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Exam 8: Evaluating Variances From Standard Costs

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Question 91

Multiple Choice

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The unfavorable volume variance may be due to all of the following factors except

A) failure to maintain an even flow of work
B) machine breakdowns
C) unexpected increases in the cost of utilities
D) failure to obtain enough sales orders

E) B) and D)
F) B) and C)

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Question 92

True/False

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An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

A) True
B) False

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Question 93

Multiple Choice

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The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. The materials quantity variance is

If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 unfavorable.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $2,200 unfavorable.