WHICH VARIANCE IS MOST USEFUL IN ASSESSING THE PERFORMANCE OF THE PURCHASING DEPARTMENT?

14 May WHICH VARIANCE IS MOST USEFUL IN ASSESSING THE PERFORMANCE OF THE PURCHASING DEPARTMENT?

Question 1 of 40 2.5/ 2.5 Points

A company’s purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

A. Materials quantity variance

B. Materials price variance

C. Labor rate variance

D. Labor efficiency variance

Question 2 of 40 2.5/ 2.5 Points

The direct labor price variance was unfavorable and much greater than anticipated. Who would be in the best position to explain why the unfavorable variance occurred?

A. Both the production and human resource supervisors

B. The production supervisor

C. The purchasing manager

D. Both the purchasing manager and production supervisor

Question 3 of 40 2.5/ 2.5 Points

Active Lifestyle Beverages gathered the following information for Job #928.

Standard Total Cost Actual Total Cost

Direct labor:

Standard: 540 hours at $6.75/hr. 3,645

Actual: 500 hours at $6.50/hr. 3,250

What is the direct labor efficiency variance?

A. $260 favorable

B. $260 unfavorable

C. $270 favorable

D. $270 unfavorable

Question 4 of 40 2.5/ 2.5 Points

Kahn Performance Nutrition produces a protein shake that contains whey protein as one of its ingredients. The whey protein (materials) standards for each batch of protein shake produced are 12 pounds of whey protein at a standard cost of $3 per pound. During July, Kahn Performance Nutrition purchased and used 54,000 pounds of whey protein at a total of $170,000 to make a total of 4,300 batches of protein shake. What is the materials quantity variance for whey protein in July?

A. $7,200 unfavorable

B. $7,200 favorable

C. $141,900 favorable

D. $141,900 unfavorable

Question 5 of 40 2.5/ 2.5 Points

A manager purchased better quality materials for a slightly higher cost than anticipated. However, as a result, there was less spoilage than normal. What is the effect on the price and quantity variances respectively?

A. Favorable, favorable

B. Favorable, unfavorable

C. Unfavorable, favorable

D. Unfavorable, unfavorable

Question 6 of 40 2.5/ 2.5 Points

A company produced 2,200 units of output during a production process that normally requires 2 hours of labor per unit of output. The standard labor rate is $16 per hour, but the company paid $15 per hour. Actual hours needed to complete the production process were 4,600. How much was the labor rate variance?

A. $4,400 favorable

B. $4,400 unfavorable

C. $4,600 favorable

D. $4,600 unfavorable

Question 7 of 40 2.5/ 2.5 Points

A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.

A. allocated cost

B. applied cost

C. standard cost

D. flexible cost

Question 8 of 40 2.5/ 2.5 Points

How is the direct labor efficiency variance calculated?

A. The difference between the standard labor hours allowed and the actual labor hours used multiplied by the actual labor rate

B. The difference between the standard labor hours allowed and the actual labor hours used multiplied by the standard labor rate

C. The difference between the standard labor hours and the actual labor hours used

D. The difference between the standard labor rate and the actual labor rate

Question 9 of 40 0.0/ 2.5 Points

Which of the following is NOT an advantage of using standard costs and variances?

A. Use as a performance benchmark for evaluation of actual costs

B. Use as a basis for components of the master budget

C. Simplification of bookkeeping

D. Change in behavior of managers to obtain desired variances

Question 10 of 40 2.5/ 2.5 Points

Jackson Industries has collected the following data for one of its products.

Direct materials standard (6 pounds per unit @ $0.55/lb.) $3.30 per finished good

Direct materials flexible budget variance-unfavorable $12,000

Actual direct materials used 35,000 pounds

Actual finished goods produced 26,000 units

What is the total actual cost of the direct materials used?

A. $19,250

B. $73,800

C. $97,800

D. $85,800

Question 11 of 40 2.5/ 2.5 Points

The entry to allocate manufacturing overhead costs to production involves which of the following?

A. Debit to work-in-process inventory for the actual cost of overhead

B. Credit to work-in-process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

C. Credit to work-in-process inventory for the actual cost of overhead

D. Debit to work-in-process inventory for the standard rate of overhead times the standard quantity of the allocation base allowed for actual output

Question 12 of 40 2.5/ 2.5 Points

All of the following are advantages of using standard costs EXCEPT:

A. managers can evaluate the efficiency of production workers.

B. differences between the static budget and the flexible budget can be broken down into price and quantity components.

C. consumer motivation for purchases can be analyzed.

D. standard costing allows companies to create flexible budgets.

Question 13 of 40 2.5/ 2.5 Points

Which of the following formulas is used to compute variable overhead rate (or spending) variance?

A. Actual hours x (actual rate – standard rate)

B. Standard hours allowed x (actual rate – standard rate)

C. Actual rate x (actual hours – standard hours allowed)

D. Standard rate x (actual hours – standard hours allowed)

Question 14 of 40 2.5/ 2.5 Points

The two fixed overhead variances are the:

A. budget and volume variances.

B. rate and efficiency variances.

C. price and usage variances.

D. rate and volume variances.

Question 15 of 40 2.5/ 2.5 Points

Which term below is best paired with “The difference between the actual overhead cost incurred and the flexible budget amount of overhead cost for actual number of output”?

A. Sales volume variance

B. Flexible budget

C. Overhead flexible budget variance

D. Benchmarking

Question 16 of 40 0.0/ 2.5 Points

Capital Manufacturing designs and manufactures bathtubs for home and commercial applications. Capital recorded the following data for its commercial bathtub production line during the month of March.

Standard DL hours per tub 3

Standard overhead rate per DL hour $6.50

Standard overhead cost per unit $19.50

Actual overhead costs $22,750

Actual DL hours 3,250

Actual overhead cost per machine hour $7.00

Actual tubs produced 1,100

What is the variable manufacturing overhead efficiency variance for March?

A. $1,625 unfavorable

B. $325 unfavorable

C. $1,625 favorable

D. $325 favorable

Question 17 of 40 2.5/ 2.5 Points

How is the variable manufacturing overhead efficiency variance calculated?

A. The difference between the actual overhead rate and the standard overhead rate multiplied by the standard overhead rate

B. The difference between the standard hours allowed and the actual hours us
ed multiplied by the standard overhead rate

C. The difference between the standard hours allowed and the actual hours used

D. The difference between the standard hours allowed and the actual hours used multiplied by the actual overhead rate

Question 18 of 40 0.0/ 2.5 Points

The following information describes a company’s usage of direct labor in a recent period.

Actual direct labor hours used 34,000

Actual rate per hour $17.00

Standard rate per hour $16.75

Standard hours for units produced 33,500

How much is the direct labor rate variance?

A. $8,375 favorable

B. $8,500 favorable

C. $8,375 unfavorable

D. $8,500 unfavorable

Question 19 of 40 2.5/ 2.5 Points

Myles Company budgeted 10,500 pounds of direct materials costing $23.50 per pound to make 5,300 units of product. The company actually purchased 11,000 pounds of direct materials costing $25 per pound to make the 5,300 units. What is the direct materials price variance?

A. $16,500 favorable

B. $16,500 unfavorable

C. $15,750 unfavorable

D. $15,750 favorable

Question 20 of 40 2.5/ 2.5 Points