24. ToolTime has a standard of 1.5 pounds of materials per unit, at $2 per pound

Question

24. ToolTime has a standard of 1.5 pounds of materials per unit, at $2 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $6,045. ToolTime's materials price variance is
A) $45 U.
B) $155 F.
C) $200 F.
D) $350 F.

25. If a company issues raw materials to production at a cost of $12,600 when the standard cost is $12,200, it will
A) debit Materials Price Variance for $400.
B) credit Materials Price Variance for $400.
C) debit Materials Quantity Variance for $400.
D) credit Material Quantity Variance for $400.

26. If a company is concerned with the potential negative effects of establishing standards, it should
A) set loose standards that are easy to fulfill.
B) offer wage incentives to those meeting standards.
C) not employ any standards.
D) set tight standards in order to motivate people.

27. The overhead volume variance is
A) actual overhead less overhead budgeted for actual hours.
B) actual overhead less overhead budgeted for standard hours allowed.
C) overhead budgeted for actual hours less applied overhead.
D) the fixed overhead rate times the difference between normal capacity hours and standard hours allowed.

28. Which of the following statements about overhead variances is false?
A) Standard hours allowed are used in calculating the controllable variance.
B) Standard hours allowed are used in calculating the volume variance.
C) The controllable variance pertains solely to fixed costs.
D) The total overhead variance pertains to both variable and fixed costs.

29. The overhead variances measure whether overhead costsAre Effectively Managed Were Used Effectively


A) Controllable Controllable and Volume



B) Controllable Volume



C) Controllable and Volume Controllable



D) Volume Controllable

Explanation / Answer

24. Option B)$155F is the correct answer. Standard price per pound $2 Standard material per unit = 1.5 pound Standard cost per unit= 1.5*2=$3 Standard Quantity for producing 2,000units= 2,000*1.5=3,000 3,000 pounds Actual materials used = 3,100 pounds Actual cost = $6,045 Actual price per pound = $6,045/3,100=$1.95 Material Price Variance= AQ(AP-SP) 3,100($1.95-$2) 3,100($-0.05) $155Favorable 25. Option A) Debit Materials price Variance for $400 Actual cost= $12,600 Standardcost=$12,200 If Actual cost is more than standard cost then the variance is Unfavorable. Hence, it is debited to material price variance 26. Option D is the correct answer. Set tight standards inorder to motivate people. 27. Option D is the correct answer. The Fixed overhead rate times the difference between normal capacity hours and standard hours allowed. 28. Option C is the correct answer. The controllable variance pertains solely to fixed costs. 29. Option C is the corrrect answer. Controllable and volume controllable Option B)$155F is the correct answer. Standard price per pound $2 Standard material per unit = 1.5 pound Standard cost per unit= 1.5*2=$3 Standard Quantity for producing 2,000units= 2,000*1.5=3,000 3,000 pounds Actual materials used = 3,100 pounds Actual cost = $6,045 Actual price per pound = $6,045/3,100=$1.95 Material Price Variance= AQ(AP-SP) 3,100($1.95-$2) 3,100($-0.05) $155Favorable

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