CHAPTER11:CONTROLANDEVALUATIONOFCOSTCENTERS

MultipleChoice
c1.Thetwogeneraltypesofvariablecostvariancesarethe
a.ratevarianceandspendingvariance.
b.pricevarianceandbudgetvariance.
c.pricevarianceandquantityvariance.
d.quantityvarianceandefficiencyvariance.

d2.Amajoradvantageofusingstandardcostsisthat
a.theyareeasiertocomputethanactualcosts.
b.theyarelowerthanactualcosts.
c.productswithstandardcostscanbesoldatlowerprices.
d.theyprovideinformationforcontrolpurposes.

a3.Settingstandards
a.hasimportantbehavioralimplications.
b.islargelyamatterofcalculatingratesandquantities.
c.shouldbedonetomakethemastightaspossible.
d.isdoneonlyformanufacturingactivities.

d4.WhichofthefollowingisNOTaquantityvariance?
a.Materialusevariance.
b.Laborefficiencyvariance.
c.Variableoverheadefficiencyvariance.
d.Fixedoverheadbudgetvariance.

a5.Amajordrawbacktosettingstandardsbasedonhistoricalresultsisthatsuchstandards
a.canperpetuateinefficiencies.
b.arehardertocomputethanareengineeredstandards.
c.areusuallytoohardtomeetbecauseofinflation.
d.areusuallynotwellreceivedbyworkers.

b6.CascadeCompany,whichhasa$3standardcostperunitandbudgetedproductionat1,000units,actually
produced1,200units.Totalstandardcostfortheperiodis
a.$3,000.
b.$3,600.
c.anamountthatcannotbedeterminedwithoutknowingthevariancesfortheperiod.
d.noneoftheabove.

c7.WhichvarianceisLEASTlikelytobeaffectedbyhiringworkerswithlessskillthanthosealready
working?
a.Materialusevariance.
b.Laborratevariance.
c.Materialpricevariance.
d.Variableoverheadefficiencyvariance.

c8.WhichvarianceisMOSTlikelytobeaffectedbybuyingamoreexpensivematerialthatproduceslesswaste
andiseasiertohandle?
a.Laborratevariance.
b.Variableoverheadspendingvariance.
c.Directlaborefficiencyvariance.
d.Fixedoverheadbudgetvariance.

b9.FilterCompany'sbudgetforoverheadcostsis:
totaloverheadcost=$50,000+($4xdirectlaborhours)
Standarddirectlabortimeis1.5hoursperunitofproduct.Thestandardwagerateis$6perhour.
Standardvariableoverheadcostforaunitofproductis
a.$4.00.
b.$6.00.
c.$9.00.
d.$10.00.

b10.Themajorvarianceusedincontrollingfixedcostsisthe
a.efficiencyvariance.
b.budgetvariance.
c.usevariance.
d.noneoftheabove.

d11.Ifthevariableoverheadstandardisbasedondirectlaborhoursandactualhoursworkedexceedstandard
hoursallowed,theresultis
a.afavorablelaborefficiencyvariance.
b.anunfavorablevariableoverheadspendingvariance.
c.afavorablevariableoverheadspendingvariance.
d.anunfavorablevariableoverheadefficiencyvariance.

a12.Controlchartsareused
a.todecidewhethertoinvestigatevariances.
b.todevelopstandardcosts.
c.tocalculatevariances.
d.foralloftheabovepurposes.

c13.Anunfavorablelaborefficiencyvariance
a.meansthatworkerswereinefficientandtheirsupervisordidapoorjob.
b.causesafavorablevariableoverheadefficiencyvariance.

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c.canresultfromanactiontakenbyamanagerotherthanthesupervisoroftheworkers.
d.shouldalwaysbeinvestigatedandcorrected.

d14.Thesumofthematerialpricevarianceandmaterialusevariancealwaysequalsthedifferencebetween
a.actualandstandardmaterialpurchases.
b.actualmaterialpurchasesandstandardmaterialuse.
c.standardmaterialpurchasesandstandardmaterialuse.
d.noneoftheabovepairsofamounts.

c15.Whichsetoftermsdescribesthesametypeofvariance?
a.Pricevariance,ratevariance,usevariance.
b.Pricevariance,ratevariance,efficiencyvariance.
c.Usevariance,efficiencyvariance,quantityvariance.
d.Usevariance,efficiencyvariance,spendingvariance.

d16.Aproductrequires0.60standardlaborhours,thestandardlaborrateis$10perhour,andproductionwas
300units.Actuallaborcostwas$1,862at$9.80perhour.Whichofthefollowingistrue?
a.Thelaborratevariancewas$98favorable.
b.Thelaborratevariancewas$62unfavorable.
c.Thelaborefficiencyvariancewas$62unfavorable.
d.Thelaborefficiencyvariancewas$100unfavorable.

d17.CascadeCompanybought10,000poundsofmaterialandused9,500.Thematerialpricevariancewas$300
unfavorableandthestandardpriceperpoundis$3.Thecostofmaterialspurchasedwas
a.$28,200
b.$28,800
c.$29,700
d.$30,300

c18.Thestandardpriceofamaterialis$2perpound.Thecompanybought2,000poundsat$1.90perpoundand
used1,700pounds.Standardusewas1,800pounds.Thematerialpricevariancewas
a.$170favorable.
b.$180favorable.
c.$200favorable.
d.$400favorable.

c19.Acompanymade1,200unitswitha$550favorablelaborusevariance.Therewasnolaborratevarianceand
actuallaborcostwas$19,250.Theactualwageratewas$11.Standardlabortimeperunitis
a.0.5hours
b.1.0hour
c.1.5hours
d.2.0hours

a20.Whichformulacalculatesapriceorratevariance?(AQ=actualquantityofthefactor,AP=actualprice
ofthefactor,SQ=standardpriceofthefactor,SQ=standardquantityofthefactor)
a.(AQxAP)(AQxSP).
b.(AQxAP)(SQxAP).
c.(AQxSP)(SQxSP)
d.(AQxSP)(SQxAP).

b21.Whichformulacalculatesauseorefficiencyvariance?(AQ=actualquantityofthefactor,AP=actual
priceofthefactor,SQ=standardpriceofthefactor,SQ=standardquantityofthefactor)
a.(AQxAP)(SQxSP).
b.(AQxSP)(SQxSP).
c.(AQxAP)(AQxSP)
d.(SQxSP)(SQxAP).
b22.Usingvariancestoevaluateperformance
a.isespeciallyusefultoJITcompanies.
b.canbemisleadingbecauseofinterdependenceamongvariances.
c.cannotbeusedwithactivitybasedoverheadstandards.
d.alloftheabove.
b23.Usingactivitybasedcostinginsettingstandards
a.ismostvaluablefordirectlaborstandards.
b.shouldprovidebettervariableoverheadstandards.
c.isunnecessary.
d.givesthesamestandardsthattraditionalmethodsdo.

c24.Apurchasingmanagerboughtcheaperthannormalmaterialsthataredifficulttohandle.Whichcombination
ofvariancesisLEASTlikelytobeaffectedbythisdecision?
a.Materialuseanddirectlaboruse.
b.Materialuse,directlaboruse,andvariableoverheadefficiency.
c.Directlaborrateandvariableoverheadbudget.
d.Directlaboruseandvariableoverheadefficiency.
d25.Standardcostsareusefulfor
a.planning.
b.control.
c.performanceevaluation.
d.alloftheabove.

b26.Whichkindsofvariancesshouldbeinvestigated?
a.Thosethatarelargeandunfavorable.
b.Thosethatarelargeandeitherfavorableorunfavorable.
c.Allvariances,despitetheirsize.

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d.Onlyusevariances.

b27.Thematerialpricevarianceiscalculated
a.thesameasthelaborratevariance.
b.onthequantityofmaterialsbought,notthequantityused.
c.onthequantityofmaterialsused,notthequantitybought.
d.bymultiplyingthedifferencebetweentheactualandstandardpriceofmaterialstimesthequantityof
materialsused.

b28.Probablythebestlevelatwhichtosetstandardsis
a.historicalperformance.
b.currentlyattainableperformance.
c.idealperformance.
d.anyoftheabove.

d29.Theuseofidealstandards
a.motivatesworkerstoperformwell.
b.resultsinmostlyfavorablevariances.
c.ispreferredbymostmanagers.
d.cancauseperformancetosuffer.

d30.An80%learningcurvemeansthat
a.theincrementaltimeforeachunitis80%ofthetimeoftheunitbeforeit.
b.thecumulativeaveragetimeis80%ofthecumulativeaveragetimeatthepreviousunit.
c.asproductiondoubles,theincrementaltimeforaunitis80%ofthetimeatthepreviousdoubling
point.
d.asproductiondoubles,thecumulativeaveragetimeis80%ofthetimeatthepreviousdoublingpoint.
b31.Inwhichcompanyisthelearningeffectprobablymostimportant?
a.Acanneroforangejuice.
b.Amanufacturerofairplanes.
c.Ahighlyautomatedchemicalmanufacturer.
d.Amanufacturerofnails.
a32.WhichofthefollowingisNOTareasonwhysomeJIToperationsdonotusestandards?
a.StandardsareoftensettootightforJIToperations.
b.Usingstandardscanstiflecontinuousimprovement.
c.Standardsfocusoncostcenters,notontheentiremanufacturingoperation.
d.Alloftheabovearereasons.
d33.Theroleofactivitybasedcostinginstandardcostsisto
a.determinethestandardmaterialcontentofproducts.
b.findvalueaddingactivities.
c.determinethevariableoverheadrateperdirectlaborhour.
d.identifydriversofoverheadcosts.
a34.Acompanythatusesactivitybasedcostingtodevelopstandardcosts
a.willusuallyhavemorethanonevariableoverheadcomponentinitsstandardcosts.
b.cannotcomputevariableoverheadefficiencyvariances.
c.willhavelessinformationabouttheprofitabilityofindividualproducts.
d.alloftheabove.
d35.Advancedmanufacturers
a.areespeciallyconcernedwithmaterialpricevariances.
b.almostalwaysseekouttheleastexpensivevendors.
c.usemorematerialsthanconventionalmanufacturers.
d.aregenerallymoreconcernedwithqualityanddeliverythanwithprice.
b36.Foracompanywhosevariableoverheadrelatestodirectlabor,thevariableoverheadefficiencyvariance
a.resultsfromefficientorinefficientuseofvariableoverheadelements.
b.resultsfromefficientorinefficientuseofdirectlabor.
c.isalwaysthesameasthedirectlaborefficiencyvariance.
d.ismorelikeabudgetvariancethanausevariance.

b37.AcmeCompanyproduced500unitswitha$50unfavorablelaborratevariance.Thelaborusevariancewas
$180favorable.Actuallaborcostwas$17,870.Thestandardwageratewas$9.Actualhourswere
a.1,520
b.1,980
c.2,000
d.2,020
a38.CrunchCompanyexpectsa90%learningcurve.Thefirstbatchofanewproductrequired1,000hours.The
totaltimeforthefirstfourbatchesshouldbe
a.3,240hours.
b.3,600hours.
c.4,000hours.
d.someothernumberofhours.
c39.CrunchCompanyexpectsa90%learningcurve.Thefirstbatchofanewproductrequired10hours.Thefirst
fourbatchesshouldtakeanaverageof
a.10hours.
b.9hours.
c.8.1hours.
d.someothernumberofhours.
c40.Acmehasastandardof15partsofcomponentXcosting$1.50each.Acmepurchased14,910unitsofXfor
$21,950.Acmegenerateda$415favorablepricevarianceanda$3,735favorablequantityvariance.If

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therewerenochangesinthecomponentinventory,howmanyunitsoffinishedproductwereproduced?
a.994units
b.1,000units
c.1,160units
d.someothernumber
b41.Acmehasastandardpriceof$6perpoundformaterials.July'sresultsshowedanunfavorablematerial
pricevarianceof$44andafavorablequantityvarianceof$228.If1,066poundswereusedinproduction,
whatwasthestandardquantityallowedformaterials?
a.1,066
b.1,104
c.1,294
d.someothernumber

c42.Gencopaid$78,800todirectlaborfortheproductionof1,500units.Standardsallow2laborhoursper
unitatarateof$25.00perhour.Actualhourstotaled2,900.Thedirectlaborratevariancewas
a.$2,050favorable
b.$3,800favorable
c.$6,300unfavorable
d.someothernumber
a43.Gencopaid$78,800todirectlaborfortheproductionof1,500units.Standardsallow2laborhoursper
unitatarateof$25.00perhour.Actualhourstotaled2,900.Thedirectlaborefficiencyvariancewas
a.$2,500favorable
b.$3,800favorable
c.$6,300unfavorable
d.someothernumber
c44.Dannerhada$550favorabledirectlaborratevarianceanda$720unfavorableefficiencyvariance.Danner
paid$6,650for800hoursoflabor.Whatwasthestandarddirectlaborwagerate?
a.$8.10
b.$8.31
c.$9.00
d.someothernumber
c45.Jeter'sCompanyhada$510unfavorabledirectlaborratevarianceanda$1,000favorableefficiency
variance.Jeter'sstandardpayrollwas$11,200atastandardwageof$10perhour.Whatwastheactual
directlaborwagerate?
a.$9.56
b.$10.00
c.$10.50
d.someothernumber
a46.Chippewapaid$32,225todirectlaborfortheproductionof1,700units.Standardsallow3laborhoursper
unitatarateof$6.50perhour.Actualhourstotaled5,150.Thedirectlaborratevariancewas
a.$1,250favorable
b.$925favorable
c.$325favorable
d.$325unfavorable
d47.Chippewapaid$32,225todirectlaborfortheproductionof1,700units.Standardsallow3laborhoursper
unitatarateof$6.50perhour.Actualhourstotaled5,150.Thedirectlaborefficiencyvariancewas
a.$1,250favorable
b.$925favorable
c.$325favorable
d.$325unfavorable
a48.ChetekCompanyhasstandardvariablecostsasfollows:
Materials,3poundsat$4.00perpound
$12.00
Labor,2hoursat$10.00perhour
20.00
Variableoverhead,$7.50perlaborhour
15.00
$47.00
DuringSeptember,Chetekproduced5,000units,using9,640laborhoursatatotalwageof$94,670and
incurring$78,600invariableoverhead.Thevariableoverheadbudgetvarianceis
a.$6,300unfavorable
b.$3,600unfavorable
c.$2,700favorable
d.someothernumber
c49.BarronCompanyhasstandardvariablecostsasfollows:
Materials,3poundsat$4.00perpound
$12.00
Labor,2hoursat$10.00perhour
20.00
Variableoverhead,$7.50perlaborhour
15.00
$47.00
DuringSeptember,Barronproduced5,000units,using9,640laborhoursatatotalwageof$94,670and
incurring$78,600invariableoverhead.Thevariableoverheadefficiencyvarianceis
a.$6,300unfavorable
b.$3,600unfavorable
c.$2,700favorable
d.$3,300favorable
c50.

SilverBowmanufacturedthefirstbatchofproductin100hours.Thesecondbatchtookanadditional60
hours.Whatpercentlearningoccurred?
a.100%
b.90%

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c.80%
d.Cannotbedeterminedwiththeinformationgiven.
TrueFalse

T1.Standardcostsareperunitexpressionsofflexiblebudgetallowancesbasedonoutput.

F2.Thevalueofb,theexponentinthelearningcurveformula,isthelearningrate.
T3.Theuseofidealstandardscouldhaveundesirableeffectsonoutput.

F4.Learningcurvescanonlybeusedforaoneofakindspecialorderproduct.
F5.Solongastotalactualcostsapproximatetotalbudgetedcoststhereisnoneedformanagerialconcernor
action.

T6.Itisnotalwayspossibletoseparatethevariableandfixedcomponentsofactualoverheadcost.

F7.Whenanunfavorablevarianceoccurs,thereissomeactionthatsomemanagercantaketocorrecttheevent
orcircumstancethatgaverisetothevariance.
F8.Standardcostsaredevicesformeasuringeffectivenessbutnotefficiency.

F9."Idealstandards"arethosemostlikelytobemetundermostconditions.
T10.Thelaborefficiencyvarianceexcludestheeffectsoflaborersbeingpaidmoreorthanthestandardlabor
rate.
Problem
1.ThedatabelowrelatetoaproductofSaloisCompany.
Standardcosts:
Materials,2poundsat$6perpound
Labor,3hoursat$15perhour
Variableoverheadat$8perlaborhour
Budgetedfixedproductioncosts
Budgetedproductionfortheyear

$12
$45
$24
$140,000
4,000

perunit
perunit
perunit
peryear
units

Actualresultswere:
Production
3,700 units
Materialpurchases,8,000pounds
$46,400
Labor,10,360hours
$160,580
Variableoverheadincurred
$84,700
Fixedoverheadincurred
$137,500
Materialusedinproduction
7,300 pounds

Foreachvariance,determinetheamountandcirclethecorrectdirection,
F=favorable,U=unfavorable

a.
Materialpricevariance.

b.
Materialusevariance.

c.
Directlaborratevariance.
d.
Directlaborefficiencyvariance.

e.
Variableoverheadbudgetvariance.

f.
Variableoverheadefficiencyvariance.

g.
Fixedoverheadbudgetvariance.

SOLUTION:
a.

b.

MPV$1,600F$46,400($6x8,000)

c.

DLRV$5,180U$160,580($15x10,360)

d.

DLEV$11,100F($15x10,360)($45x3,700)

e.

VOHBV$1,820U$84,700($8x10,360)

f.

VOHEV$5,920F($8x10,360)($24x3,700)

g.

FOHBV$2,500F$137,500$140,000

MUV$600F($6x7,300)($12x3,700)

2.ThedatabelowrelatetoaproductofConroyCompany.
Standardcosts:
Materials,3poundsat$4perpound
Labor,5hoursat$12perhour
Variableoverheadat$7perlaborhour
Budgetedfixedproductioncosts
Budgetedproductionfortheyear

$12
$60
$35
$150,000
5,000

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perunit
perunit
perunit
peryear
units

Actualresultswere:
Production
5,200 units
Materialpurchases,15,000pounds
$63,220
Labor,24,860hours
$301,620
Variableoverheadincurred
$168,600
Fixedoverheadincurred
$152,760
Materialusedinproduction
15,300 pounds

Foreachvariance,determinetheamountandcirclethecorrectdirection,
F=favorable,U=unfavorable

a.
Materialpricevariance.

b.
Materialusevariance.

c.
Directlaborratevariance.
d.
Directlaborefficiencyvariance.

e.
Variableoverheadbudgetvariance.

f.
Variableoverheadefficiencyvariance.

g.
Fixedoverheadbudgetvariance.

SOLUTION:
a.

b.

MPV$3,220U$63,220($4x15,000)

c.

DLRV$3,300U$301,620($12x24,860)

d.

DLEV$13,680F($12x24,860)($60x5,200)

e.

VOHBV$5,420F$168,600($7x24,860)

f.

VOHEV$7,980F($7x24,860)($35x5,200)

g.

FOHBV$2,760U$152,760$150,000

3.

MUV$1,200F($4x15,300)($12x5,200)

Anne'sArborshasthefollowingbudgetandactualresultsforMay:
Budget

9,000
11,250
15,750

Unitproduction
Directlaborhours
Materialsused,feet

Actual
9,600
11,550
16,100

Standardlaborrateis$12perhour;standardmaterialpriceis$4.50perfoot.Actualwageswere$140,250;
actualmaterialpurchaseswere17,500poundsfor$77,160.
Foreachvariance,determinetheamountandcirclethecorrectdirection,
F=favorable,U=unfavorable

a.
Materialpricevariance.

b.
Materialusevariance.

c.
Directlaborratevariance.
d.

Directlaborefficiencyvariance.

SOLUTION:
a.
MPV:

$1,590F

$77,160($4.50x17,500)

b.

MUV:

$3,150F

$4.50x(16,100[1.75x9,600])

c.

DLRV:

$1,650U

$140,250($12x11,550)

d.

DLEV:

$5,400F

$12x(11,550[1.25x9,600])

4.

NorthCompanyhasthefollowingbudgetandactualresultsforJuly:

Unitproduction
Directlaborhours
Materialsused,feet

Budget

10,000
12,000
16,000

Actual

8,400
11,860
16,750

Standardlaborrateis$14perhour;standardmaterialpriceis$7.50perfoot.Actualwageswere$168,750;
actualmaterialpurchaseswere18,800poundsfor$149,825.
Foreachvariance,determinetheamountandcirclethecorrectdirection,

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F=favorable,U=unfavorable

a.
Materialpricevariance.

b.
Materialusevariance.

c.
Directlaborratevariance.
d.

Directlaborefficiencyvariance.

SOLUTION:
a.

MPV:

$8,825U

$149,825($7.50x18,800)

b.

MUV:

$24,825U

$7.50x(16,750[1.6x8,400])

c.

DLRV:

$2,710U

$168,750($14x11,860)

d.

DLEV:

$24,920U

$14x(11,860[1.2x8,400])

5.

ThedatabelowrelatetoaproductofAcmeCompany.

Standardcosts:
Materials,5yardsat$3perpound
Labor,3hoursat$14perhour
Variableoverheadat$10perlaborhour
Budgetedfixedproductioncosts
Budgetedproductionfortheyear

$15
$42
$30
$175,000
7,700

perunit
perunit
perunit
peryear
units

Actualresultswere:
Production
6,300 units
Materialpurchases,31,700yards
$80,890
Labor,17,660hours
$252,330
Variableoverheadincurred
$178,300
Fixedoverheadincurred
$172,200
Materialusedinproduction
31,600 yards

Foreachvariance,determinetheamountandcirclethecorrectdirection,
F=favorable,U=unfavorable

a.
Materialpricevariance.

b.
Materialusevariance.

c.
Directlaborratevariance.
d.
Directlaborefficiencyvariance.

e.
Variableoverheadbudgetvariance.

f.
Variableoverheadefficiencyvariance.

SOLUTION:
a.

b.

MPV

$14,210F$80,890($3x31,700)

MUV

$300U($3x31,600)($15x6,300)

c.

DLRV

$5,090U$252,330($14x17,660)

d.

DLEV

$17,360F($14x17,660)($42x6,300)

e.

VOHBV

$1,700U$178,300($10x17,660)

f.

VOHEV

$11,160U($9x17,660)($27x6,300)

6.ToimiInc.hadthefollowingvariancesforthemostrecentmonth:
MaterialsPriceVariance
MaterialsUsageVariance
DirectLaborRateVariance
DirectLaborEfficiencyVariance

$3,500U
$720F
$5,770F
$6,980U

Otherinformationincluded:actualwagespaid$72,310;materialspurchased$130,760;standardsperunitwere
2laborhoursat$5perhour,3poundsat$6perpound.Therewerenochangesinmaterialsinventories.
a.

Findtheunitsproduced.

b.

Findthestandardlaborhours.

c.

Findtheactuallaborhours.

d.

Findthestandardquantityofmaterialsallowed.

e.

Findtheactualquantityofmaterialsused.

SOLUTION:

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a.

7,110units ($72,310+5,7706,980)/(2x$5)

b.

14,220SH

$71,100/$5

c.

15,616AH

$78,080/$5

d.

21,330lbs ($130,7603,500+720)/$6

e.

21,210lbs $127,260/$6

7.

RalphInc.hadthefollowingvariancesforthemostrecentmonth:
DirectLaborRateVariance
DirectLaborEfficiencyVariance
VariableOverheadSpendingVariance

$14,560U
$3,660U
$12,320F

Otherinformationincluded:actualwagespaid$105,560;materialspurchased$124,860;standardsperunit
were2laborhoursat$5perhourandvariableoverheadat$6perhour.
a.

Findtheunitsproduced.

b.

Findthestandardlaborhours.

c.

Findtheactuallaborhours.

d.

Findthevariableoverheadefficiencyvariance.

e.

Findtheactualvariableoverhead.

SOLUTION:
a.

8,734units ($105,56014,5603,660)/(2x$5)

b.

17,468SH

8,734x2

c.

18,200AH

($105,56014,560)/$5

d.

$4,392U

(18,20017,468)x6

e.

$96,880

(18,200x$6)$12,320

8.

GrosVentreCompanyexpectsalearningrateof80%.Thefirstbatchofanewproductisexpectedtotake
500directlaborhours.

a.

b.

Computethecumulativeaveragetimeforthefirstfourbatches.
Computethetotaltimeforthefirstfourbatches.

SOLUTION:
a.

320[500hoursx80%x80%]

b. 1,280
Output(X)Averagetime(Y)Totaltime(XY)
1500500
2400(500x80%)800(2x400)
4320(400x80%)1,280(4x320)
9.

BencoInc.hasthefollowingresultsforDecemberwhenproductionwas8,000units:
Materialspurchased
Materialsused
Directlabor

18,000pounds
17,750pounds
27,050hours

$213,520
$436,544

Perunitstandardsare2.5poundsofmaterialsat$12.00perpoundand3.5hoursat$16perhour.
Foreachvariance,determinetheamountandcirclethecorrectdirection,
F=favorable,U=unfavorable
a.

Materialpricevariance.

b.

Materialusevariance.

c.

Directlaborratevariance.

d.

Directlaborefficiencyvariance.

SOLUTION:
a.

b.

MPV

$2,480F$213,520($12x18,000)

MUV

$27,000F($12x17,750)($12x2.5x8,000)

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c.

DLRV

$3,744U$436,544($16x27,050)

d.

DLEV

$15,200F($16x27,050)($16x3.5x8,000)

10.CascadeCompanyexpectsalearningrateof90%.Thefirstbatchofanewproductisexpectedtotake200
directlaborhours.
a.

b.

Computethecumulativeaveragetimeforthefirsteightbatches.
Computethetotaltimeforthefirsteightbatches.

SOLUTION:
a.

145.8(200hoursx90%x90%x90%)

b. 1,166.4
Output(X)Averagetime(Y)Totaltime(XY)
1200200
2180(200x90%)360(2x180)
4162(180x90%)648(4x162)
8145.8(162x90%)1,166.4(8x145.8)

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