Topic 8 Variance

What is the difference between the actual price and the standard price, multiplied by the actual quantity of materials purchased?

• Direct materials price variance

• Direct labour quantity variance

• Direct materials quantity variance

• Direct labour price variance

Which of the following is true about standard costs?

• They require that significant unfavourable variances be investigated, but do no require that significant favourable variances be investigated

• They are difficult to use with a process costing system

• They are estimates of costs attainable only under the most ideal conditions

• They can, if properly used, help motivate employees

Which of the following will result in a favourable direct labour price variance?

• When the actual direct labour rate exceeds the standard direct labour rate

• When the actual direct labour rate is less than the standard direct labour rate

• When actual direct labour hours are less than standard direct labour hours

• When actual direct labour hours exceed standard direct labour hours

An unfavourable materials quantity variance would occur if ________.

• Actual kilograms of materials used were greater than the standard kilograms allowed

• Actual labour hours used were greater than the standard labour hours allowed

• Actual kilograms of materials used were less than the standard kilograms allowed

• More materials are purchased than are used

What is the primary difference between a static budget and a flexible budget?

• The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels

• The static budget contains only fixed costs, while the flexible budget contains only variable costs

• The static budget is adjusted for different activity levels, while a flexible budget is prepared for a single level of activity

• Both the static budget and the flexible budget are adjusted for different activity levels

Which of the following is NOT a benefit of using standard costing?

• Simplifies costing of inventory

• Useful in setting selling prices

• Contributes to management control

• Used as a way to place blame on managers or employees

The direct materials total cost variance can be analysed into: 

• Usage variance and rate variance

• Wage variance and usage variance

• Efficiency variance and price variance

• Price variance and usage variance