College Acct 2- Chapter 9

Zanny Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $8.10. During the month of August, Zanny's water ski radio production used 6,250 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Zanny's labor rate variance for August?

• $2,160 Favorable

• $972 Favorable

• $1,917 Favorable

• $1,917 Unfavorable

Poorly trained workers could have an unfavorable effect on which of the following variances?

• Labor Rate Variance & Materials Quantity Variance

• Labor Rate Variance only

• Materials Quantity Variance only

• Neither variance

A budget that adjusts based on changes in actual activity levels is called a:

• rolling budget.

• fixed budget.

• flexible budget.

• operating budget.

If the total standard variable cost for one unit of finished product is $90, then the standard price per foot for direct materials is:

• $5

• $3

• $4

• $2

Warp Manufacturing Corporation uses a standard cost system for the production of its ski lift chairs. Warp uses machine-hours as an overhead base. The variable manufacturing overhead standards for each chair are 1.2 machine-hours at a standard cost of $15 per hour.

During the month of May, Warp incurred 40,000 machine-hours in the production of 32,000 ski lift chairs. The total variable manufacturing overhead cost was $649,400. What is Warp's variable overhead rate variance for May?

• $49,400 Unfavorable

• $49,400 Favorable

• $84,040 Favorable

• $79,200 Favorable

The total overhead cost at an activity level of 10,000 guest-days per month should be:

• $237,650

• $213,150

• $224,920

• $227,190

When using a flexible budget, an increase in activity within the relevant range:

• decreases variable cost per unit.

• increases total costs.

• increases variable cost per unit.

• decreases total costs.

Ramkissoon Corp.'s cost formula for its wages and salaries is $2,025 per month plus $442 per sale. For the month of July, the company planned for activity of 117 sales, but the actual level of activity was 114 sales. The actual wages and salaries for the month was $60,000. The spending variance for wages and salaries in July would be closest to:

• $726 F

• $726 U

• $7,587 F

• $7,587 U

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

• unfavorable.

• favorable.

• zero.

• either favorable or unfavorable.

A favorable materials quantity variance indicates that:

• actual material price exceeds standard price.

• actual usage of material exceeds the standard material allowed for output.

• standard material allowed for output exceeds the actual usage of material.

• standard material price exceeds actual price.