Chapter 10 Standard Costs And Variances

Question 0

Standard quantity per unit?

Answer 0

Amount of direct materials that should be used for each unit of finished product.

Question 1

What is a standard?

Answer 1

A benchmark for measuring performance.

• there are quantity and price standards
• if quantity or acquisition price depart from the standard, managers must investigate and eliminate the cause.

Question 2

Standard price per unit?

Answer 2

Price that should be paid for each unit of direct materials and should reflect the final, delivered cost of those materials.

Question 3

Standard hours per unit?

Answer 3

Amount of direct labor hours that should be used to produce one unit of finished goods

Question 4

Standard rate per hour?

Answer 4

The company’s expected direct labor wage rate per hour, including employment taxes and fringe benefits
- actual hourly wage rates may vary somewhat from individual to individual due to differing skills or seniority

Question 5

Standard cost card?

Answer 5

Shows the standard quantity or hours and standard price or rate of the inputs required to produce a unit of a specific product

Question 6

Standard cost per unit?

Answer 6

The standard quantity or hours per unit is multiplied by the standard price or rate per unit to obtain the standard cost per unit

Question 7

Price variance?

Answer 7

The difference between the actual amount paid for an input and the standard amount that should’ve been paid, multiplied by the actual amount of the input purchased

Question 8

Quantity variance?

Answer 8

The difference between how much of an input was actually used and how much should’ve been used and is stated in dollar terms using the standard price of the input

Question 9

Standard quantity allowed (with direct materials variances) or standard hours allowed (with direct labor and variable mfg overhead variances?

Answer 9

The amount of an input that should have been used to manufacture the actual output of finished goods produced during the period

Question 10

Materials price variance?

Answer 10

Measures the difference between an inputs actual price and its standard price, multiplied by the actual quantity purchased.

Actual quantity (actual price - standard price)

Question 11

Materials quantity variance?

Answer 11

Measures the difference between the actual quantity of materials used in production and the standard quantity of materials allowed for the actual output, multiplied by the standard price per unit of materials.

Standard price (actual quantity-standard quantity)

Question 12

Labor rate variance?

Answer 12

Measures the difference between actual hourly rate and the standard hourly rate, multiplied by the actual number of hours worked during the period.

Actual hours (actual rate-standard rate)

Question 13

Labor efficiency variance?

Answer 13

Measures the difference between the actual hours used and the standard hours allowed for the actual output, multiplied by the standard hourly rate.

Standard rate (actual hours-standard hours)

Question 14

Variable overhead rate variance?

Answer 14

Measures the difference between the actual variable overhead cost incurred and the standard cost that should’ve been incurred.

Actual hours (actual rate-standard rate)

Question 15

Variable overhead efficiency variance?

Answer 15

Difference between actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate.

Standard rate(actual hours-standard hours)