of 1,200 gallons of Material X is purchased at a price of $4.50 per gallon. The standard price is $4.00 per gallon. The journal entry for this purchase will include a:

a. debit to Materials for $5,400

b. debit to Direct Materials Price Variance for $600

c. credit to Direct Materials Price Variance for $600

d. debit to Work in Process for $4,800

Answer 1

1) Solution: $3,900 unfavorable

Explanation: Total actual direct labor cost - Total standard cost

18,900 - [(5000 * 0.25* 12)]

$3900 unfavorable

2) Solution: direct materials quantity variance

Explanation: The direct materials quantity variance is difference between the standard quantity and the actual quantity of direct materials

3) Solution: direct labor time variance

Explanation: The direct labor time variance is the difference between the standard hours and the actual hours.

4) Solution: volume variance

Explanation: The volume variance is difference between the fixed budgeted overhead at 100% of normal capacity and the fixed standard overhead

5) Solution: all of the above

Explanation: The unfavorable variance may result to machine breakdowns and uneven work flow

6) Solution: number of customer complaints

The number of customer complaints is an example of nonfinancial measure

7) Solution: debit to Direct Materials Price Variance for $600

Explanation: Direct Materials Price Variance will be debited by $600