A favorable material price variance coupled with an unfavorable material usage variance would most likely be the result of:

a. labor efficiency problems.

b. machine efficiency problems.

c. the purchase and use of higher than standard quality materials.

d. the purchase and use of lower than standard quality materials.

2. Standards preferably should be set so that:

a. no allowance is made for machine breakdowns or other work interruptions.

b. they are based on practical levels that can be achieved rather than on ideal levels.

c. they reflect a level that can be achieved only by the most skilled and efficient employee working at peak effort \(100 \%\) of the time.

d. they can be used for motivational purposes rather than in forecasting cash flows and in planning inventory.

3. Inspection of products would be \(a(n)\) :

a. prevention cost.

b. appraisal cost.

c. internal failure cost.

d. external failure cost.
4. Which of the following is NOT true with respect to statistical process control?

a. It places the monitoring of quality at a workstation.

b. It eliminates the need for a final inspection of goods.

c. It is considered a prevention cost.

d. It requires the charting of observed measurements.
Questions 5 through 8 are based on the following information.
Jackson Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for the costs of one unit of product:

During May, Jackson purchased 125,000 pounds of direct material at a total cost of \(\$ 475,000\). The total factory direct labor wages for May were \(\$ 327,600\). Jackson manufactured 22,000 units of product during May, using 108,000 pounds of direct material and 28,000 direct labor hours.
5. The price variance for the direct material acquired by Jackson Industries during May is:

a. \(\$ 21,600\) favorable.

b. \(\$ 25,000\) unfavorable.

c. \(\$ 28,000\) favorable.

d. \(\$ 21,600\) unfavorable.
6. The direct material quantity (usage) variance for May is:

a. \(\$ 7,200\) unfavorable.

b. \(\$ 7,600\) favorable.

c. \(\$ 5,850\) unfavorable.

d. \(\$ 7,200\) favorable.
7. The direct labor rate variance for May is:

a. \(\$ 8,400\) favorable.

b. \(\$ 7,200\) unfavorable.

c. \(\$ 8,400\) unfavorable.

d. \(\$ 6,000\) favorable.
8. The direct labor efficiency variance for May is:

a. \(\$ 5,850\) favorable.

b. \(\$ 7,200\) favorable.

c. \(\$ 6,000\) unfavorable.

d. \(\$ 5,850\) unfavorable.
9. For the month of January 2006, Crabapple's records disclosed the following data related to direct labor:
Actual direct labor costs Labor rate variance Labor efficiency variance \(\$ 10,000\)
\(\$ 1,000\) Favorable \((\$ 1,500)\) Unfavorable For the month of January, actual direct labor hours totaled 2,000. What was Crabapple's standard direct labor rate per hour?

a. \(\$ 5.50\)

b. \(\$ 5.00\)

c. \(\$ 4.75\)

d. \(\$ 4.50\)

10. Quality costs:

a. relate only to the manufacturing process.

b. should focus on appraisal activities.

c. are minimized by having well-trained inspectors.

d. cut across departmental lines and are often not reported to management.

Transcribed Image Text:

Direct materials Direct labor Standard Quantity 5 pounds 1.25 hours Standard Price or Rate $3.60 per pound $12.00 per hour