Question

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QUESTION 6

1. 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: $23

   Standard rate per hour: $14.75

   Standard hours per units produced: 30,000

   How much is the direct labor efficiency variance?

   	a.	$59,000 (Favorable)
   	b.	$92,000 (Unfavorable)
   	c.	$92,000 (Favorable)
   	d.	$59,000 (Unfavorable)

2.5 points   

QUESTION 7

1. Victoria Corp. manufactures quality vases. Budgeted production data for the vases are as follows:

   January budgeted unit production   2,300

   February budgeted unit production     2,700

   March budgeted unit production       4,000

   1 pound of clay (raw materials) is required for each finished vase.

   The ending inventory of clay each month needs to be equal to 10% of the production needs for the following month.

   At the beginning of January, 230 pounds of clay were in inventory.

   How many pounds of clay must be purchased in February?

   	a.	4,130
   	b.	2,340
   	c.	2,830
   	d.	2,430

2.5 points   

QUESTION 8

1. Mighty Corp. manufactures tables. Each table requires 0.50 direct labor-hours in the production. Mighty Corp. has a direct labor rate of $17.00 per direct labor-hour.  The production budget shows Mighty Corp. plans to product 1,000 tables in March and 1,400 tables in April.  What is the total combined direct labor costs that Mighty Corp. should budget for March and April?

   	a.	$20,400
   	b.	$23,800
   	c.	$40,800
   	d.	$8,500

2.5 points   

QUESTION 9

1. Direct materials standard 15 pounds per unit

   Direct materials standard cost $0.52 per pound

   Actual direct materials used     40,000 pounds

   Actual finished goods purchased 4,800 units

   What is the direct materials quantity variance?

   	a.	$16,640 Unfavorable
   	b.	$2,560 Favorable
   	c.	$16,640 Favorable
   	d.	$2,560 Unfavorable

2.5 points   

QUESTION 10

1. Ticktock produces clocks. According to company standards, it should take 2 hours of direct labor to produce a clock.

   Ticktock standard labor cost is $19.00 per hour.  During June Ticktock produced 5,800 clocks and used 13,800 of direct labor at a total cost of $331,200.

   What is the direct labor rate variance for June?

   	a.	$2,200 Favorable
   	b.	$2,200 Unfavorable
   	c.	$69,000 Favorable
   	d.	$69,000 Unfavorable

Answer 1

Answers

• Answer 6

Direct labor efficiency variance = (Standard hours – Actual hours) x Standard rate
= (30000 – 34000) x $ 14.75
= ($59,000)

Correct Answer = Option ‘D’ $ 59,000 Unfavourable

• Answer 7

Pounds to be purchased in Feb = (Feb production x 1 pound) + Desired ending inventory for Feb – Beginning inventory for Feb
= (2700 units x 1 pound) + (4000 units x 10%) - (2700 units x 10%)
= 2700 + 400 – 270
= 2,830 pounds

Correct Answer = Option ‘C’ 2,830

• Answer 8

Total tables to be produced = 1000 + 1400 = 2400
Combined direct labor cost = 2400 tables x 0.50 direct labor hours x $ 17 per hour
= $ 20,400
Correct Answer = Option ‘A’ $ 20,400

• Answer 9

Direct material quantity variance = (Standard quantity – Actual quantity) x Standard price
= [(4800 units x 15 pounds) – 40000 pounds] x $ 0.52
= (72000 – 40000) x 0.52
= 16640

Correct Answer = Option ‘C’ $ 16,640 Favourable

• Answer 10

Labor rate variance = (Standard rate – Actual rate) x Actual labor hours
= [$19.00 per hour – ($331200 / 13800 hours)] x 13800 hours
= (19 – 24) x 13800
= ($69,000)

Correct ANswer = Option ‘D’ $ 69,000 Unfavourable.