1. If the standard quantity of materials is 83,500 units at $0.14 per unit and the actual quantity is 94,000 units at $0.11 per unit, then the materials quantity variance is:

Multiple Choice

• $2,820 Favorable.

• $2,820 Unfavorable.

• $1,470 Unfavorable.

• $1,350 Favorable.

2. If the standard quantity of materials is 83,800 units at $0.14 per unit and the actual quantity is 94,300 units at $0.11 per unit, then the materials price variance is:

Multiple Choice

• $1,470 Unfavorable.

• $1,359 Favorable.

• $2,829 Unfavorable.

• $2,829 Favorable.

3. If the standard quantity of materials is 85,000 units at $0.14 per unit and the actual quantity is 95,500 units at $0.11 per unit, then the journal entry to record the cost of materials used includes:

Multiple Choice

• A credit to Materials Price variance of $1,470.

• A debit to Materials Price variance of $2,865.

• A debit to Work in Process Inventory of $11,900.

• A debit to Work in Process Inventory of $10,50

4. Roman Mfg.'s July production involved actual direct labor costs of $58,124 for 4,400 direct labor hours. The budget for the July level of production called for 4,500 direct labor hours at $13.20 per hour, using a standard cost system.

Roman's labor rate variance for July is:

Multiple Choice

• $1,276 unfavorable.

• $1,276 favorable.

• $44 unfavorable.

• $1,320 favorable.

5. Roman Mfg.'s July production involved actual direct labor costs of $58,124 for 4,400 direct labor hours. The budget for the July level of production called for 4,500 direct labor hours at $13.20 per hour, using a standard cost system.

Roman's labor efficiency variance for July is:

Multiple Choice

• $1,320 favorable.

• $44 unfavorable.

• $1,276 unfavorable.

• $1,276 favorable.

6. Helicopter Gear is planning to expand its product line, which requires investment of $475,200 in special-purpose machinery. The machinery has a useful life of six years and no salvage value. The estimated annual results of offering the new products are as follows:

Revenue	$ 528,000
Expenses (including straight-line depreciation)	(501,600)
Increase in net income	$ 26,400

All revenue from the new products and all expenses (except depreciation) will be received or paid in cash in the same period as recognized for accounting purposes.

The payback period for this proposed investment is:

Multiple Choice

• 2.3 years.

• 9.0 years.

• 6.0 years.

• 4.5 years.