Q1)

PopALock manufactures locks for home and industrial use. PopALock developed the following standard costs for its most popular industrial deadbolt lock:

	Standard Cost							Unit Standard Cost
Direct materials		1.20	pounds	@	$	2	per pound		$	2.40
Direct labor		0.25	hour	@	$	12	per hour			3.00

For the current year, PopALock planned to work 2,180 direct labor hours and planned to produce 8,720 units of this industrial deadbolt lock. Actual results for the current year were 8,800 deadbolt locks produced, 11,000 pounds of direct materials were purchased and used, price paid for the direct materials was $23,100, and actual direct labor costs were $26,656 for 2,240 direct labor hours. Which of the following correctly represents the direct materials price variance and the direct materials quantity variance, respectively?

Multiple Choice

A) $1,100 F and $880 F

B) $1,100 F and $1,056 U

C) $3,300 U and $1,056 U

D) $1,100 U and $880 U

E) $3,300 U and $880 U

Q2)

When variances are used as an input to the performance evaluation system, which of the following scenarios may be encountered?

Multiple Choice

A) Purchasing managers may buy too much inventory to get a bulk purchase discount

B) Purchasing managers may buy lower quality materials to generate a favorable price variance

C) If standards are set at easily achievable levels, some people will only do enough to meet the target, but no more

D) When labor efficiency is measured on a team or production cell basis, the free rider may take advantage

E) All of the choices are correct

Please attempt only if you are willing to solve both questions.

Thank you for your help!