Chapter 9

Question 1

Control limits

Answer 1

the maximum allowable deviation from a standard.

Question 2

Currently attainable standards

Answer 2

a standard that reflects an efficient operating state; it is rigorous but achievable.

Question 3

Direct labor efficiency variance (LEV)

Answer 3

the difference between the actual direct labor hours used and the standard direct labor hours allowed multiplied by the standard hourly wage rate.

Question 4

Direct labor rate variance (LRV)

Answer 4

the difference between the actual hourly rate paid and the standard hourly rate multiplied by the actual hours worked.

Question 5

Direct materials price variance (MPV)

Answer 5

the difference between the actual price paid per unit of materials and the standard price allowed per unit multiplied by the actual quantity of materials purchased.

Question 6

Direct materials usage variance (MUV)

Answer 6

the difference between the direct materials actually used and the direct materials allowed for the actual output multiplied by the standard price.

Question 7

Favorable (F) variance

Answer 7

a variance produced whenever the actual amounts are less than the budgeted or standard allowances.

Question 8

Fixed overhead spending variance

Answer 8

the difference between actual fixed overhead and applied fixed overhead.

Question 9

Fixed overhead volume variance

Answer 9

the difference between budgeted fixed overhead and applied fixed overhead; it is a measure of capacity utilization.

Question 10

Ideal standards

Answer 10

standards that reflect perfect operating conditions.

Question 11

Kaizen standards

Answer 11

an interim standard that reflects the planned improvement for a coming period.

Question 12

Mix variance

Answer 12

the difference in the standard cost of the mix of actual material inputs and the standard cost of the material input mix that should have been used.

Question 13

Price (rate) variance

Answer 13

the difference between standard price and actual price multiplied by the actual quantity of inputs used.

Question 14

Price standards

Answer 14

the price that should be paid per unit of input.

Question 15

Quantity standards

Answer 15

the quantity of input allowed per unit of output.

Question 16

Standard bill of materials

Answer 16

a listing of the type and quantity of materials allowed for a given level of output.

Question 17

Standard cost per unit

Answer 17

the per-unit cost that should be achieved given materials, labor, and overhead standards.

Question 18

Standard cost sheet

Answer 18

a listing of the standard costs and standard quantities of direct materials, direct labor, and overhead that should apply to a single product.

Question 19

Standard hours allowed

Answer 19

the direct labor hours that should have been used to produce the actual output (Unit labor standard × Actual output).

Question 20

Standard quantity of materials allowed

Answer 20

the quantity of materials that should have been used to produce the actual output (Unit materials standard × Actual output).

Question 21

Total budget variance

Answer 21

the difference between the actual cost of an input and its planned cost.

Question 22

Unfavorable (U) variance

Answer 22

a variance produced whenever the actual input amounts are greater than the budgeted or standard allowances.

Question 23

Unit standard cost

Answer 23

the product of these two standards: Standard price × Standard quantity(SP × SQ).

Question 24

Usage (efficiency) variance

Answer 24

the difference between standard quantities and actual quantities multiplied by standard price.

Question 25

Variable overhead efficiency variance

Answer 25

the difference between the actual direct labor hours used and the standard hours allowed multiplied by the standard variable overhead rate.

Question 26

Variable overhead spending variance

Answer 26

the difference between the actual variable overhead and the budgeted variable overhead based on actual hours used to produce the actual output.

Question 27

Yield variance

Answer 27

the difference in the standard material cost of the standard yield and the standard material cost of the actual yield.