Chapter 10 - Standard Costs and Variances

Chapter 10 Standard Costs and Variances Answer Key

True / False Questions

1. The materials price variance is computed by multiplying the difference between the actual price and the
standard price by the actual quantity of materials used in production.
FALSE

2. In general, the purchasing agent is responsible for the materials price variance.
TRUE

3. A materials price variance is favorable if the actual price exceeds the standard price.
FALSE

4. Generally speaking, it is the responsibility of the production department to see that material usage is kept in
line with standards.
TRUE

5. When more hours of labor time are necessary to complete a job than the standard allows, the labor rate
variance is unfavorable.
FALSE

6. Standard costs should generally be based on the actual costs of prior periods.
FALSE

7. The standard quantity per unit for direct materials should not include an allowance for waste.
FALSE

8. Ideal standards should be used for forecasting and planning.

FALSE

9. The standard cost per unit is computed by multiplying the standard quantity or hours by the standard price or
rate.
TRUE

10. Standard costs greatly increase the complexity of the bookkeeping process.
FALSE

Multiple Choice Questions

11. When computing standard cost variances, the difference between actual and standard price multiplied by
actual quantity yields a(n): A. combined price and quantity variance.
B. efficiency variance.
C. price variance.
D. quantity variance.

Materials price variance = AQ (AP - SP)

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12. The general model for calculating a price variance is:
A. actual quantity of inputs u (actual price - standard price).
B. standard price u (actual quantity of inputs - standard quantity allowed for output).
C. (actual quantity of inputs at actual price) - (standard quantity allowed for output at standard price).
D. actual price u (actual quantity of inputs - standard quantity allowed for output).

Materials price variance = AQ (AP - SP)

13. The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize
on price and in response to the demands of the production manager due to a mistake in production scheduling.
The materials were shipped by airfreight at a rate higher than that ordinarily charged for shipment by truck,
resulting in an unfavorable materials price variance. The lower quality material proved to be unsuitable on the
production line and resulted in excessive waste. In this situation, who should be held responsible for the materials
price and quantity variances?

A. Option A
B. Option B
C. Option C
D. Option D

The materials price variance is the responsibility of the production manager because the unfavorable variance
was due to the demands made by the production manager. The materials quantity variance is the responsibility of
the purchasing agent because the purchasing agent was responsible for ordering the lower quality material.

14. Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard
specifications for one unit of Teragram include six pounds of material at $0.30 per pound. Actual production in
November was 3,100 units of Teragram. The accountant computed a favorable materials purchase price variance
of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude
that: A. more materials were purchased than were used.
B. more materials were used than were purchased.
C. the actual cost of materials was less than the standard cost.
D. the actual usage of materials was less than the standard allowed.

Materials price variance = AQ (AP - SP)

A favorable materials price variance can only occur if the actual price of materials was less than the standard
price.

15. The materials quantity variance should be computed: A. when materials

are purchased.
B. based upon the amount of materials used in production.
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C. based upon the difference between the actual and standard prices per unit times the actual quantity used.
D. only when there is a difference between standard and actual cost per unit for the materials.

Materials quantity variance = (AQ - SQ)SP, where AQ is the actual quantity used

16. Which department should usually be held responsible for an unfavorable materials price variance?
A. Production.
B. Materials Handling.
C. Engineering.
D. Purchasing.

The purchasing department should ordinarily be held responsible for an unfavorable materials price variance
because that department ordinarily has most control over the price.

17. Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The
standards for one unit of Titactium specify six pounds of materials at $0.30 per pound. Actual production in
November was 3,100 units of Titactium. There was an unfavorable materials price variance of $380 and a
favorable materials quantity variance of $120. Based on these variances, one could conclude that: A. more
materials were purchased than were used.
B. more materials were used than were purchased.
C. the actual cost per pound for materials was less than the standard cost per pound.
D. the actual usage of materials was less than the standard allowed.

Materials quantity variance = (AQ - SQ) SP

A favorable materials quantity variance occurs only if the actual usage of materials was less than the standard
allowed, i.e., if AQ < SQ.

18. If the labor efficiency variance is unfavorable, then

A. actual hours exceeded standard hours allowed for the actual output.
B. standard hours allowed for the actual output exceeded actual hours.
C. the standard rate exceeded the actual rate.
D. the actual rate exceeded the standard rate.

Labor efficiency variance = (AH - SH) SR. An unfavorable variance occurs if AH > SH.

19. A labor efficiency variance resulting from the use of poor quality materials should be charged to:
A. the production manager.
B. the purchasing agent.
C. manufacturing overhead.
D. the industrial engineering department.

The purchasing manager is usually responsible for the acquisition of poor quality materials.

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20. An unfavorable direct labor efficiency variance could be caused by:

A. an unfavorable materials quantity variance.

B. an unfavorable variable overhead rate variance.

C. a favorable materials quantity variance.
D. a favorable variable overhead rate variance.

An unfavorable quantity variance could be caused by low quality materials, which in turn could cause an
unfavorable labor efficiency variance.

21. Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the
direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be: A.
favorable.
B. unfavorable.
C. either favorable or unfavorable.
D. zero.

Labor efficiency variance = (AH - SH) SR

Variable overhead efficiency variance = (AH - SH) SR
If the labor efficiency variance is unfavorable, AH > SH. If AH > SH, the variable overhead efficiency variance
must also be unfavorable.

22. Which of the following statements concerning ideal standards is incorrect? A. Ideal standards
generally do not provide the best motivation for workers.
B. Ideal standards do not make allowances for waste, spoilage, and machine breakdowns.
C. Ideal standards are better suited for cash budgeting than practical standards.
D. Ideal standards may be better than practical standards when managers seek continual improvement.

Practical standards provide better forecasts of cash flows for cash budgeting than practical standards.

23. The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of
direct material at an actual cost of $53,000; the materials quantity variance was $1,875 Unfavorable; and the
standard quantity of materials allowed for July production was 21,750 pounds. The materials price variance for
July was:
A. $2,725 F
B. $2,725 U
C. $3,250 F
D. $3,250 U

Materials price variance = (AQ u AP) - (AQ u SP)

= $53,000 - (22,500 pounds u $2.50 per pound) = $53,000 - $56,250 = $3,250 F

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24. Last month 75,000 pounds of direct material were purchased and 71,000 pounds were used. If the actual
purchase price per pound was $0.50 more than the standard purchase price per pound, then the materials price
variance was:
A. $2,000 F
B. $37,500 F
C. $37,500 U
D. $35,500 U

Materials price variance = (AQ u AP) - (AQ u SP) = AQ (AP - SP) = 75,000 pounds u
$0.50 per pound = $37,500 U

25. The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the materials quantity variance for the month?

A. $19,460 F
B. $9,730 U
C. $10,115 U
D. $20,230 F

SQ = 7.3 pounds per unit u 1,000 units = 7,300 pounds

Materials quantity variance = (AQ - SQ) SP
= (5,900 pounds - 7,300 pounds) $14.45 per pound = (-1,400 pounds)
$14.45 per pound = $20,230 F

26. The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the materials price variance for the month?

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A. $15,405 F
B. $5,775 U
C. $5,925 U
D. $1,600 U

AQ u AP = $63,200
Materials price variance = AQ (AP - SP) = AQ u AP - AQ u SP
Materials price variance = $63,200 - (3,200 feet u $19.25 per foot) = $63,200 - $61,600
= $1,600 U

27. The Wright Company has a standard costing system. The following data are available for September:

The actual price per pound of direct materials purchased in September is:
A. $1.85
B. $2.00
C. $2.10
D. $2.15

Materials price variance = AQ (AP - SP)

25,000 pounds (AP - $2 per pound) = $2,500 U
25,000 pounds u AP - $50,000 = $2,500 U
25,000 pounds u AP - $50,000 = $2,500
25,000 pounds u AP = $52,500
AP = $52,500 y 25,000 pounds AP = $2.10 per pound

28. The Cox Company uses standard costing. The following data are available for April:

The standard quantity of material allowed for April production is:

A. 14,200 gallons
B. 12,700 gallons
C. 11,700 gallons
D. 10,200 gallons

Materials quantity variance = (AQ - SQ) SP

(12,200 gallons - SQ) $4 per gallon = $2,000 U
($48,800 - SQ) u $4 per gallon= $2,000 U
SQ u $4 per gallon = $46,800 SQ = $46,800 y $4
per gallon SQ = 11,700 gallons
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29. The standard cost card for a product shows that the product should use 4 kilograms of material B per finished
unit and that the standard price of material B is $4.50 per kilogram. During April, when the budgeted production
level was 1,000 units, 1,040 units were actually made. A total of 4,100 kilograms of material B were used in
production and the inventories of material B were reduced by 300 kilograms during April. The total cost of
material B purchased during April was $14,400. The material variances for material B during April were:

A. Option A
B. Option B
C. Option C
D. Option D

Beginning balance of raw materials + Purchases of raw materials = Materials used in production + Ending
balance of raw materials
Purchases of raw materials = Materials used in production + Ending balance of raw materials - Beginning
balance of raw materials
Purchases of raw materials = Materials used in production + (Ending balance of raw materials - Beginning
balance of raw materials) = 4,100 kilograms + (-300 kilograms) = 3,800 kilograms
Materials price variance = AQ (AP - SP)
=$14,400 - (3,800 kilograms u $4.50 per kilogram)
=$14,400 - $17,100 = $2,700 F
Materials quantity variance = (AQ - SQ) SP = AQ u SP- SQ u SP
= $18,450 - (1,040 units u 4 kilograms per unit) u $4.50 per kilogram = $18,450 - $18,720
= $270 F

30. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor efficiency variance for the month?

A. $13,805 U
B. $13,530 U
C. $15,305 U
D. $15,305 F

SH = 1,500 units u 4 hours per unit = 6,000 hours

Labor efficiency variance = (AH - SH) SR
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= (7,100 hours - 6,000 hours) $12.30 per hour = (1,100 hours)
$12.30 per hour = $13,530 U

31. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor rate variance for the month?

A. $1,325 U
B. $1,780 F
C. $430 F
D. $430 U

AH u AR = $94,340
Labor rate variance = AH (AR - SR) = AH u AR - AH u SR = $94,340 - (5,300
hours u $17.55 per hour) = $1,325 U

32. The standards for direct labor for a product are 2.5 hours at $8 per hour. Last month, 9,000 units of the
product were made and the labor efficiency variance was $8,000 F. The actual number of hours worked during
the past period was:
A. 23,500
B. 22,500
C. 20,500
D. 21,500

SH = 9,000 units u 2.5 hours per unit = 22,500 hours

Labor efficiency variance = (AH - SH) SR
= (AH - 22,500 hours) $8 per hour = -$8,000
AH u $8 per hour - $180,000 = -$8,000
AH u $8 per hour = $172,000 AH = $172,000 y $8
per hour AH = 21,500 hours

33. The Reedy Company uses a standard costing system. The following data are available for November:

The actual direct labor rate for November is:

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A. $8.80
B. $8.90
C. $9.00
D. $9.20

Labor rate variance = AH(AR - SR)

5,800 hours (AR - $9 per hour) = -$1,160
5,800 hours u AR - $52,200 = -$1,160
5,800 hours u AR = $51,040 AR = $51,040 y
5,800 hours AR = $8.80 per hour

34. Borden Enterprises uses standard costing. For the month of April, the company reported the following data:
x Standard direct labor rate: $10 per hour
x Standard hours allowed for actual production: 8,000 hours x Actual direct
labor rate: $9.50 per hour x Labor efficiency variance: $4,800 Favorable x The
labor rate variance for April is:
A. $3,760 U
B. $3,760 F
C. $2,850 F
D. $2,850 U

Labor efficiency variance = (AH - SH) SR

= (AH - 8,000 hours) $10 per hour = -$4,800
AH u $10 per hour - $80,000 = -$4,800
AH u $10 per hour = $75,200 AH = $75,200 y $10
per hour
AH = 7,520
Labor rate variance = AH(AR - SR)
= 7,520 hours ($9.50 per hour - $10.00 per hour) = 7,520 hours (-
$0.50 per hour) = $3,760 F

35. Furson Corporation makes a single product. In a recent period 6,500 units were made and there was an
unfavorable labor efficiency variance of $26,000. Direct labor workers were paid $8 per hour and total wages
were $182,000. The labor rate variance was zero. The standard labor-hours per unit of output is closest to:
A. 3.0
B. 3.5
C. 4.0
D. 4.5

AH = $182,000 y $8 per hour = 22,750 hours

Labor rate variance = AH(AR - SR)
$0 = 22,750 hours ($8 per hour - SR)
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SR = $8 per hour
Labor efficiency variance = (AH - SH) SR
$26,000 = (22,750 hours - 6,500 units u Standard hours per unit) $8 per hour
(22,750 hours - 6,500 units u Standard hours per unit) = $26,000 y $8 per hour
(22,750 hours - 6,500 units u Standard hours per unit) = 3,250 hours 6,500 units u Standard
hours per unit = 19,500 hours
Standard hours per unit = 19,500 hours y 6,500 units Standard hours per unit = 3
hours per unit

36. The following standards for variable manufacturing overhead have been established for a company that
makes only one product:

The following data pertain to operations for the last month:

What is the variable overhead efficiency variance for the month?

A. $9,219 U
B. $10,179 U
C. $9,867 U
D. $648 U

SH = 600 units u 2.7 hours per unit = 1,620 hours

Variable overhead efficiency variance = (AH - SH) SR
= (2,400 hours - 1,620 hours) $13.05 per hour = (780 hours)
$13.05 per hour = $10,179 U

37. The following standards for variable manufacturing overhead have been established for a company that
makes only one product:

The following data pertain to operations for the last month:

What is the variable overhead rate variance for the month?

A. $1,200 F
B. $9,625 F
C. $8,425 F
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D. $990 U

Variable overhead rate variance = AH (AR - SR) = AH u AR - AH u SR

= $45,375 - (3,300 hours u $13.45 per hour) = $45,375 -
$44,385 = $990 U

38. Millonzi 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 rate variance for the month?
A. $4,350 favorable
B. $2,000 unfavorable
C. $2,650 favorable
D. $1,700 favorable

Variable overhead rate variance = AH (AR - SR) = AH u AR - AH u SR

= $42,400 - (5,300 hours u $8.50 per hour) = $42,400 -
$45,050 = $2,650 F

39. Lafountaine Manufacturing Corporation has a standard cost system in which it applies manufacturing
overhead to products on the basis of standard machine-hours (MHs). The company's cost formula for variable
manufacturing overhead is $4.70 per MH. During the month, the actual total variable manufacturing overhead
was $20,210 and the actual level of activity for the period was 4,700 MHs. What was the variable overhead rate
variance for the month?
A. $400 unfavorable
B. $1,880 favorable
C. $1,880 unfavorable
D. $400 favorable

Variable overhead rate variance = AH (AR - SR) = AH u AR - AH u SR

= $20,210 - (4,700 hours u $4.70 per hour) = $20,210 -
$22,090 = $1,880 F

40. Dowen Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For
the most recent month, the company based its budget on 4,400 machinehours. Budgeted and actual overhead
costs for the month appear below:

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The company actually worked 4,460 machine-hours during the month. The standard hours allowed for the actual
output were 4,310 machine-hours for the month. What was the overall variable overhead efficiency variance for
the month?
A. $2,198 favorable
B. $1,695 unfavorable
C. $150 unfavorable
D. $503 favorable

Variable overhead = $21,560 + $28,160 = $49,720

SR = $49,720 y 4,400 hours = $11.30 per hour
Variable overhead efficiency variance = (AH - SH) SR
= (4,460 hours - 4,310 hours) $11.30 per hour = (150 hours)
$11.30 per hour = $1,695 U

41. Ruston 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 4,500 machine-hours. The company actually worked 4,590 machine-hours
during the month and the standard hours allowed for the actual output were 4,700 machine-hours. What was the
overall variable overhead efficiency variance for the month?
A. $50 unfavorable
B. $869 favorable
C. $969 unfavorable
D. $100 unfavorable

SR = $35,550 y 4,500 hours = $7.90 per hour

Variable overhead efficiency variance = (AH - SH) SR
= (4,590 hours - 4,700 hours) $7.90 per hour = (-110 hours)
$7.90 per hour = $869 F

42. Tavorn Corporation applies manufacturing overhead to products on the basis of standard machine-hours.
The company's standard variable manufacturing overhead rate is $1.80 per machine-hour. The actual variable
manufacturing overhead cost for the month was $13,080. The original budget for the month was based on 7,100
machine-hours. The company actually worked 7,210 machine-hours during the month. The standard hours
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allowed for the actual output of the month totaled 7,070 machine-hours. What was the variable overhead
efficiency variance for the month? A. $354 unfavorable
B. $252 unfavorable
C. $54 favorable
D. $102 unfavorable

Variable overhead efficiency variance = (AH - SH) SR

= (7,210 hours - 7,070 hours) $1.80 per hour = (140 hours) $1.80
per hour = $252 U

43. Kornfeld Corporation produces metal telephone poles. In the most recent month, the company budgeted
production of 2,800 poles. Actual production was 3,200 poles. According to standards, each pole requires 2.2
machine-hours. The actual machine-hours for the month were 6,890 machine-hours. The standard variable
manufacturing overhead rate is $9.20 per machine-hour. The actual variable manufacturing cost for the month
was $67,020. The variable overhead efficiency variance is:
A. $1,380 U
B. $1,380 F
C. $2,252 F
D. $2,252 U

SH = 3,200 poles u 2.2 hours per pole = 7,040 hours

Variable overhead efficiency variance = (AH - SH) SR
= (6,890 hours - 7,040 hours) $9.20 per hour = (-150 hours)
$9.20 per hour = $1,380 F

44. Acri Corporation produces large commercial doors for warehouses and other facilities. In the most recent
month, the company budgeted production of 6,900 doors. Actual production was 7,300 doors. According to
standards, each door requires 5.6 machine-hours. The actual machine-hours for the month were 40,360 machine-
hours. The standard supplies cost, and element of variable manufacturing overhead, is $4.20 per machine-hour.
The actual supplies cost for the month was $168,251. The variable overhead efficiency variance for supplies cost
is:
A. $3,445 U
B. $2,184 F
C. $2,184 U
D. $3,445 F

SH = 7,300 doors u 5.6 hours per door = 40,880 hours

Variable overhead efficiency variance = (AH - SH) SR
= (40,360 hours - 40,880 hours) $4.20 per hour = (-520 hours)
$4.20 per hour = $2,184 F

45. The following data have been provided by Spraglin Corporation, a company that produces forklift trucks:

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Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for
supplies cost is:
A. $484 U
B. $2,643 U
C. $484 F
D. $2,643 F

SH = 6,200 trucks u 3.7 hours per truck = 22,940 hours

Variable overhead efficiency variance = (AH - SH) SR
= (23,160 hours - 22,940 hours) $2.20 per hour = (220 hours) $2.20
per hour = $484 U

The Litton Company has established standards as follows:

Direct material: 3 pounds per unit @ $4 per pound = $12 per unit
Direct labor: 2 hours per unit @ $8 per hour = $16 per unit
Variable manufacturing overhead: 2 hours per unit @ $5 per hour = $10 per unit Actual production figures
for the past year are given below. The company records the materials price variance when materials are
purchased.

The company applies variable manufacturing overhead to products on the basis of standard direct labor-hours.

46. The materials price variance is:

A. $400 U
B. $400 F
C. $600 F
D. $600 U

Materials price variance = (AQ u AP) - (AQ u SP)

$11,400 - (3,000 pounds u $4 per pound)
$11,400 - $12,000 = $600 F

47. The materials quantity variance is:

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A. $800 U
B. $4,000 U
C. $760 U
D. $760 F

SQ = 3 pounds per unit u 600 units = 1,800 pounds

Materials quantity variance = (AQ - SQ) SP
= (2,000 pounds - 1,800 pounds) $4 per pound
= (200 pounds) $4 per pound = $800 U

48. The labor rate variance is:

A. $480 F
B. $480 U
C. $440 F
D. $440 U

Labor rate variance = AH (AR - SR) = AH u AR - AH u SR

= $9,240 - (1,100 hours u $8 per hour) = $9,240 - $8,800 =
$440 U

49. The labor efficiency variance is:

A. $800 F
B. $800 U
C. $840 F
D. $840 U

SH = 600 units u 2 hours per unit = 1,200 hours

Labor efficiency variance = (AH - SH) SR
= (1,100 hours - 1,200 hours) $8 per hour = (-100 hours) $8
per hour = $800 F

50. The variable overhead rate variance is:

A. $240 U
B. $220 U
C. $220 F
D. $240 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $5,720 - (1,100 hours u $5.00 per hour) = $5,720 - $5,500 =
$220 U
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51. The variable overhead efficiency variance is:

A. $520 F
B. $520 U
C. $500 U
D. $500 F

Variable overhead efficiency variance = (AH - SH) SR

= (1,100 hours - 1,200 hours) $5.00 per hour = (-100 hours)
$5.00 per hour = $500 F

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each
core test performed:

During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand.
Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The
following events occurred during March: x 8,600 pounds of sand were purchased at a cost of $7,310. x 7,200
pounds of sand were used for core tests. x 840 actual direct labor-hours were worked at a cost of $8,610. x Actual
variable manufacturing overhead incurred was $3,200.

52. The materials price variance for March is:

A. $860 unfavorable
B. $860 favorable
C. $281 unfavorable
D. $281 favorable

Materials price variance = AQ (AP - SP) = AQ u AP - AQ u SP

= $7,310 - (8,600 pounds u $0.75 per pound) = $7,310 - $6,450 =
$860 U

53. The materials quantity variance for March is:

A. $900 favorable
B. $1,950 favorable
C. $1,950 unfavorable
D. $900 unfavorable

SQ = 3 pounds per unit u 2,000 units = 6,000 pounds

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Materials quantity variance = (AQ - SQ) SP
= (7,200 pounds - 6,000 pounds) $0.75 per pound
= (1,200 pounds) $0.75 per pound = $900 U

54. The labor rate variance for March is:

A. $4,578 unfavorable
B. $1,470 unfavorable
C. $4,578 favorable
D. $1,470 favorable

Labor rate variance = AH (AR - SR) = AH u AR - AH u SR

= $8,610 - (840 hours u $12 per hour) = $8,610 - $10,080
= $1,470 F

55. The labor efficiency variance for March is:

A. $480 favorable
B. $480 unfavorable
C. $192 favorable
D. $192 unfavorable

SH = 2,000 tests u 0.4 hours per test = 800 hours

Labor efficiency variance = (AH - SH) SR
= (840 hours - 800 hours) $12 per hour = (40 hours) $12
per hour = $480 U

56. The variable overhead efficiency variance for March is:

A. $320 unfavorable
B. $320 favorable
C. $360 unfavorable
D. $360 favorable

SH = 2,000 tests u 0.4 hours per test = 800 hours

Variable overhead efficiency variance = (AH - SH) SR
= (840 hours - 800 hours) $9 per hour = (40 hours) $9 per
hour = $360 U

Hurren Corporation makes a product with the following standard costs:

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The company reported the following results concerning this product in June.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

57. The materials quantity variance for June is:

A. $1,760 U
B. $1,782 F
C. $1,760 F
D. $1,782 U

SQ = 6,500 units u 4.4 grams per unit = 28,600 grams

Materials quantity variance = (AQ - SQ) SP
= (28,380 grams - 28,600 grams) $8.00 per gram = (-220 grams)
$8.00 per gram = $1,760 F

58. The materials price variance for June is:

A. $3,180 U
B. $2,860 F
C. $2,860 U
D. $3,180 F

Materials price variance = AQ (AP - SP)

= 31,800 grams ($8.10 per gram - $8.00 per gram) = 31,800 grams
($0.10 per gram) = $3,180 U

59. The labor efficiency variance for June is:

A. $995 U
B. $950 U
C. $995 F
D. $950 F

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SH = 6,500 units u 0.7 hours per unit = 4,550 hours
Labor efficiency variance = (AH - SH) SR
= (4,500 hours - 4,550 hours) $19 per hour = (-50 hours) $19
per hour = $950 F

60. The labor rate variance for June is:

A. $4,095 F
B. $4,050 F
C. $4,095 U
D. $4,050 U

Labor rate variance = AH(AR - SR)

= 4,500 hours ($19.90 per hour - $19.00 per hour) = 4,500 hours
($0.90 per hour) = $4,050 U

61. The variable overhead efficiency variance for June is:

A. $185 F
B. $200 U
C. $185 U
D. $200 F

SH = 6,500 units u 0.7 hours per unit = 4,550 hours

Variable overhead efficiency variance = (AH - SH) SR
= (4,500 hours - 4,550 hours) $4 per hour = (-50 hours) $4
per hour = $200 F

62. The variable overhead rate variance for June is:

A. $1,365 U
B. $1,365 F
C. $1,350 F
D. $1,350 U

Variable overhead rate variance = AH(AR - SR)

= 4,500 hours ($3.70 per hour - $4.00 per hour) = 4,500 hours (-
$0.30 per hour) = $1,350 F

Snuggs Corporation makes a product with the following standard costs:

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The company reported the following results concerning this product in October.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

63. The materials quantity variance for October is:

A. $1,798 U
B. $1,798 F
C. $1,740 F
D. $1,740 U

SQ = 2.8 ounces per unit u 1,100 units = 3,080 ounces

Materials quantity variance = (AQ - SQ) SP
= (2,790 ounces - 3,080 ounces) $6.00 per ounce
= (-290 ounces) $6.00 per ounce = $1,740 F

64. The materials price variance for October is:

A. $620 F
B. $616 F
C. $616 U
D. $620 U

Materials price variance = AQ (AP - SP)

= 3,100 ounces ($6.20 per ounce - $6.00 per ounce) = 3,100 ounces
($0.20 per ounce) = $620 U

65. The labor efficiency variance for October is:

A. $510 U
B. $480 F
C. $480 U
D. $510 F

SH = 1,100 units u 0.3 hours per unit = 330 hours

Labor efficiency variance = (AH - SH) SR

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= (350 hours - 330 hours) $24.00 per hour = (20 hours) $24.00
per hour = $480 U

66. The labor rate variance for October is:

A. $495 U
B. $495 F
C. $525 U
D. $525 F

Labor rate variance = AH(AR - SR)

= 350 hours ($25.50 per hour - $24.00 per hour) = 350 hours ($1.50
per hour) = $525 U

67. The variable overhead efficiency variance for October is:

A. $82 U
B. $80 U
C. $82 F
D. $80 F

SH = 1,100 units u 0.3 hours per unit = 330 hours

Variable overhead efficiency variance = (AH - SH) SR
= (350 hours - 330 hours) $4.00 per hour = (20 hours) $4.00
per hour = $80 U

68. The variable overhead rate variance for October is:

A. $33 F
B. $35 U
C. $35 F
D. $33 U

Variable overhead rate variance = AH(AR - SR)

= 350 hours ($4.10 per hour - $4.00 per hour) = 350 hours ($0.10
per hour) = $35 U

Kibodeaux Corporation makes a product with the following standard costs:

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The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The
company used 33,240 liters of direct material and 320 direct labor-hours to produce this output. The company
purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour
and the actual variable overhead rate was $2.70 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

69. The materials quantity variance for June is:

A. $392 U
B. $392 F
C. $400 F
D. $400 U

SQ = 3,400 units u 9.8 liters per unit = 33,320 liters

Materials quantity variance = (AQ - SQ) SP
= (33,240 liters - 33,320 liters) $5.00 per liter = (-80 liters) $5.00
per liter = $400 F

70. The materials price variance for June is:

A. $3,332 F
B. $3,590 U
C. $3,332 U
D. $3,590 F

Materials price variance = AQ (AP - SP)

= 35,900 liters ($4.90 per liter - $5.00 per liter) = 35,900 liters (-
$0.10 per liter) = $3,590 F

71. The labor efficiency variance for June is:

A. $454 F
B. $454 U
C. $440 F
D. $440 U

SH = 3,400 units u 0.1 hour per unit = 340 hours

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Chapter 10 - Standard Costs and Variances
Labor efficiency variance = (AH - SH) SR
= (320 hours - 340 hours) $22 per hour = (-20 hours) $22
per hour = $440 F

72. The labor rate variance for June is:

A. $238 U
B. $238 F
C. $224 U
D. $224 F

Labor rate variance = AH(AR - SR)

= 320 hours ($22.70 per hour - $22.00 per hour) = 320 hours ($0.70
per hour) = $224 U

73. The variable overhead efficiency variance for June is:

A. $54 F
B. $54 U
C. $60 F
D. $60 U

SH = 3,400 units u 0.1 hour per unit = 340 hours

Variable overhead efficiency variance = (AH - SH) SR
= (320 hours - 340 hours) $3 per hour = (-20 hours) $3
per hour = $60 F

74. The variable overhead rate variance for June is:

A. $96 U
B. $102 F
C. $96 F
D. $102 U

Variable overhead rate variance = AH(AR - SR)

= 320 hours ($2.70 per hour - $3.00 per hour) = 320 hours (-$0.30
per hour) = $96 F

Gentile Corporation makes a product with the following standard costs:

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The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor-hours.
During the month, the company purchased 40,400 kilos of the direct material at $4.70 per kilo. The actual direct
labor rate was $13.70 per hour and the actual variable overhead rate was $2.70 per hour.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

75. The materials quantity variance for May is:

A. $13,150 F
B. $12,361 F
C. $13,150 U
D. $12,361 U

SQ = 6,000 units u 6.6 kilos per unit = 39,600 kilos

Materials quantity variance = (AQ - SQ) SP
= (36,970 kilos - 39,600 kilos) $5.00 per kilo = (-2,630 kilos)
$5.00 per kilo = $13,150 F

76. The materials price variance for May is:

A. $11,880 U
B. $11,880 F
C. $12,120 F
D. $12,120 U

Materials price variance = AQ (AP - SP)

= 40,400 kilos ($4.70 per kilo - $5.00 per kilo) = 40,400 kilos (-
0.30 per kilo) = $12,120 F

77. The labor efficiency variance for May is:

A. $6,302 U
B. $6,440 U
C. $6,440 F
D. $6,302 F

SH = 6,000 units u 0.8 hour per unit = 4,800 hours

Labor efficiency variance = (AH - SH) SR
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Chapter 10 - Standard Costs and Variances
= (4,340 hours - 4,800 hours) $14 per hour = (-460 hours) $14
per hour = $6,440 F

78. The labor rate variance for May is:

A. $1,302 U
B. $1,440 U
C. $1,440 F
D. $1,302 F

Labor rate variance = AH(AR - SR)

= 4,340 hours ($13.70 per hour - $14.00 per hour) = 4,340 hours (-
$0.30 per hour) = $1,302 F

79. The variable overhead efficiency variance for May is:

A. $1,380 F
B. $1,242 U
C. $1,242 F
D. $1,380 U

SH = 6,000 units u 0.8 hour per unit = 4,800 hours

Variable overhead efficiency variance = (AH - SH) SR
= (4,340 hours - 4,800 hours) $3.00 per hour = (-460 hours)
$3.00 per hour = $1,380 F

80. The variable overhead rate variance for May is:

A. $1,440 U
B. $1,302 F
C. $1,302 U
D. $1,440 F

Variable overhead rate variance = AH(AR - SR)

= 4,340 hours ($2.70 per hour - $3.00 per hour) = 4,340 hours (-
$0.30 per hour) = $1,302 F

Tidd Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in November.

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Chapter 10 - Standard Costs and Variances

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

81. The materials quantity variance for November is:

A. $7,530 U
B. $7,028 U
C. $7,530 F
D. $7,028 F

SQ = 9,000 units u 4.7 grams per unit = 42,300 grams

Materials quantity variance = (AQ - SQ) SP
= (44,810 grams - 42,300 grams) $3.00 per gram = (2,510 grams)
$3.00 per gram = $7,530 U

82. The materials price variance for November is:

A. $8,460 F
B. $8,460 U
C. $9,460 U
D. $9,460 F

Materials price variance = (AQ u AP) - (AQ u SP)

= $132,440 - (47,300 grams u $3.00 per gram) = $132,440 -
$141,900 = $9,460 F

83. The labor efficiency variance for November is:

A. $10,720 U
B. $10,720 F
C. $10,653 U
D. $10,653 F

SH = 9,000 units u 0.8 hour per unit = 7,200 hours

Labor efficiency variance = (AH - SH) SR

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Chapter 10 - Standard Costs and Variances
= (7,870 hours - 7,200 hours) $16 per hour = (670 hours) $16
per hour = $10,720 U

84. The labor rate variance for November is:

A. $787 U
B. $720 F
C. $787 F
D. $720 U

Labor rate variance = (AH u AR) - (AH u SR)

= $125,133 - (7,870 hours u $16.00 per hour) = $125,133 -
$125,920 = $787 F

85. The variable overhead efficiency variance for November is:

A. $2,680 F
B. $2,546 F
C. $2,680 U
D. $2,546 U

SH = 9,000 units u 0.8 hour per unit = 7,200 hours

Variable overhead efficiency variance = (AH - SH) SR
= (7,870 hours - 7,200 hours) $4 per hour = (670 hours) $4
per hour = $2,680 U

86. The variable overhead rate variance for November is:

A. $1,574 F
B. $1,440 U
C. $1,574 U
D. $1,440 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $29,906 - (7,870 hour u $4 per hour) = $29,906 -
$31,480 = $1,574 F

Caquias Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in August.

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Chapter 10 - Standard Costs and Variances

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

87. The materials quantity variance for August is:

A. $1,620 F
B. $1,674 F
C. $1,620 U
D. $1,674 U

SQ = 2,100 units u 5.3 kilos = 11,130 kilos

Materials quantity variance = (AQ - SQ) SP
= (10,860 kilos - 11,130 kilos) $6.00 per kilo = (-270 kilos) $6.00
per kilo = $1,620 F

88. The materials price variance for August is:

A. $2,360 U
B. $2,360 F
C. $2,226 U
D. $2,226 F

Materials price variance = (AQ u AP) - (AQ u SP)

= $73,160 - (11,800 kilos u $6.00 per kilo) = $73,160 -
$70,800 = $2,360 U

89. The labor efficiency variance for August is:

A. $480 F
B. $500 U
C. $500 F
D. $480 U

SH = 2,100 units u 0.5 hour per unit = 1,050 hours

Variable overhead efficiency variance = (AH - SH) SR
= (1,100 hours - 1,050 hours) $10.00 per hour = (50 hours) $10.00
per hour = $500 U

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Chapter 10 - Standard Costs and Variances
90. The labor rate variance for August is:
A. $440 F
B. $440 U
C. $420 U
D. $420 F

Labor rate variance = (AH u AR) - (AH u SR)

= $10,560 - (1,100 hours u $10.00 per hour) = $10,560 -
$11,000 = $440 F

91. The variable overhead efficiency variance for August is:

A. $200 F
B. $205 U
C. $205 F
D. $200 U

SH = 2,100 units u 0.5 hour per unit = 1,050 hours

Variable overhead efficiency variance = (AH - SH) SR
= (1,100 hours - 1,050 hours) $4.00 per hour = (50 hours) $4.00
per hour = $200 U

92. The variable overhead rate variance for August is:

A. $105 F
B. $110 F
C. $105 U
D. $110 U

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $4,510 - (1,100 hours u $4.00 per hour) = $4,510 - $4,400 =
$110 U

Sande Corporation makes a product with the following standard costs:

In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The
company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the
month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor
cost was $29,607 and the actual variable overhead cost was $2,502.
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Chapter 10 - Standard Costs and Variances
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

93. The materials quantity variance for November is:

A. $420 U
B. $434 F
C. $420 F
D. $434 U

SQ = 3,000 units u 9.2 grams per unit = 27,600 grams

Materials quantity variance = (AQ - SQ) SP
= (27,670 grams - 27,600 grams) $6.00 per gram = (70 grams) $6.00
per gram = $420 U

94. The materials price variance for November is:

A. $5,520 F
B. $6,340 F
C. $5,520 U
D. $6,340 U

Materials price variance = (AQ u AP) - (AQ u SP)

= $196,540 - (31,700 grams u $6.00 per gram) = $196,540 -
$190,200 = $6,340 U

95. The labor efficiency variance for November is:

A. $2,530 U
B. $2,530 F
C. $2,343 F
D. $2,343 U

SH = 3,000 units u 0.5 hours per unit = 1,500 hours

Variable overhead efficiency variance = (AH - SH) SR
= (1,390 hours - 1,500 hours) $23.00 per hour = (110 hours)
$23.00 per hour = $2,530 F

96. The labor rate variance for November is:

A. $2,363 U
B. $2,550 F
C. $2,550 U
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Chapter 10 - Standard Costs and Variances
D. $2,363 F

Labor rate variance = (AH u AR) - (AH u SR)

= $29,607 - (1,390 hours u $23.00 per hour) = $29,607 -
$31,970 = $2,363 F

97. The variable overhead efficiency variance for November is:

A. $220 U
B. $198 F
C. $198 U
D. $220 F

SH = 3,000 units u 0.5 hours per unit = 1,500 hours

Variable overhead efficiency variance = (AH - SH) SR
= (1,390 hours - 1,500 hours) $2.00 per hour = (-110 hours)
$2.00 per hour = $220 F

98. The variable overhead rate variance for November is:

A. $300 U
B. $278 U
C. $300 F
D. $278 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $2,502 - (1,390 hours u $2.00 per hour) = $2,502 - $2,780 =
$278 F

Landram Corporation makes a product with the following standard costs:

In March the company produced 4,700 units using 10,230 kilos of the direct material and 2,210 direct labor-
hours. During the month, the company purchased 10,800 kilos of the direct material at a cost of $76,680. The
actual direct labor cost was $38,233 and the actual variable overhead cost was $11,934.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.

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Chapter 10 - Standard Costs and Variances
99. The materials quantity variance for March is:
A. $5,810 F
B. $5,893 U
C. $5,893 F
D. $5,810 U

SQ = 4,700 units u 2.0 kilos per unit = 9,400 kilos

Materials quantity variance = (AQ - SQ) SP
= (10,230 kilos - 9,400 kilos) $7.00 per kilo = (830 kilos) $7.00
per kilo = $5,810 U

100. The materials price variance for March is:

A. $940 F
B. $1,080 F
C. $1,080 U
D. $940 U

Materials price variance = (AQ u AP) - (AQ u SP)

= $76,680 - (10,800 kilos u $7.00 per kilo) = $76,680 -
$75,600 = $1,080 U

101. The labor efficiency variance for March is:

A. $2,660 F
B. $2,422 F
C. $2,422 U
D. $2,660 U

SH = 4,700 units u 0.5 hour per unit = 2,350 hours

Labor efficiency variance = (AH - SH) SR
= (2,210 hours - 2,350 hours) $19.00 per hour = (-140 hours)
$19.00 per hour = $2,660 F

102. The labor rate variance for March is:

A. $3,757 U
B. $3,757 F
C. $3,995 U
D. $3,995 F

Labor rate variance = (AH u AR) - (AH u SR)

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Chapter 10 - Standard Costs and Variances
= $38,233 - (2,210 hours u $19.00 per hour) = $38,233 -
$41,990 = $3,757 F

103. The variable overhead efficiency variance for March is:

A. $756 U
B. $700 F
C. $756 F
D. $700 U

SH = 4,700 units u 0.5 hour per unit = 2,350 hours

Variable overhead efficiency variance = (AH - SH) SR
= (2,210 hours - 2,350 hours) $5.00 per hour = (-140 hours)
$5.00 per hour = $700 F

104. The variable overhead rate variance for March is:

A. $884 U
B. $884 F
C. $940 U
D. $940 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $11,934 - (2,210 hours u $5.00 per hour) = $11,934 -
$11,050 = $884 U

Arrow Industries uses a standard cost system in which direct materials inventory is carried at standard cost.
Arrow has established the following standards for the prime costs of one unit of product.

During May, Arrow purchased 160,000 pounds of direct material at a total cost of $304,000. The total direct labor
wages for May were $37,800. Arrow manufactured 19,000 units of product during May using 142,500 pounds of
direct material and 5,000 direct labor-hours.

105. The direct materials price variance for May is:

A. $16,000 favorable
B. $16,000 unfavorable
C. $14,250 favorable
D. $14,250 unfavorable

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Chapter 10 - Standard Costs and Variances
Materials price variance = (AQ u AP) - (AQ u SP)
= $304,000 - (160,000 pounds u $1.80 per pound) = $304,000 -
$288,000 = $16,000 U

106. The direct materials quantity variance for May is:

A. $14,400 unfavorable
B. $1,100 favorable
C. $17,100 unfavorable
D. $17,100 favorable

SQ = 19,000 units u 8 pounds per unit = 152,000 pounds

Materials quantity variance = (AQ - SQ) SP
= (142,500 pounds - 152,000 pounds) $1.80 per pound = (-9,500 pounds)
$1.80 per pound = $17,100 F

107. The direct labor rate variance for May is:

A. $2,200 favorable
B. $1,900 unfavorable
C. $2,000 unfavorable
D. $2,090 favorable

Labor rate variance = (AQ u AP) - (AQ u SP)

= $37,800 - (5,000 hours u $8.00 per hour) = $37,800 -
$40,000 = $2,200 F

108. The direct labor efficiency variance for May is:

A. $2,200 favorable
B. $2,000 favorable
C. $2,000 unfavorable
D. $1,800 unfavorable

SH = 19,000 units u 0.25 hour per unit = 4,750 hours

Labor efficiency variance = (AH - SH) SR
= (5,000 hours - 4,750 hours) $8 per hour = (250 hours) $8
per hour = $2,000 U

The Thompson Company uses standard costing and has established the following direct material and direct labor
standards for each unit of Lept.
Direct materials: 2 gallons at $4 per gallon
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Chapter 10 - Standard Costs and Variances
Direct labor: 0.5 hours at $8 per hour
During September, the company made 6,000 Lepts and incurred the following costs:
Direct materials purchased: 13,400 gallons at $4.10 per gallon
Direct materials used: 12,600 gallons
Direct labor used: 2,800 hours at $7.65 per hour

109. The materials price variance for September was:

A. $1,340 favorable
B. $1,260 favorable
C. $1,260 unfavorable
D. $1,340 unfavorable

Materials price variance = AQ (AP - SP)

= 13,400 gallons ($4.10 per gallon - $4.00 per gallon) = 13,400 gallons
($0.10 per gallon) = $1,340 U

110. The materials quantity variance for September was:

A. $2,460 unfavorable
B. $5,600 unfavorable
C. $2,400 unfavorable
D. $5,740 unfavorable

SQ = 6,000 units u 2 gallons per units = 12,000 gallons

Materials quantity variance = (AQ - SQ) SP
= (12,600 gallons - 12,000 gallons) $4.00 per gallon = (600 gallons)
$4.00 per gallon = $2,400 U

111. The labor rate variance for September was:

A. $1,530 unfavorable
B. $980 favorable
C. $280 favorable
D. $980 unfavorable

Labor rate variance = AH(AR - SR)

= 2,800 hours ($7.65 per hour - $8.00 per hour) = 2,800 hours (-
$0.35 per hour) = $980 F

112. The labor efficiency variance for September was:

A. $33,600 favorable
B. $1,600 favorable
C. $22,400 favorable
D. $3,200 favorable

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SH = 6,000 units u 0.5 hours per unit = 3,000 hours
Labor efficiency variance = (AH - SH) SR
= (2,800 hours - 3,000 hours) $8.00 per hour = (-200 hours)
$8.00 per hour = $1,600 F

The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The
following data are for the month of August: x Actual cost of direct material purchased and used: $65,560 x
Material price variance: $5,960 unfavorable x Total materials variance: $22,360 unfavorable x Standard cost
per pound of material: $4 x Standard cost per direct labor-hour: $5 x Actual direct labor-hours: 6,500 hours x
Labor efficiency variance: $3,500 favorable
x Standard number of direct labor-hours per unit of Roff: 2 hours x Total labor
variance: $400 unfavorable

113. The total number of units of Roff produced during August was:
A. 10,800
B. 14,400
C. 3,600
D. 6,500

Labor efficiency variance = (AH u SR) - (SH u SR)

= (6,500 hours u $5 per hour) - (2 hours per unit u Actual units produced u $5 per hour) = $3,500
$32,500 - $10 per unit u Actual units produced = -$3,500
$10 per unit u Actual units produced = $36,000
Actual units produced = $36,000 y $10 per unit = 3,600 units

114. The standard material allowed to produce one unit of Roff was:
A. 1 pound
B. 4 pounds
C. 3 pounds
D. 2 pounds

The following analysis only works if, as in this case, the materials purchased during the period are also used
during the period.
Total materials variance = Actual materials cost - Standard materials cost
$22,360 = $65,560 - Standard materials cost
Standard materials cost = $43,200
Standard materials cost = Standard cost per pound u Standard pounds per unit u Actual units produced
$43,200 = $4 per pound u Standard pounds per unit u 3,600 units*
Standard pounds per unit = $43,200 y ($4 per pound u 3,600 units) = 2 pounds per unit *To compute the actual
units produced:
Labor efficiency variance = (AH u SR) - (SH u SR)
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Chapter 10 - Standard Costs and Variances
= (6,500 hours u $5 per hour) - (2 hours per unit u Actual units produced u $5 per hour) = $3,500
$32,500 - $10 per unit u Actual units produced = -$3,500
$10 per unit u Actual units produced = $36,000
Actual units produced = $36,000 y $10 per unit = 3,600 units

115. The actual material cost per pound was:

A. $4.00
B. $3.67
C. $3.30
D. $4.40

Total material variance = Material price variance + Material quantity variance

$22,360 U = $5,960 U + Material quantity variance
Material quantity variance = $22,360 U - $5,960 U
Material quantity variance = $16,400 U
Material quantity variance = SP (AQ - SQ)
$16,400 = $4 per pound (AQ - (3,600 units u 3 pounds per unit))
$16,400 = $4 per pound u AQ - $43,200
$59,600 = $4 per pound u AQ
AQ = $59,600 y $4 per pound
AQ = 14,900 pounds
Actual cost of materials = Actual price per pound u AQ
$65,560 = Actual price per pound u 14,900 pounds
Actual price per pound = $65,560 y 14,900 pounds = $4.40 per pound

116. The actual direct labor rate per hour was:

A. $5.60
B. $5.00
C. $10.00
D. $4.40

Total labor variance = Labor rate variance + Labor efficiency variance

$400 U = Labor rate variance + $3,500 F
Labor rate variance = $3,900 U
Labor rate variance = (AH u AR) - (AH u SR) = AH (AR - SR)
$3,900 = 6,500 hours (AR - $5 per hour)
$3,900 = 6,500 hours u AR - $32,500
6,500 hours u AR = $36,400
AR = $36,400 y 6,500 hours = $5.60 per hour

117. The labor rate variance was:

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Chapter 10 - Standard Costs and Variances
A. $3,900 favorable
B. $3,900 unfavorable
C. $3,100 unfavorable
D. $3,100 favorable

Total labor variance = Labor rate variance + Labor efficiency variance

$400 U = Labor rate variance + $3,500 F Labor rate variance =
$3,900 U

The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

118. What is the materials price variance for the month?

A. $660 U
B. $600 U
C. $660 F
D. $600 F

Materials price variance = (AQ u AP) - (AQ u SP)

= $20,680 - (1,100 feet u $19.40 per foot) = $20,680 -
$21,340 = $660 F

119. What is the materials quantity variance for the month?

A. $1,880 U
B. $10,476 U
C. $1,940 U
D. $10,152 U

SQ = 100 units u 4.6 feet per unit = 460 feet

Materials quantity variance = (AQ - SQ) SP
= (1,000 feet - 460 feet) $19.40 per foot
= (540 feet) $19.40 per foot = $10,476 U

Johnny Corporation makes a product that uses a material with the following standards:

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The company budgeted for production of 9,500 units in April, but actual production was 9,600 units. The
company used 85,400 kilos of direct material to produce this output. The company purchased 91,900 kilos of the
direct material at $1.10 per kilo.
The direct materials purchases variance is computed when the materials are purchased.

120. The materials quantity variance for April is:

A. $7,348 U
B. $6,680 U
C. $6,680 F
D. $7,348 F

SQ = 9,600 units u 8.2 kilos per unit = 78,720 kilos

Materials quantity variance = (AQ - SQ) SP
= (85,400 kilos - 78,720 kilos) $1.00 per kilo = (6,680 kilos)
$1.00 per kilo = $6,680 U

121. The materials price variance for April is:

A. $7,872 F
B. $9,190 U
C. $9,190 F
D. $7,872 U

Materials price variance = AQ (AP - SP)

= 91,900 kilos ($1.10 per kilo - $1.00 per kilo) = 91,900 kilos
($0.10 per kilo) = $9,190 U

Fraize Corporation makes a product that uses a material with the quantity standard of 9.5 kilos per unit of output
and the price standard of $4.00 per kilo. In July the company produced 7,000 units using 68,850 kilos of the
direct material. During the month the company purchased 73,600 kilos of the direct material at $3.70 per kilo.
The direct materials purchases variance is computed when the materials are purchased.

122. The materials quantity variance for July is:

A. $9,400 U
B. $8,695 U
C. $9,400 F
D. $8,695 F

SQ = 7,000 units u 9.5 kilos per unit = 66,500 kilos

Materials quantity variance = (AQ - SQ) SP
= (68,850 kilos - 66,500 kilos) $4.00 per kilo = (2,350 kilos)
$4.00 per kilo = $9,400 U

123. The materials price variance for July is:

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A. $22,080 U
B. $19,950 U
C. $22,080 F
D. $19,950 F

Materials price variance = AQ (AP - SP)

= 73,600 kilos ($3.70 per kilo - $4.00 per kilo) = 73,600 kilos (-
$0.30 per kilo) = $22,080 F

Cuda Corporation makes a product that uses a material with the following standards:

The company budgeted for production of 3,500 units in November, but actual production was 3,300 units. The
company used 23,050 pounds of direct material to produce this output. The company purchased 26,000 pounds of
the direct material at a total cost of $158,600. The direct materials purchases variance is computed when the
materials are purchased.

124. The materials quantity variance for November is:

A. $9,600 U
B. $9,760 U
C. $9,760 F
D. $9,600 F

SQ = 3,300 units u 6.5 pounds per unit = 21,450 pounds

Materials quantity variance = (AQ - SQ) SP
= (23,050 pounds - 21,450 pounds) $6.00 per pound = (1,600 pounds)
$6.00 per pound = $9,600 U

125. The materials price variance for November is:

A. $2,145 U
B. $2,145 F
C. $2,600 U
D. $2,600 F

Materials price variance = (AQ u AP) - (AQ u SP)

= $158,600 - (26,000 pounds u $6.00 per pound) = $158,600 -
$156,000 = $2,600 U

Carskadon Corporation makes a product that uses a material with the following direct material standards:

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The company produced 3,000 units in December using 6,270 pounds of the material. During the month, the
company purchased 7,100 pounds of the direct material at a total cost of $13,490. The direct materials purchases
variance is computed when the materials are purchased.

126. The materials quantity variance for December is:

A. $660 F
B. $660 U
C. $627 F
D. $627 U

SQ = 3,000 units u 2.2 pounds per unit = 6,600 pounds

Materials quantity variance = (AQ - SQ) SP
= (6,270 pounds - 6,600 pounds) $2.00 per pound = (-330 pounds)
$2.00 per pound = $660 F

127. The materials price variance for December is:

A. $710 F
B. $710 U
C. $660 F
D. $660 U

Materials price variance = (AQ u AP) - (AQ u SP)

= $13,490 - (7,100 pounds u $2.00 per pound) = $13,490 -
$14,200 = $710 F

The auto repair shop of Empire Motor Sales uses standards to control labor time and labor cost in the shop. The
standard time for a motor tune-up is 2.5 hours. The record showing time spent in the shop last week on tune-ups
has been misplaced; however, the shop supervisor recalls that 50 tune-ups were completed during the week and
the controller recalls that the labor rate variance on tune-ups was $87, favorable. The shop has a set standard
labor rate of $9 per hour for tune-up work. The total labor variance for the week on tune-up work was $93,
unfavorable.

128. The number of actual hours spent on tune-up work last week was:
A. 125 hours
B. 105 hours
C. 145 hours
D. Cannot be computed without further information

Total labor variance = Labor rate variance + Labor efficiency variance

$93 U = $87 F + Labor efficiency variance
$93 = -$87 + Labor efficiency variance
Labor efficiency variance = $180
Labor efficiency variance = (AH u SR) - (SH u SR) = (AH- SH) SR
$180 = (AH - (2.5 hours per tune-up u 50 tune-ups)) $9 per hour
$180 = $9 per hour u AH - $1,125
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$9 per hour u AH = $1,305
AH = $1,305 y $9 per hour = 145 hours

129. The actual hourly rate of pay for tune-up work last week was:
A. $8.40 per hour
B. $9.00 per hour
C. $9.60 per hour
D. Cannot be computed without further information

Labor rate variance = AH (AR - SR) -$87 = 145 hours (AR

- $9 per hour)
-$87 = 145 hours u AR - $1,305
145 hours u AR = $1,218
AR = $1,218 y 145 hours = $8.40 per hour

The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

130. What is the labor rate variance for the month?

A. $400 F
B. $80 U
C. $80 F
D. $400 U

Labor rate variance = (AH u AR) - (AH u SR)

= $10,600 - (1,000 hours u $10.20 per hour) = $10,600 -
$10,200 = $400 U

131. What is the labor efficiency variance for the month?

A. $416 F
B. $416 U
C. $816 F
D. $848 F

SH = 200 units u 5.4 hours per unit = 1,080 hours

Labor efficiency variance = (AH - SH) SR
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= (1,000 hours - 1,080 hours) $10.20 per hour = (-80 hours)
$10.20 per hour = $816 F

Bonnot Corporation makes a product that has the following direct labor standards:

The company budgeted for production of 2,100 units in October, but actual production was 1,900 units. The
company used 410 direct labor-hours to produce this output. The actual direct labor rate was $20.60 per hour.

132. The labor efficiency variance for October is:

A. $618 U
B. $630 F
C. $618 F
D. $630 U

SH = 1,900 units u 0.2 hours per unit = 380 hours

Labor efficiency variance = (AH - SH) SR
= (410 hours - 380 hours) $21.00 per hour = (30 hours) $21.00
per hour = $630 U

133. The labor rate variance for October is:

A. $164 F
B. $164 U
C. $152 U
D. $152 F

Labor rate variance = AH(AR - SR)

= 410 hours ($20.60 per hour - $21.00 per hour) = 410 hours (-$0.40
per hour) = $164 F

Davidson Corporation makes a product that has the following direct labor standards:

In September the company produced 4,900 units using 2,210 direct labor-hours. The actual direct labor rate was
$22.40 per hour.

134. The labor efficiency variance for September is:

A. $5,520 F
B. $5,376 F
C. $5,520 U
D. $5,376 U

SH = 4,900 units u 0.5 hours per unit = 2,450 hours

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Labor efficiency variance = (AH - SH) SR
= (2,210 hours - 2,450 hours) $23.00 per hour = (-240 hours)
$23.00 per hour = $5,520 F

135. The labor rate variance for September is:

A. $1,470 U
B. $1,326 U
C. $1,326 F
D. $1,470 F

Labor rate variance = AH(AR - SR)

= 2,210 hours ($22.40 per hour - $23.00 per hour) = 2,210 hours (-
0.60 per hour)= $1,326 F

Pikus Corporation makes a product that has the following direct labor standards:

In January the company's budgeted production was 3,400 units, but the actual production was 3,500 units. The
company used 640 direct labor-hours to produce this output. The actual direct labor cost was $8,960.

136. The labor efficiency variance for January is:

A. $840 U
B. $900 U
C. $840 F
D. $900 F

SH = 3,500 units u 0.2 hours per unit = 700 hours

Labor efficiency variance = (AH - SH) SR
= (640 hours - 700 hours) $15.00 per hour = (-60 hours)
$15.00 per hour = $900 F

137. The labor rate variance for January is:

A. $700 F
B. $640 U
C. $640 F
D. $700 U

Labor rate variance = (AQ u AP) - (AQ u SP)

= $8,960 - (640 hours u $15.00 per hour) = $8,960 - $9,600 =
$640 F

Fabiano Corporation makes a product whose direct labor standards are 0.5 hours per unit and $23.00 per hour. In
February the company produced 3,300 units using 1,640 direct laborhours. The actual direct labor cost was
$38,540.
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138. The labor efficiency variance for February is:
A. $230 F
B. $235 F
C. $230 U
D. $235 U

SH = 3,300 units u 0.5 hours per unit = 1,650 hours

Labor efficiency variance = (AH - SH) SR
= (1,640 hours - 1,650 hours) $23.00 per hour = (-10 hours)
$23.00 per hour = $230 F

139. The labor rate variance for February is:

A. $825 U
B. $820 U
C. $820 F
D. $825 F

Labor rate variance = (AQ u AP) - (AQ u SP)

= $38,540 - (1,640 hours u $23.00 per hour)
= $38,540 - $37,720 = $820 U

The following standards for variable manufacturing overhead have been established for a company that makes
only one product:

The following data pertain to operations for the last month:

140. What is the variable overhead rate variance for the month?
A. $3,721 F
B. $3,721 U
C. $3,440 F
D. $3,440 U

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $95,890 - (8,600 actual hours u $11.55 per hour) = $95,890 -
$99,330 = $3,440 F

141. What is the variable overhead efficiency variance for the month?

A. $3,192 U
B. $6,913 F
C. $7,161 U
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Chapter 10 - Standard Costs and Variances
D. $6,913 U

SH = 1,900 units u 4.2 hours per unit = 7,980 hours

Variable overhead efficiency variance = (AH - SH) SR
= (8,600 hours - 7,980 hours) $11.55 per hour = (620 hours)
$11.55 per hour = $7,161 U

The Richie Company uses a standard costing system in which variable manufacturing overhead is assigned to
production on the basis of the number of machine setups. Data for the month of October include the following:
x Variable manufacturing overhead cost incurred: $42,750 x Total variable manufacturing
overhead variance: $5,430 favorable x Standard machine setups allowed for actual
production: 2,920 setups x Actual machine setups incurred: 2,850 setups

142. The standard variable overhead rate per machine setup is:
A. $16.91
B. $12.78
C. $15.00
D. $16.50

Total variable manufacturing overhead variance = Actual manufacturing overhead cost incurred - Standard
manufacturing overhead cost
$5,430 F = $42,750 - Standard manufacturing overhead cost
-$5,430 = $42,750 - Standard manufacturing overhead cost
Standard manufacturing overhead cost = $48,180 $48,180 y 2,920 setups =
$16.50 per setup

143. The variable overhead rate variance is:

A. $4,275 favorable
B. $4,275 unfavorable
C. $1,050 unfavorable
D. $1,050 favorable

Variable overhead rate variance = (AH u AR) - (AH u SR)

$42,750 - (2,850 setups u $16.50 per setup) = $42,750 -
$47,025 = $4,275 F

A manufacturing company that has only one product has established the following standards for its variable
manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours.

The following data pertain to operations for the last month:

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144. What is the variable overhead rate variance for the month?
A. $1,220 U
B. $5,885 F
C. $1,220 F
D. $5,885 U

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $73,505 - (6,100 machine-hours u $12.25 per machine-hour) = $73,505 -
$74,725 = $1,220 F

145. What is the variable overhead efficiency variance for the month?
A. $7,105 U
B. $6,989 F
C. $6,989 U
D. $1,104 U

SH = 1,200 units u 4.6 hours per unit = 5,520 hours

Variable overhead efficiency variance = (AH - SH) SR
= (6,100 hours - 5,520 hours) $12.25 per hour = (580 hours)
$12.25 per hour = $7,105 U

The following data have been provided by Augustave Corporation:

Indirect labor and power are both elements of variable manufacturing overhead.

146. The variable overhead rate variance for indirect labor is closest to:
A. $7,407 F
B. $4,347 F
C. $4,347 U
D. $3,060 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $194,418 - (44,170 hours u $4.50 per hour) = $194,418 -
$198,765 = $4,347 F

147. The variable overhead rate variance for power is closest to:
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Chapter 10 - Standard Costs and Variances
A. $1,428 F
B. $5,016 F
C. $5,016 U
D. $3,588 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $89,169 - (44,170 hours u $2.10 per hour) = $89,169 -
$92,757 = $3,588 F

The following data have been provided by Pollo Corporation:

Lubricants and supplies are both elements of variable manufacturing overhead.

148. The variable overhead rate variance for lubricants is closest to:
A. $1,425 U
B. $13,448 U
C. $12,023 U
D. $12,023 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $164,923 - (61,160 hours u $2.50 per hour) = $164,923 -
$152,900 = $12,023 U

149. The variable overhead rate variance for supplies is closest to:
A. $2,757 U
B. $2,757 F
C. $2,073 U
D. $684 U

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $75,465 - (61,160 hours u $1.20 per hour) = $75,465 -
$73,392 = $2,073 U

Hickory Corporation, which produces commercial safes, has provided the following data:

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Chapter 10 - Standard Costs and Variances

Supplies cost is an element of variable manufacturing overhead.

150. The variable overhead rate variance for supplies is closest to:
A. $47,251 F
B. $42,901 U
C. $47,251 U
D. $42,901 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $542,151 - (99,850 hours u $5.00 per hour) = $542,151 -
$499,250 = $42,901 U

151. The variable overhead efficiency variance for supplies is closest to:
A. $47,251 U
B. $4,350 U
C. $4,350 F
D. $47,251 F

SH = 10,100 units u 9.8 hours per unit = 98,980 hours

Variable overhead efficiency variance = (AH - SH) SR
= (99,850 hours - 98,980 hours) $5.00 per hour = (870 hours) $5.00
per hour = $4,350 U

Jardell Corporation makes a product with the following standards for labor and variable overhead:

The company budgeted for production of 6,400 units in June, but actual production was 6,400 units. The
company used 3,180 direct labor-hours to produce this output. The actual variable overhead rate was $4.90 per
hour. The company applies variable overhead on the basis of direct labor-hours.

152. The variable overhead efficiency variance for June is:

A. $100 F
B. $98 F
C. $100 U
D. $98 U

SH = 6,400 units u 0.5 hours per unit = 3,200 hours

Variable overhead efficiency variance = (AH - SH) SR

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Chapter 10 - Standard Costs and Variances
= (3,180 hours - 3,200 hours) $5.00 per hour = (-20 hours) $5.00
per hour = $100 F

153. The variable overhead rate variance for June is:

A. $318 U
B. $320 F
C. $318 F
D. $320 U

Variable overhead rate variance = AH(AR - SR)

= 3,180 hours ($4.90 per hour - $5.00 per hour) = 3,180 hours (-
$0.10 per hour) = $318 F

Schuetz Corporation makes a product whose variable overhead standards are based on direct labor-hours. The
quantity standard is 0.4 hours per unit. The variable overhead rate standard is $5.00 per hour. In July the
company produced 7,500 units using 2,740 direct labor-hours. The actual variable overhead rate was $5.20 per
hour.

154. The variable overhead efficiency variance for July is:

A. $1,352 U
B. $1,352 F
C. $1,300 U
D. $1,300 F

SH = 7,500 units u 0.4 hours = 3,000 hours

Variable overhead efficiency variance = (AH - SH) SR
= (2,740 hours - 3,000 hours) $5.00 per hour = (-260 hours)
$5.00 per hour = $1,300 F

155. The variable overhead rate variance for July is:

A. $600 F
B. $600 U
C. $548 F
D. $548 U

Variable overhead rate variance = AH(AR - SR)

= 2,740 hours ($5.20 per hour - $5.00 per hour) = 2,740 hours
($0.20 per hour) = $548 U

Mazzo Corporation makes a product with the following standards for direct labor and variable overhead:

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In February the company's budgeted production was 5,000 units, but the actual production was 5,100 units. The
company used 2,090 direct labor-hours to produce this output. The actual variable overhead cost was $6,688. The
company applies variable overhead on the basis of direct labor-hours.

156. The variable overhead efficiency variance for February is:

A. $150 F
B. $160 F
C. $160 U
D. $150 U

SH = 5,100 units u 0.4 hours = 2,040 hours

Variable overhead efficiency variance = (AH - SH) SR
= (2,090 hours - 2,040 hours) $3.00 per hour = (50 hours) $3.00
per hour = $150 U

157. The variable overhead rate variance for February is:

A. $408 U
B. $418 F
C. $418 U
D. $408 F

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $6,688 - (2,090 hours u $3.00 per hour) = $6,688 - $6,270 =
$418 U

Marten Corporation makes a product with the following standards for direct labor and variable overhead:

In May the company produced 2,800 units using 300 direct labor-hours. The actual variable overhead cost was
$1,620. The company applies variable overhead on the basis of direct labor-hours.

158. The variable overhead efficiency variance for May is:

A. $100 U
B. $108 F
C. $108 U
D. $100 F

SH = 2,800 units u 0.1 hours per unit = 280 hours

Variable overhead efficiency variance = (AH - SH) SR

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Chapter 10 - Standard Costs and Variances
= (300 hours - 280 hours) $5.00 per hour = (20 hours) $5.00
per hour = $100 U

159. The variable overhead rate variance for May is:

A. $112 U
B. $112 F
C. $120 F
D. $120 U

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $1,620 - (300 hours u $5.00 per hour) = $1,620 - $1,500 =
$120 U

Essay Questions

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Chapter 10 - Standard Costs and Variances
160. Thompson Company uses a standard cost system for its single product. The following data are available:
Actual experience for the current year:

Standards per unit of product:

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 rate variance.
f. Variable overhead efficiency variance.

a. & b. Raw Materials:

Materials price variance = AQ (AP - SP)
= 15,000 yards ($13.00 per yard - $15.00 per yard)
= 15,000 yards (-$2.00 per yard) = $30,000 F
SQ = 12,600 units u 1.1 yards per unit = 13,860 yards
Materials quantity variance = (AQ - SQ) SP
= (12,000 yards - 13,860 yards) $15.00 per yard = (-1,860 yards)
$15.00 per yard = $27,900 F c. & d. Direct Labor:
Labor rate variance = AH(AR - SR)
= 10,200 hours ($10.00 per hour - $9.50 per hour)
= 10,200 hours ($0.50 per hour) = $5,100 U
SH = 12,600 units u 0.8 hour per unit = 10,080 hours
Labor efficiency variance = (AH - SH) SR
= (10,200 hours - 10,080 hours) $9.50 per hour = (120 hours)
$9.50 per hour = $1,140 U e. & f. Variable Overhead:
Variable overhead rate variance = (AH u AR) - (AH u SR)
= $84,150 - (10,200 hours u $8 per hour)
= $84,150 - $81,600 = $2,550 U
SH = 12,600 units u 0.8 hours per unit = 10,080 hours
Variable overhead efficiency variance = (AH - SH) SR
= (10,200 hours - 10,080 hours) $8.00 per hour
= (20 hours) $8.00 per hour = $960 U

161. Fastic Corporation makes a product with the following standard costs:

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The company reported the following results concerning this product in August.

The materials price variance is recognized when materials are purchased. Variable overhead is applied on the
basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SQ = 8,400 units u 6.9 liters per unit = 57,960 liters

Materials quantity variance = (AQ - SQ) SP
= (58,330 liters - 57,960 liters) $5.00 per liter
= (370 liters) $5.00 per liter = $1,850 U
b. Materials price variance = AQ (AP - SP) = 62,500 liters ($4.90 per
liter - $5.00 per liter)
= 62,500 liters (-$0.10 per liter) = $6,250 F
c. SH = 8,400 units u 0.3 hours = 2,520 hours Labor efficiency
variance = (AH - SH) SR
= (2,310 hours - 2,520 hours) $17.00 per hour = (-210 hours)
$17.00 per hour = $3,570 F d. Labor rate variance = AH(AR -
SR)
= 2,310 hours ($17.10 per hour - $17.00 per hour)
= 2,310 hours ($0.10 per hour) = $231 U
e. SH = 8,400 units u 0.3 hours per unit = 2,520 hours Variable overhead efficiency variance =
(AH - SH) SR
= (2,310 hours - 2,520 hours) $6.00 per hour
= (-210 hours) $6.00 per hour = $1,260 F
f. Variable overhead rate variance = AH(AR - SR)
= 2,310 hours ($5.50 per hour - $6.00 per hour)
= 2,310 hours (-$0.50per hour) = $1,155 F

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Chapter 10 - Standard Costs and Variances
162. Blomdahl Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in October.

The materials price variance is recognized when materials are purchased. Variable overhead is applied on the
basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SQ = 8,100 units u 5.2 kilos per unit = 42,120 kilos

Materials quantity variance = (AQ - SQ) SP
= (43,130 kilos - 42,120 kilos) $6.00 per kilo
= (1,010 kilos) $6.00 per kilo = $6,060 U
b. Materials price variance = AQ (AP - SP) = 46,700 kilos ($5.70 per kilo - $6.00 per kilo)
= 46,700 kilos (-$0.30 per kilo) = $14,010 F
c. SH = 8,100 units u 0.3 hours per unit = 2,430 hours
Labor efficiency variance = (AH - SH) SR
= (2,570 hours - 2,430 hours) $22.00 per hour = (140 hours)
$22.00 per hour = $3,080 U d. Labor rate variance = AH(AR -
SR)
= 2,570 hours ($23.70 per hour - $22.00 per hour)
= 2,570 hours ($1.70 per hour) = $4,369 U
e. SH = 8,100 units u 0.3 hours = 2,430 hours Variable overhead efficiency variance = (AH -
SH) SR
= (2,570 hours - 2,430 hours) $2.00 per hour
= (140 hours) $2.00 per hour = $280 U
f. Variable overhead rate variance = AH(AR - SR)
= 2,570 hours ($1.80 per hour - $2.00 per hour) = 2,570 hours (-
$0.20 per hour)= $514 F

Level: Easy

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Chapter 10 - Standard Costs and Variances

163. Silmon Corporation makes a product with the following standard costs:

In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580 direct labor-hours.
During the month the company purchased 24,100 grams of the direct material at a price of $6.80 per gram. The
actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $3.90 per hour. The
materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of
direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SH = 4,200 units u 4.9 grams per unit = 20,580 grams

Materials quantity variance = (AQ - SQ) SP
= (21,830 grams - 20,580 grams) $7.00 per gram = (1,250 grams)
$7.00 per gram = $1,850 U b. Materials price variance = AQ (AP -
SP) = 24,100 grams ($6.80 per gram - $7.00 per gram)
= 24,100 grams (-$0.20 per gram) = $4,820 F
c. SH = 4,200 units u 0.6 hours per unit = 2,520 hours
Labor efficiency variance = (AH - SH) SR
= (2,580 hours - 2,520 hours) $14.00 per hour = (60 hours)
$14.00 per hour = $840 U d. Labor rate variance = AH(AR -
SR)
= 2,580 hours ($14.60 per hour - $14.00 per hour)
= 2,580 hours ($0.60 per hour) = $1,548 U
e. SH = 4,200 units u 0.6 hours per unit = 2,520 hours Variable overhead efficiency variance =
(AH - SH) SR
= (2,580 hours - 2,520 hours) $4.00 per hour
= (60 hours) $4.00 per hour = $240 U
f. Variable overhead rate variance = AH(AR - SR)
= 2,580 hours ($3.90 per hour - $4.00 per hour) = 2,580 hours (-
$0.10 per hour) = $258 F

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164. Igel Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in September.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SH = 1,700 units u 4.3 pounds per unit = 7,310 pounds

Materials quantity variance = (AQ - SQ) SP
= (7,210 pounds - 7,310 pounds) $6.00 per pound
= (-100 pounds) $6.00 per pound = $600 F
b. Materials price variance = (AQ u AP) - (AQ u SP)
= $43,320 - (7,600 pounds u $6 per pound)
= $43,320 - $45,600 = $2,280 F
c. SH = 1,700 units u 0.7 hours per unit = 1,190 hours
Labor efficiency variance = SR(AH - SH)
= $20 per hour (1,260 hours - 1,190 hours)
= $20 per hour (70 hours) = $1,400 U
d. Labor rate variance = (AH u AR) - (AH u SR)
= $25,578 - (1,260 hours u $20 per hour)
= $25,578 - $25,200 = $378 U
e. SH = 1,700 units u 0.7 hours per unit = 1,190 hours Variable overhead efficiency variance = (AH - SH) SR
= (1,260 hours - 1,190 hours) $2 per hour
= (70 hours) $2 per hour = $140 U
f. Variable overhead rate variance = (AH u AR) - (AH u SR)
= $2,394 - (1,260 hours u $2 per hour) = $2,394 - $2,520 =
$126 F

165. Schlager Corporation makes a product with the following standard costs:

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The company reported the following results concerning this product in August.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SH = 8,500 units u 7.8 kilos per unit = 66,300 kilos

Materials quantity variance = (AQ - SQ) SP
= (65,550 kilos - 66,300 kilos) $1.00 per kilo
= (-750 kilos) $1.00 per kilo = $750 F
b. Materials price variance = (AQ u AP) - (AQ u SP)
= $75,900 - (69,000 kilos u $1.00 per kilo)
= $75,900 - $69,000 = $6,900 U
c. SH = 8,500 units u 0.4 hours per unit = 3,400 hours
Labor efficiency variance = (AH - SH) SR
= (3,410 hours - 3,400 hours) $18.00 per hour
= (10 hours) $18.00 per hour = $180 U
d. Labor rate variance = (AH u AR) - (AH u SR)
= $66,495 - (3,410 hours u $18.00 per hour)
= $66,495 - $61,380 = $5,115 U
e. SH = 8,500 units u 0.4 hours per unit = 3,400 hours Variable overhead efficiency variance = (AH - SH) SR
= (3,410 hours - 3,400 hours) $3.00 per hour
= (10 hours) $3.00 per hour = $30 U
f. Variable overhead rate variance = (AH u AR) - (AH u SR)
= $9,889 - (3,410 hours u $3.00 per hour) = $9,889 - $10,230
= $341 F

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Level: Easy

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Chapter 10 - Standard Costs and Variances

166. Leerar Corporation makes a product with the following standard costs:

In December the company produced 4,200 units using 34,870 ounces of the direct material and 1,900 direct
labor-hours. During the month, the company purchased 39,700 ounces of the direct material at a total cost of
$111,160. The actual direct labor cost for the month was $35,530 and the actual variable overhead cost was
$3,990. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases
variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.

a. SQ = 4,200 units u 8.1 ounces per unit = 34,020 ounces

Materials quantity variance = (AQ - SQ) SP
= (34,870 ounces - 34,020 ounces) $3.00 per ounce
= (850 ounces) $3.00 per ounce = $2,550 U
b. Materials price variance = (AQ u AP) - (AQ u SP)
= $111,160 - (39,700 ounces u $3.00 per ounce)
= $111,160 - $119,100 = $7,940 F
c. SH = 4,200 units u 0.5 hours per unit = 2,100 hours
Labor efficiency variance = (AH - SH) SR
= (1,900 hours - 2,100 hours) $18.00 per hour
= (-200 hours) $18.00 per hour = $3,600 F
d. Labor rate variance = (AH u AR) - (AH u SR)
= $35,530 - (1,900 hours u $18.00 per hour)
= $35,530 - $34,200 = $1,330 U
e. SH = 4,200 units u 0.5 hours per unit = 2,100 hours Variable overhead efficiency variance = (AH - SH) SR
= (1,900 hours - 2,100 hours) $2.00 per hour
= (-200 hours) $2.00 per hour = $400 F
f. Variable overhead rate variance = (AH u AR) - (AH u SR)
= $3,990 - (1,900 hours u $2.00 per hour) = $3,990 - $3,800 =
$190 U

167. Diamond Company produces a single product. The company has set the following standards for materials
and labor:
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During the past month, the company purchased 7,000 pounds of direct materials at a cost of $17,500. All of this
material was used in the production of 1,300 units of product. Direct labor cost totaled $36,750 for the month.
The following variances have been computed:

Required:
1. For direct materials:
a. Compute the standard price per pound of materials.
b. Compute the standard quantity allowed for materials for the month's production.
c. Compute the standard quantity of materials allowed per unit of product.
2. For direct labor:
a. Compute the actual direct labor cost per hour for the month.
b. Compute the labor rate variance.

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1. a. Materials price variance = AQ (AP - SP)
$1,750 F* = 7,000 pounds ($2.50 per pound** - SP)
-$1,750 = $17,500 - 7,000 pounds u SP
7,000 pounds u SP = $19,250
SP = $2.75 per pound
* $1,375U + $375 F = $1,750 F ** 17,500 y 7,000 pounds =
$2.50 per pound
b. Materials quantity variance = (AQ - SQ) SP $1,375 U = (7,000
pounds - SQ) $2.75 per pound
$1,375 = $19,250 - SQ u $2.75 per pound
SQ u $2.75 per pound= $17,875
SQ = $17,875 y $2.75 per pound
SQ = 6,500 pounds
c. 6,500 pounds y 1,300 units = 5 pounds per unit. 2. a. Labor
efficiency variance = (AH - SH) SR
$4,000 F = (AH - 3,900 hours*)$10 per hour
-$4,000 = AH u $10 per hour- $39,000 AH u $10 per hour=
$35,000
AH = $35,000 y $10 per hour
AH = 3,500
Therefore, $36,750 total labor cost y 3,500 hours = $10.50 per hour. * 1,300 units u 3
hours per unit = 3,900 hours. b. Labor rate variance = AH(AR - SR) = 3,500 hours
($10.50 per hour - $10.00 per hour)
= 3,500 hours ($0.50 per hour) = $1,750 U

168. The following materials standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?

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

= $34,155 - (2,700 pounds u $13 per pound)
= $34,155 - $35,100 = $945 F
b. SQ = 500 units u 3.8 pounds per unit = 1,900 pounds
Materials quantity variance = (AQ - SQ) SP
= (2,000 pounds - 1,900 pounds) $13 per pound
= (100 pounds) $13 per pound = $1,300 U

169. The following standards have been established for a raw material used to make product P62:

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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?

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

= $100,500 - (6,700 pounds u $15.50 per pound)
= $100,500 - $103,850 = $3,350 F
b. SQ = 920 units u 6.3 pounds per unit = 5,796 pounds Materials quantity variance = (AQ - SQ)
SP
= (6,400 pounds - 5,796 pounds) $15.50 per pound = (604 pounds)
$15.50 per pound = $9,362 U

170. The standards for product U31 call for 7.1 liters of a raw material that costs $12.10 per liter. Last month,
1,900 liters of the raw material were purchased for $23,180. The actual output of the month was 200 units of
product U31. A total of 1,200 liters 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?

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

= $23,180 - (1,900 liters u $12.10 per liter)
= $23,180 - $22,990 = $190 U
b. SQ = 200 units u 7.1 liters per unit = 1,420 liters
Materials quantity variance = (AQ - SQ) SP
= (1,200 liters - 1,420 liters) $12.10 per liter = (-220 liters)
$12.10 per liter = $2,662 F

171. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

Required:
a. What is the labor rate variance for the month?
b. What is the labor efficiency variance for the month?

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

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Chapter 10 - Standard Costs and Variances
= $130,975 - (6,500 hours u $19.70 per hour)
= $130,970 - $128,050 = $2,925 U
b. SH = 1,400 units u 4.5 hours per unit = 6,300 hours
Labor efficiency variance = (AH - SH) SR
= (6,500 hours - 6,300 hours) $19.70 per hour = (200 hours)
$19.70 per hour = $3,940 U

172. The following direct labor standards have been established for product E45O:

The following data pertain to last month's operations:

Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?

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

= $115,320 - (9,300 hours u $13.00 per hour)
= $115,320 - $120,900 = $5,580 F
b. SH = 1,120 units u 8.2 hours per unit = 9,184 hours
Labor efficiency variance = (AH - SH) SR
= (9,300 hours - 9,184 hours) $13.00 per hour = (116 hours)
$13.00 per hour = $1,508 U

173. The standards for product C54L specify 4.5 direct labor-hours per unit at $12.40 per direct labor-hour. Last
month 1,560 units of product C54L were produced using 7,000 direct labor-hours at a total direct labor wage cost
of $86,100.
Required:
a. What was the labor rate variance for the month?
b. What was the labor efficiency variance for the month?

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

= $86,100 - (7,000 hours u $12.40 per hour)
= $86,100 - $86,800 = $700 F
b. SH = 1,560 units u 4.5 hours per unit = 7,020 hours
Labor efficiency variance = (AH - SH) SR
= (7,000 hours - 7,020 hours) $12.40 per hour = (-20 hours)
$12.40 per hour = $248 F

174. The following standards for variable overhead have been established for a company that makes only one
product:

The following data pertain to operations for the last month:

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Required:
a. What is the variable overhead rate variance for the month?
b. What is the variable overhead efficiency variance for the month?

a. Variable overhead rate variance = (AH u AR) - (AH u SR)

= $125,120 - (9,200 hours u $13.95 per hour)
= $125,120 - $128,340 = $3,220 F
b. SH = 1,600 units u 5.7 hours per unit = 9,120 hours Variable overhead efficiency variance =
(AH - SH) SR
= (9,200 hours - 9,120 hours) $13.95 per hour = (80 hours) $13.95
per hour = $1,116 U

175. Imme Corporation's variable overhead is applied on the basis of direct labor-hours. The company has
established the following variable overhead standards for product I81Z:

The following data pertain to the most recent month's operations during which 1,360 units of product I81Z were
made:

Required:
a. What was the variable overhead rate variance for the month?
b. What was the variable overhead efficiency variance for the month?

a. Variable overhead rate variance = (AH u AR) - (AH u SR)

= $38,640 - (4,600 hours u $7.60 per hour)
= $38,640 - $34,960 = $3,680 U
b. SH = 1,360 units u 3.5 hours per unit = 4,760 hours Variable overhead efficiency variance =
(AH - SH) SR
= (4,600 hours - 4,760 hours) $7.60 per hour = (-160 hours)
$7.60 per hour = $1,216 F

176. Stelluti Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card
for product H67F specifies 7.8 direct labor-hours per unit of H67F. The standard variable overhead rate is $6.50
per direct labor-hour. During the most recent month, 400 units of product H67F were made and 2,900 direct
labor-hours were worked. The actual variable overhead incurred was $20,155.
Required:
a. What was the variable overhead rate variance for the month?
b. What was the variable overhead efficiency variance for the month?

a. Variable overhead rate variance = (AH u AR) - (AH u SR)

= $20,155 - (2,900 hours u $6.50 per hour)
= $20,155 - $18,850 = $1,305 U
b. SH = 400 units u 7.8 hours per unit = 3,120 hours Variable overhead efficiency variance =
(AH - SH) SR
= (2,900 hours - 3,120 hours) $6.50 per hour = (-220 hours)
$6.50 per hour = $1,430 F
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177. The following data for November have been provided by Rickenbaker Corporation, a producer of precision
drills for oil exploration:

Required:
Compute the variable overhead rate variances for indirect labor and for power for November. Indicate whether
each of the variances is favorable (F) or unfavorable (U). Show your work!

Indirect labor:
Variable overhead rate variance = (AH u AR) - (AH u SR)
= $362,756 - (36,530 hours u $9.40 per hour) = $362,756 -
$343,382 = $19,374 U Power:
Variable overhead rate variance = (AH u AR) - (AH u SR)
= $97,693 - (36,530 hours u $2.90 per hour) = $97,693 -
$105,937 = $8,244 F

178. The following data have been provided by Tiano Corporation:

Required:
Compute the variable overhead rate variances for lubricants and for supplies. Indicate whether each of the
variances is favorable (F) or unfavorable (U). Show your work!

Lubricants:
Variable overhead rate variance = (AH u AR) - (AH u SR)
= $211,801 - (38,270 hours u $5.10 per hour) = $211,801 -
$195,177 = $16,624 U Supplies:
Variable overhead rate variance = (AH u AR) - (AH u SR)
= $107,566 - (38,270 hours u $2.90 per hour) = $107,566 -
$110,983 = $3,417 F

179. Buis Corporation, which makes landing gears, has provided the following data for a recent month:

Required:
Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those
variables are favorable or unfavorable. Show your work!

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $49,742 - (7,950 hours u $6.50 per hour)
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= $49,742 - $51,675 = $1,933 F
SH = 1,300 units u 5.9 hours per unit = 7,670 hours
Variable overhead efficiency variance = (AH - SH) SR
= (7,950 hours - 7,670 hours) $6.50 per hour = (280 hours) $6.50
per hour = $1,820 U

180. Vitko Corporation makes automotive engines. For the most recent month, budgeted production was 6,000
engines. The standard power cost is $8.80 per machine-hour. The company's standards indicate that each engine
requires 6.1 machine-hours. Actual production
was 6,400 engines. Actual machine-hours were 38,730 machine-hours. Actual power cost totaled $350,628.
Required:
Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those
variances are unfavorable or favorable. Show your work!

Variable overhead rate variance = (AH u AR) - (AH u SR)

= $350,628 - (38,730 hours u $8.80 per hour)
= $350,628 - $340,824 = $9,804 U
SH = 6.1 hours per unit u 6,400 units = 39,040 hours
Variable overhead efficiency variance = (AH - SH) SR
= (38,730 hours - 39,040 hours) $8.80 per hour = (-310 hours)
$8.80 per hour = $2,728 F

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