Multiple Choice Questions:

1) Which of the following does the efficiency variance measure?

A) The difference between the quantity used by the company and the quantity used by its competitors

B) The change in quantities used over time

C) The difference between actual and standard quantity used

D) How quickly materials are processed into finished goods

2) Which of the following statements is true of cost variances and efficiency variances?

A) They pertain to the difference between the static budget and actual results.

B) They pertain to the difference between the flexible budget and actual results.

C) They pertain to the difference between the flexible budget and the static budget.

D) They pertain to the difference between the static budget and the previous year's actual results.

3) Fast Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Fast uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows:

Materials: 1.5 pounds per unit; $4.00 per pound

Labor: 2.0 hours per unit; $18.00 per hour

During the first quarter, Fast produced 5,000 units of this product. At the end of the quarter, an examination of the materials records showed that the company used 7,000 pounds of materials and the direct materials cost variance was $1,750 U. Which of the following would be a logical explanation for this variance?

A) The company used more labor hours than allowed by the standards.

B) The company paid a higher rate for labor than allowed by the standards.

C) The company used greater quantity of materials than allowed by the standards.

D) The company paid a higher price for the materials than allowed by the standards.

4) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows:

Direct materials: 3 pounds per unit; $4 per pound

Direct labor: 4 hours per unit; $15 per hour

Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the direct labor cost variance was $75,000 F. Which of the following would be a logical explanation for this variance?

A) The company used fewer labor hours than allowed by the standards.

B) The company paid a lower rate for labor than allowed by the standards.

C) The company used a lower quantity of materials than allowed by the standards.

D) The company paid a lower price for the materials than allowed by the standards.

5) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows:

Direct materials: 3 pounds per unit; $4 per pound

Direct labor: 4 hours per unit; $15 per hour

Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs were $375,000. The direct labor efficiency variance was $75,000 U. Which of the following would be a logical explanation for this variance?

A) The company used more labor hours than allowed by the standards.

B) The company paid a higher rate for labor than allowed by the standards.

C) The company used a higher quantity of materials than allowed by the standards.

D) The company paid a higher price for the materials than allowed by the standards.