Question

81) Assume the following information appears in the standard cost card for a company that makes only one product:

	Standard Quantity or hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.00	per pound	$	55.00
Direct labor	2	hours	$	17.00	per hour	$	34.00
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 19,200 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct materials price variance?

Multiple Choice

• $9,750 U

• $9,750 F

• $9,600 U

• $9,600 F

82) Assume the following information appears in the standard cost card for a company that makes only one product:

	Standard Quantity or hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.45	per pound	$	57.25
Direct labor	2	hours	$	17.00	per hour	$	34.00
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct materials quantity variance?

Multiple Choice

• $5,725 U

• $5,725 F

• $5,250 U

• $5,250 F

84) Assume the following information appears in the standard cost card for a company that makes only one product:

	Standard Quantity or hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.00	per pound	$	55.00
Direct labor	2	hours	$	18.00	per hour	$	36.00
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct labor rate variance?

Multiple Choice

• $6,000 F

• $6,000 U

• $12,000 F

• $12,000 U

85) Assume the following information appears in the standard cost card for a company that makes only one product:

	Standard Quantity or hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.00	per pound	$	55.00
Direct labor	2	hours	$	16.80	per hour	$	33.60
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct labor efficiency variance?

Multiple Choice

• $3,360 F

• $3,360 U

• $3,300 F

• $3,300 U

Answer 1

Question	Answer
81	$9,600	Favorable
82	$5,725	Unfavorable
84	$12,000	Favorable
85	$3,360	Favorable

Calculations:

81.Materials price variance = Actual quantity (Actual price - Standard price)

= 19,200 ($10.50-$11.00)

= -$9,600 or $9,600 Favorable

82.Materials quantity variance = Standard price (Actual quantity - Standard quantity)

= $11.45 (20,000 - 19,500*)

= $5,725 Unfavorable

*Standard quantity = 3,900 units x 5 pounds = 19,500 pounds

84.Direct labor rate variance = Actual hours (Actual rate - Standard rate)

= 8,000 ($16.50* - $18.00)

= -$12,000 or $12,000 Favorable

*Actual rate = $132,000/8,000 = $16.50 per hour

85.Direct labor efficiency variance = Standard rate (Actual hours - Standard hours)

= $16.80 (8,000 - 7,800*)

= -$3,360 or $3,360 Favorable

*Standard hours = 3,900 units x 2 hours = 7,800 hours