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Chapter 10 B 1.

Although formal entry of standard costs and variances into the accounting records is not required, some organizations make such entries in order to emphasize the importance of variances as well as to simplify the bookkeeping process. TRUE 2. A favorable labor efficiency variance is recorded as a credit in the Labor Efficiency Variance account. TRUE 3. A favorable labor rate variance is recorded as a debit in the Labor Rate Variance account. FALSE 4. An unfavorable materials quantity variance is recorded as a credit in the Materials Quantity Variance account. FALSE 5. If the actual purchase price for materials exceeds the standard purchase price, then the journal entry to record the Direct Materials Price Variance would be a debit. TRUE 6. If the actual rate per direct labor-hour exceeds the standard rate per direct labor-hour, then the journal entry to record the Direct Labor Rate Variance would be a credit. FALSE 7. If the actual quantity of materials used is less than the standard quantity of materials allowed for the actual output, then the journal entry to record the Direct Materials Quantity Variance would be a credit. TRUE 8. If the actual direct labor-hours used is less than the standard direct labor-hours allowed for the actual output, then the journal entry to record the Labor Efficiency Variance would be a debit. FALSE 9. When the actual amount of a raw material used in production is greater than the standard amount allowed for the actual output, the journal entry would include: A. Debit to Raw Materials; Credit to Materials Quantity Variance B. Debit to Work-In-Process; Credit to Materials Quantity Variance C. Debit to Raw Materials; Debit to Materials Quantity Variance D. Debit to Work-In-Process; Debit to Materials Quantity Variance 10. Dolittle Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $0.50 per pound from a supplier at $0.60 per pound would include a: A. credit to Raw Materials Inventory. B. debit to Work in Process. C. credit to Materials Price Variance. D. debit to Materials Price Variance. 11. Which of the following entries would correctly record charging direct labor costs to Work in Process, given an unfavorable labor efficiency variance and a favorable labor rate variance?

A. Option A B. Option B C. Option C D. Option D

12. When the actual direct labor-hours exceeds the standard direct labor-hours allowed for the actual output of the period, the journal entry would include: A. Debit to Wages Payable; Credit to Labor Efficiency Variance B. Debit to Work-In-Process; Credit to Labor Efficiency Variance C. Debit to Wages Payable; Debit to Labor Efficiency Variance D. Debit to Work-In-Process; Debit to Labor Efficiency Variance 13. When the actual direct labor-hours is less than the standard direct labor-hours allowed for the actual output of the period, the journal entry would include: A. Debit to Wages Payable; Credit to Labor Efficiency Variance B. Debit to Work-In-Process; Credit to Labor Efficiency Variance C. Debit to Wages Payable; Debit to Labor Efficiency Variance D. Debit to Work-In-Process; Debit to Labor Efficiency Variance 14. Ciubal Corporation has provided the following data concerning its direct labor costs for December:

The Labor Rate Variance for December would be recorded as a: A. credit of $19,440. B. credit of $21,168. C. debit of $19,440. D. debit of $21,168. Labor rate variance = AH(AR - SR) = 26,460 hours ($13.80 per hour - $13.00 per hour) = $365,148 - $343,980 = $21,168 U 15. Gotay Corporation's standard wage rate is $12.00 per direct labor-hour (DLH) and according to the standards, each unit of output requires 5.8 DLHs. In December, 4,900 units were produced, the actual wage rate was $11.00 per DLH, and the actual hours were 27,870 DLHs. The Labor Rate Variance for December would be recorded as a: A. debit of $28,420. B. credit of $28,420. C. credit of $27,870. D. debit of $27,870. Labor rate variance = AH(AR - SR) = 27,870 hours ($11.00 per hour - $12.00 per hour) = 27,870 hours (-$1.00 per hour) = $27,870 F 16. Forker Corporation has provided the following data concerning its direct labor costs for April:

The Labor Efficiency Variance for April would be recorded as a: A. debit of $54,634. B. debit of $57,875. C. credit of $54,634. D. credit of $57,875. SH = 3,600 units 8.4 hours per units = 30,240 hours Labor efficiency variance = (AH - SH) SR = (25,610 hours - 30,240 hours) $12.50 per hour = (-4,630 hours) $12.50 per hour = $57,875 F

17. Denise Corporation's standard wage rate is $14.40 per direct labor-hour (DLH) and according to the standards, each unit of output requires 7.0 DLHs. In May, 5,200 units were produced, the actual wage rate was $13.70 per DLH, and the actual hours were 36,520 DLHs. The Labor Efficiency Variance for May would be recorded as a: A. credit of $1,644. B. credit of $1,728. C. debit of $1,728. D. debit of $1,644. SH = 5,200 units 7 hours per unit = 36,400 hours Labor efficiency variance = (AH - SH) SR = (36,520 hours - 36,400 hours) $14.40 per hour = (120 hours) $14.40 per hour = $1,728 U 18. At the end of the year, a company's Manufacturing Overhead account contained the following data:

If the denominator activity for the year was 40,000 machine-hours, and if 36,400 machine-hours were allowed for the year's production, then the predetermined overhead rate per machine-hour was: A. $2.15 B. $1.96 C. $2.26 D. $2.05 Overhead applied = Predetermined overhead rate Standard hours allowed for the actual output $78,260 = Predetermined overhead rate 36,400 hours Predetermined overhead rate = $78,260 36,400 hours = $2.15 per hour 19. Raybould Corporation has provided the following data concerning its most important raw material, compound M31P:

When recording the purchase of materials, Raw Materials would be: A. credited for $49,950. B. credited for $51,300. C. debited for $49,950. D. debited for $51,300.

20. Durrant Corporation has provided the following data concerning its most important raw material, compound O96H:

When recording the use of materials in production, Raw Materials would be: A. debited for $55,930. B. debited for $54,264. C. credited for $55,930. D. credited for $54,264.

*400 units 5.7 liters = 2,280 liters

21. Compound V11V is used to make Hickenbottom Corporation's major product. The standard cost of V11V is $21.50 per ounce and the standard quantity is 3.6 ounces per unit of output. In the most recent month, 1,600 ounces of the raw material were purchased at a cost of $21.00 per ounce. When recording the purchase of materials, Raw Materials would be: A. credited for $34,400. B. credited for $33,600. C. debited for $34,400. D. debited for $33,600.

22. Compound K47E is used to make Goforth Corporation's major product. The standard cost of compound K47E is $24.50 per ounce and the standard quantity is 6.1 ounces per unit of output. In the most recent month, 5,030 ounces of the compound were used to make 700 units of the output. When recording the use of materials in production, Raw Materials would be: A. credited for $123,235. B. debited for $123,235. C. debited for $104,615. D. credited for $104,615.

*700 units 6.1 ounces per unit = 4,270 ounces

23. Data concerning the direct labor costs for April of Dimaio Corporation appear below:

The journal entry to record the incurrence of direct labor costs in April would include the following for Work in Process: A. debit of $341,658. B. credit of $341,658. C. credit of $294,174. D. debit of $294,174.

*3,700 units 8.1 ounces per unit = 29,970 ounces

24. Stanfa Corporation's standard wage rate is $10.50 per direct labor-hour (DLH) and according to the standards, each unit of output requires 8.0 DLHs. In January, 3,700 units were produced, the actual wage rate was $10.80 per DLH, and the actual hours were 25,280 DLHs. In the journal entry to record the incurrence of direct labor costs in January, the Work in Process entry would consist of a: A. debit of $310,800. B. credit of $273,024. C. credit of $310,800. D. debit of $273,024.

*3,700 units 8 DLHs per unit = 29,600 DLHs

The Odle Company makes and sells a single product called a Kitt. Odle uses a standard costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound and 0.9 direct labor-hours at $15 per hour. There were no inventories of any kind on June 1. During June, the following events occurred: Purchased 17,000 pounds of material at a total cost of $190,000. Used 15,000 pounds of material to produce 2,400 Kitts. Used 1,900 hours of direct labor time at a total cost of $38,000. 25. To record the incurrence of direct labor cost and its use in production, the general ledger would include what kind of entry to the Labor Rate Variance account? A. $9,500 credit B. $9,500 debit C. $15,200 debit D. $2,000 debit

*2,400 units 0.9 DLHs per unit = 2,160 DLHs

26. To record the incurrence of direct labor cost and its use in production, the general ledger would include what kind of entry to the Labor Efficiency Variance account? A. $7,500 credit B. $5,600 debit C. $5,600 credit D. $3,900 credit

*2,400 units 0.9 DLHs per unit = 2,160 DLHs 27. Odle Company purchased material on account. The entry to record the purchase of materials will include a: A. credit to Work in Process. B. debit to Accounts Receivable. C. credit to Accounts Payable. D. credit to Raw Materials Inventory.

28. To record the purchase of direct materials, the general ledger would include what kind of entry to the Materials Price Variance Account? A. $14,000 credit B. $14,000 debit C. $10,000 credit D. $10,000 debit

29. To record the use of direct materials in production, the general ledger would include what kind of entry to the Materials Quantity Variance Account? A. $46,000 debit B. $60,000 credit C. $60,000 debit D. $36,000 debit

*2,400 units 5 pounds per unit = 12,000 pounds Bordes Corporation has provided the following data concerning its most important raw material, compound R85F:

The raw material was purchased on account. 30. The debits to the Raw Materials account for May would total: A. $58,596 B. $75,240 C. $53,808 D. $77,880

31. The credits to the Raw Materials account for May would total: A. $75,240 B. $77,880 C. $58,596 D. $53,808

*400 units 5.9 liters per unit = 2,360 liters 32. The Materials Price Variance for May would be recorded as a: A. Credit of $2,056 B. Debit of $2,640 C. Debit of $2,056 D. Credit of $2,640

33. The Materials Quantity Variance for May would be recorded as a: A. Debit of $4,788 B. Debit of $16,644 C. Credit of $4,788 D. Credit of $16,644

*400 units 5.9 liters per unit = 2,360 liters Compound Q11H is a raw material used to make Grater Corporation's major product. The standard cost of compound Q11H is $23.00 per ounce and the standard quantity is 3.8 ounces per unit of output. Data concerning the compound for October appear below:

The raw material was purchased on account. 34. The debits to the Raw Materials account for October would total: A. $52,900 B. $52,440 C. $48,760 D. $53,130

35. The credits to the Raw Materials account for October would total: A. $52,440 B. $48,760 C. $52,900 D. $53,130

*600 units 3.8 ounces per unit = 2,280 ounces 36. The Materials Price Variance for October would be recorded as a: A. Debit of $230 B. Credit of $212 C. Debit of $212 D. Credit of $230

37. The Materials Quantity Variance for October would be recorded as a: A. Credit of $3,680 B. Debit of $4,140 C. Credit of $4,140 D. Debit of $3,680

*600 units 3.8 ounces per unit = 2,280 ounces

Karo Corporation has provided the following data concerning its direct labor costs for December:

38. The journal entry to record the incurrence of direct labor costs in December would include the following for Work in Process: A. Credit of $142,780 B. Debit of $142,780 C. Debit of $124,012 D. Credit of $124,012

*4,300 units 2.8 DLHs per unit = 12,040 DLHs

39. The Labor Rate Variance for December would be recorded as a: A. Credit of $9,086 B. Debit of $9,086 C. Credit of $8,428 D. Debit of $8,428

*4,300 units 2.8 DLHs per unit = 12,040 DLHs

40. The Labor Efficiency Variance for December would be recorded as a: A. Debit of $9,682 B. Debit of $10,340 C. Credit of $10,340 D. Credit of $9,682

*4,300 units 2.8 DLHs per unit = 12,040 DLHs Mate Corporation's standard wage rate is $11.90 per direct labor-hour (DLH) and according to the standards, each unit of output requires 4.5 DLHs. In May, 2,900 units were produced, the actual wage rate was $11.50 per DLH, and the actual hours were 15,530 DLHs. 41. In the journal entry to record the incurrence of direct labor costs in May, the Work in Process entry would consist of a: A. credit of $155,295. B. debit of $155,295. C. credit of $178,595. D. debit of $178,595.

*2,900 units 4.5 DLHs per unit = 13,050 DLHs 42. The Labor Rate Variance for May would be recorded as a: A. debit of $5,220. B. credit of $6,212. C. credit of $5,220. D. debit of $6,212.

*2,900 units 4.5 DLHs per unit = 13,050 DLHs

43. The Labor Efficiency Variance for May would be recorded as a: A. debit of $29,512. B. credit of $28,520. C. credit of $29,512. D. debit of $28,520.

*2,900 units 4.5 DLHs per unit = 13,050 DLHs

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