CHAPTER 7 MULTIPLE CHOICE PROBLEM SOLVING

1. Lincoln Corporation used the following data to evaluate their current operating system. The
company sells items for $19 each and used a budgeted selling price of $19 per unit.

Actual Budgeted
Units sold 48,000 units 39,000 units
Variable costs $167,000 $152,000
Fixed costs $ 41,000 $ 50,000

What is the static-budget variance of revenues?

A) $171,000 favorable C) $6,000 favorable
B) $171,000 unfavorable D) $9,000 unfavorable

2. Lincoln Corporation used the following data to evaluate their current operating system. The
company sells items for $18 each and used a budgeted selling price of $18 per unit.

Actual Budgeted
Units sold 45,000 units 31,000 units
Variable costs $161,000 $150,000
Fixed costs $ 44,000 $ 50,000

What is the static-budget variance of variable costs?

A) $6,000 favorable C) $14,000 favorable
B) $11,000 unfavorable D) $5,000 unfavorable

3. Lincoln Corporation used the following data to evaluate their current operating system. The
company sells items for $18 each and used a budgeted selling price of $18 per unit.

Actual Budgeted
Units sold 43,000 units 33,000 units
Variable costs $166,000 $150,000
Fixed costs $ 41,000 $ 58,000

What is the static-budget variance of operating income?

A) $164,000 favorable C) $181,000 favorable
B) $164,000 unfavorable D) $181,000 unfavorable

4. Schooner Corporation used the following data to evaluate its current operating system. The
company sells items for $23 each and used a budgeted selling price of $23 per unit.

Actual Budgeted
Units sold 171,000 units 187,000 units
Variable costs $1,081,000 $1,285,000
Fixed costs $800,000 $774,000

What is the static-budget variance of revenues?

A) $368,000 favorable C) $16,000 favorable
B) $368,000 unfavorable D) $16,000 unfavorable

5. Schooner Corporation used the following data to evaluate its current operating system. The
company sells items for $25 each and used a budgeted selling price of $25 per unit.

Actual Budgeted
Units sold 173,000 units 181,000 units
Variable costs $1,081,000 $1,285,000
Fixed costs $806,000 $770,000

What is the static-budget variance of variable costs?

A) $36,000 favorable C) $204,000 favorable
B) $36,000 unfavorable D) $204,000 unfavorable
6. Schooner Corporation used the following data to evaluate its current operating system. The
company sells items for $24 each and used a budgeted selling price of $24 per unit.

Actual Budgeted
Units sold 177,000 units 184,000 units
Variable costs $1,090,000 $1,290,000
Fixed costs $804,000 $780,000

What is the static-budget variance of operating income?

A) $8,000 favorable C) $32,000 favorable
B) $176,000 unfavorable D) $7,000 unfavorable

7. Daniels Corporation used the following data to evaluate their current operating system. The
company sells items for $19 each and had used a budgeted selling price of $20 per unit.

Actual Budgeted
Units sold 280,000 units 279,000 units
Variable costs $980,000 $881,000
Fixed costs $ 58,000 $ 45,000

What is the static-budget variance of revenues?

A) $299,000 favorable C) $260,000 unfavorable

8. Daniels Corporation used the following data to evaluate their current operating system. The
company sells items for $19 each and had used a budgeted selling price of $20 per unit.

Actual Budgeted
Units sold 280,000 units 270,000 units
Variable costs $990,000 $887,000
Fixed costs $ 60,000 $ 47,000

What is the static-budget variance of variable costs?

A) $116,000 favorable C) $103,000 favorable
B) $116,000 unfavorable D) $103,000 unfavorable

9. Daniels Corporation used the following data to evaluate their current operating system. The
company sells items for $18 each and had used a budgeted selling price of $19 per unit.

Actual Budgeted
Units sold 280,000 units 278,000 units
Variable costs $960,000 $886,000
Fixed costs $ 60,000 $ 51,000

What is the static-budget variance of operating income?

A) $325,000 favorable C) $316,000 favorable
B) $325,000 unfavorable D) $316,000 unfavorable

10. A company budgets 11,000 units of sales based on a projected selling price of $14. The actual
units sold were 18,000 at a price of $9. What is the flexible budget for sales?
A) $252,000 B) $162,000 C) $154,000 D) $99,000

11. A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were:
A) $600 more than the master budget
B) $600 less than for the planned level of activity
C) $600 more than standard for the achieved level of activity
D) $600 less than standard for the achieved level of activity

12. Goddard Inc. planned to use $153 of material per unit but actually used $140 of material per unit,
and planned to make 1,100 units but actually made 940 units.

The flexible-budget amount for materials is:

A) $168,300 B) $143,820 C) $154,000 D) $131,600

13. Goddard Inc. planned to use $156 of material per unit but actually used $141 of material per unit,
and planned to make 1,150 units but actually made 920 units.

The flexible-budget variance for materials is:

A) $13,800 favorable C) $17,250 unfavorable
B) $13,800 unfavorable D) $17,250 favorable
14. Goddard Inc. planned to use $155 of material per unit but actually used $147 of material per unit,
and planned to make 1,110 units but actually made 1,000 units.

The sales-volume variance for materials is:

A) $8,000 favorable C) $17,050 favorable
B) $16,170 unfavorable D) $8,000 unfavorable

15. Harland Corporation currently produces cardboard boxes in an automated process. Expected
production per month is 20,000 units, direct material costs are $2.50 per unit, and manufacturing
overhead costs are $15,000 per month. Manufacturing overhead is all fixed costs. What are the
flexible budgets for 14,000 and 20,000 units, respectively?
A) $14,000; $65,000 B) $14,000; $30,000 C) $50,000; $65,000 D) $50,000; $30,000

16. Alberts Incorporated planned to use materials of $11 per unit but actually used materials of $15
per unit and planned to make 1,560 units but actually made 1,730 units.

The flexible-budget amount for materials is:

A) $17,160 B) $23,400 C) $19,030 D) $25,950

17. Alberts Incorporated planned to use materials of $11 per unit but actually used materials of $13
per unit and planned to make 1,590 units but actually made 1,780 units.

The flexible-budget variance for materials is:

A) $3,180 favorable B) $3,560 unfavorable C) $3,180 unfavorable D) $3,560 favorable

18. Alberts Incorporated planned to use materials of $9 per unit but actually used materials of $14 per
unit and planned to make 1,640 units but actually made 1,770 units.

The sales-volume variance for materials is:

A) $1,170 favorable B) $1,820 unfavorable C) $1,170 unfavorable D) $1,820 favorable

19. Better Products Inc. planned to use $43 of material per unit but actually used $32 of material per
unit and planned to make 1,510 units but actually made 1,340 units.

The flexible-budget amount for materials is:

A) $57,620 B) $64,930 C) $48,320 D) $42,880

20. Better Products Inc. planned to use $36 of material per unit but actually used $34 of material per
unit and planned to make 1,520 units but actually made 1,310 units.

The flexible-budget variance for materials is:

A) $3,040 favorable B) $3,040 unfavorable C) $2,620 unfavorable D) $2,620 favorable

21. Better Products Inc. planned to use $40 of material per unit but actually used $30 of material per
unit and planned to make 1,560 units but actually made 1,310 units.

The sales-volume variance for materials is:

A) $10,000 favorable B) $10,000 unfavorable
C) $7,500 unfavorable D) $7,500 favorable

22. Zebra Corporation currently produces baseball caps in an automated process. Expected
production per month is 17,000 units, direct material costs are $7.50 per unit, and manufacturing
overhead costs are $60,000 per month. Manufacturing overhead is entirely fixed costs. What is
the flexible budget for 11,000 and 17,000 units, respectively?
A) $60,000; $187,500 B) $60,000; $105,000
C) $142,500; $187,500 D) $142,500; $105,000

23. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.
Actual Flexible Static
Results Budget Budget
Sales volume (in units) 18,000 ____ 23,000

Sales revenues $900,000 $ $1,150,000

Variable costs 360,000 $ ________ 463,910
Contribution margin 540,000 $ 686,090
Fixed costs 275,300 $ ________ 269,500
Operating profit $264,700 $ ____ $416,590
 The flexible budget will report ________ for variable costs. (Round any intermediate calculations
to the nearest cent, and round your final answer to the nearest dollar.)
A) $592,774 B) $460,000 C) $363,060 D) $463,910

24. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.

Actual Flexible Static

Results Budget Budget
Sales volume (in units) 20,000 ____ 22,000

Sales revenues $1,000,000 $ $1,100,000

Variable costs 480,000 $ ________ 530,200
Contribution margin 520,000 $ 569,800
Fixed costs 276,200 $ ________ 270,600
Operating profit $243,800 $ ____ $299,200

The flexible budget will report ________ for the fixed costs.
A) $303,820 B) $270,600 C) $530,200 D) $246,000

25. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.

Actual Flexible Static

Results Budget Budget
Sales volume (in units) 17,000 ____ 21,000

Sales revenues $ 935,000 $ $1,155,000

Variable costs 391,000 $ ________ 480,270
Contribution margin 544,000 $ 674,730
Fixed costs 275,800 $ ________ 268,600
Operating profit $268,200 $ ____ $406,130

The flexible-budget variance for variable costs is: (Round any intermediate calculations to the
nearest cent, and round your final answer to the nearest dollar.)
A) $2,210 unfavorable B) $202,275 unfavorable
C) $89,270 favorable D) $137,930 favorable

26. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.

Actual Flexible Static

Results Budget Budget
Sales volume (in units) 19,000 ____ 20,500

Sales revenues $ 510,000 $ $ 615,000

Variable costs 256,000 $ ________ 300,000
Contribution margin 254,000 $ 315,000
Fixed costs 235,000 $ ________ 228,000
Operating profit $ 19,000 $ ____ $ 87,000

The flexible budget for sales revenues will be? (Round any intermediate calculations to the
nearest cent, and round your final answer to the nearest dollar.)
A) $615,000 B) $510,000 C) $635,500 D) $570,000

27. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.
Actual Flexible Static
Results Budget Budget
Sales volume (in units) 15,000 ____ 11,000
Sales revenues $ 245,000 $ $ 235,000
Variable costs 139,000 $ ________ 184,000
Contribution margin 106,000 $ 51,000
Fixed costs 42,000 $ ________ 31,000
Operating profit $ 64,000 $ ____ $ 20,000
 The flexible budget will report ________ for variable costs. (Round any intermediate calculations
to the nearest cent, and round your final answer to the nearest dollar.)
A) $101,970 B) $250,950 C) $45,000 D) $184,000

28. The actual information pertains to the month of June. As a part of the budgeting process, Great
Cabinets Company developed the following static budget for June. Great Cabinets is in the
process of preparing the flexible budget and understanding the results.

Actual Flexible Static

Results Budget Budget
Sales volume (in units) 15,000 ____ 13,000
Sales revenues $ 236,000 $ $ 234,000
Variable costs 166,000 $ ________ 182,000
Contribution margin 70,000 $ 52,000
Fixed costs 41,000 $ ________ 31,000
Operating profit $29,000 $ ____ $ 21,000

The flexible budget will report ________ for the fixed costs.
A) $73,923 B) $31,000 Favorable
C) $31,000 D) $10,000 Unfavorable

29. The actual information pertains to the third quarter. As part of the budgeting process, the Duck
Decoy Department of Paralith Incorporated had developed the following static budget for the
third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the
results.

Actual Flexible Static

Results Budget Budget
Sales volume (in units) 16,000 ____ 12,000
Sales revenues $ 241,000 $ $ 233,000
Variable costs 148,000 $ ________ 183,000
Contribution margin 93,000 $ 50,000
Fixed costs 36,000 $ ________ 33,000
Operating profit $ 57,000 $ ____ $ 17,000

The flexible-budget variance for variable costs is: (Round any intermediate calculations to the
nearest cent, and round your final answer to the nearest dollar.)
A) $35,000 favorable B) $37,000 unfavorable
C) $35,000 unfavorable D) $96,000 favorable

30. Classic Products Company manufactures colonial style desks. Some of the company's data was
misplaced. Use the following information to replace the lost data:

Actual Flexible Budget Flexible Sales-Volume Static

Results Variances Budget Variances Budget
Units sold 490,000 490,000 448,350
Revenues $187,250 $5,000 F (A) $6,260 U (B)
Variable costs (C) $890 U $71,260 $10,800 F $82,060
Fixed costs $36,670 $3,740 F $40,410 0 $40,410
Operating income $78,430 (D) $70,580 (E) $66,040

What amounts are reported for revenues in the flexible-budget (A) and the static-budget (B),
respectively?
A) $192,250; $175,990 B) $182,250; $188,510
C) $187,250; $185,990 D) $180,990; $188,510

31. Classic Products Company manufactures colonial style desks. Some of the company's data was
misplaced. Use the following information to replace the lost data:

Actual Flexible Budget Flexible Sales-Volume Static

Results Variances Budget Variances Budget
Units sold 490,000 490,000 448,350
Revenues $187,950 $4,900 F (A) $6,260 U (B)
Variable costs (C) $850 U $72,070 $10,400 F $82,470
Fixed costs $36,670 $3,700 F $40,370 0 $40,370
Operating income $78,360 (D) $70,610 (E) $66,470
 What are the actual variable costs (C)?
A) $71,220 B) $72,920 C) $72,070 D) $82,470

32. Classic Products Company manufactures colonial style desks. Some of the company's data was
misplaced. Use the following information to replace the lost data:

Actual Flexible Budget Flexible Sales-Volume Static

Results Variances Budget Variances Budget
Units sold 490,000 490,000 448,450
Revenues $186,850 $5,000 F (A) $6,460 U (B)
Variable costs (C) $870 U $70,870 $10,300 F $81,170
Fixed costs $36,710 $3,780 F $40,490 0 $40,490
Operating income $78,400 (D) $70,490 (E) $66,650

What is the total flexible-budget variance (D)?

A) $11,750 favorable B) $0
C) $3,840 favorable D) $7,910 favorable

33. Classic Products Company manufactures colonial style desks. Some of the company's data was
misplaced. Use the following information to replace the lost data:

Actual Flexible Budget Flexible Sales-Volume

Results Variances Budget Variances Static Budget
Units sold 490,000 490,000 447,950
Revenues $186,550 $4,400 F (A) $6,460 U (B)
Variable costs (C) $860 U $70,970 $10,700 F $81,670
Fixed costs $36,510 $3,750 F $40,260 0 $40,260
Operating income $78,210 (D) $70,920 (E) $66,680

What is the total sales-volume variance (E)?

A) $11,530 unfavorable B) $7,290 unfavorable
C) $4,240 favorable D) $11,530 favorable

34. Classic Products Company manufactures colonial style desks. Some of the company's data was
misplaced. Use the following information to replace the lost data:

Actual Flexible Budget Flexible Sales-Volume

Results Variances Budget Variances Static Budget
Units sold 500,000 500,000 458,850
Revenues $185,050 $4,400 F (A) $6,460 U (B)
Variable costs (C) $800 U $68,740 $10,900 F $79,640
Fixed costs $36,770 $3,750 F $40,520 0 $40,520
Operating income $78,740 (D) $71,390 (E) $66,950

What is the total static-budget variance?

A) $11,790 favorable B) $7,350 favorable
C) $4,440 unfavorable D) $4,440 favorable

35. J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call
for 2 square yards of wool per coat. The budgeted price of wool is $44 per square yard. The
actual price for the wool was $36 and the usage was only 1.70 yards of wool per coat. What
would be the standard cost per output for the wool?
A) $61.20 per coat B) $72.00 per coat C) $88.00 per coat D) $74.80 per coat

36. Standard material cost per kg of raw material is $6.50. Standard material allowed per unit is 5 Kg.
Actual material used per unit is 6.00 Kg. Actual cost per kg is $6.00. What is the standard cost
per output unit?
A) $30.00 B) $36.00 C) $32.50 D) $39.00

37. Standard labor rate is $7.50 per hour. Standard labor allowed per unit is 0.7 hours. Actual cost per
labor hour is $7.00 and actual labor hour per unit is 1 hours. What is the standard labor cost per
output unit?
A) $4.90 B) $5.25 C) $7.50 D) $7.00
38. Heavy Products, Inc. (HPI) developed standard costs for direct material and direct labor. In 2020,
HPI estimated the following standard costs for one of their major products, the 10-gallon plastic
container.

Budgeted quantity Budgeted price

Direct materials 0.10 pounds $80 per pound
Direct labor 0.20 hours $25 per hour

During June, Heavy Products produced and sold 19,000 containers using 2500 pounds of direct
materials at an average cost per pound of $82 and 1900 direct manufacturing labor-hours at an
average wage of $26.00 per hour.

June's direct material flexible-budget variance is:

A) $38,000 unfavorable B) $5000 favorable
C) $53,000 unfavorable D) $1900 favorable

39. Heavy Products, Inc. (HPI) developed standard costs for direct material and direct labor. In 2020,
HPI estimated the following standard costs for one of their major products, the 10-gallon plastic
container.

Budgeted quantity Budgeted price

Direct materials 0.10 pounds $80 per pound
Direct labor 0.15 hours $20 per hour

During June, Heavy Products produced and sold 18,000 containers using 2200 pounds of direct
materials at an average cost per pound of $83 and 1800 direct manufacturing labor-hours at an
average wage of $21.56 per hour.

The direct material price variance during June is:

A) $6600 unfavorable B) $38,600 favorable
C) $38,600 unfavorable D) $2808 favorable

40. Heavy Products, Inc. (HPI) developed standard costs for direct material and direct labor. In 2020,
HPI estimated the following standard costs for one of their major products, the 10-gallon plastic
container.

Budgeted quantity Budgeted price

Direct materials 0.90 pounds $60 per pound
Direct labor 0.10 hours $30 per hour

During June, Heavy Products produced and sold 19,000 containers using 1,200 pounds of direct
materials at an average cost per pound of $63 and 17,100 direct manufacturing labor-hours at an
average wage of $31.25 per hour.

The direct manufacturing labor price variance during June is:

A) $21,375 unfavorable B) $21,375 favorable
C) $3600 unfavorable D) $950,400 unfavorable

41. Heavy Products, Inc. (HPI) developed standard costs for direct material and direct labor. In 2020,
HPI estimated the following standard costs for one of their major products, the 10-gallon plastic
container.

Budgeted quantity Budgeted price

Direct materials 0.80 pounds $50 per pound
Direct labor 0.15 hours $25 per hour

During June, Heavy Products produced and sold 20,000 containers using 1000 pounds of direct
materials at an average cost per pound of $52 and 3000 direct manufacturing labor-hours at an
average wage of $50.75 per hour.

The direct manufacturing labor efficiency variance during June is:

A) $22,838 unfavorable B) $77,250 favorable
C) $515,000 unfavorable D) $0
42. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.30 pounds $50 per pound
Direct labor 0.60 hours $12 per hour

During July, GII produced and sold 4,000 containers using 1,350 pounds of direct materials at an
average cost per pound of $48 and 2,450 direct manufacturing labor hours at an average wage of
$12.25 per hour.

July's direct material flexible-budget variance is:

A) $4,800 unfavorable B) $7,500 favorable
C) $9,900 unfavorable D) $0

43. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.40 pounds $20 per pound
Direct labor 0.80 hours $15 per hour

During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an
average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of
$15.25 per hour.

The direct material price variance during July is:

A) $20,000 unfavorable B) $8,500 favorable
C) $8,500 unfavorable D) $2,000 unfavorable

44. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.20 pounds $40 per pound
Direct labor 0.10 hours $18 per hour

During July, GII produced and sold 4,000 containers using 1,000 pounds of direct materials at an
average cost per pound of $37 and 475 direct manufacturing labor hours at an average wage of
$18.75 per hour.

The direct material efficiency variance during July is:

A) $5,000 unfavorable B) $7,400 favorable
C) $8,000 unfavorable D) $5,000 favorable

45. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.60 pounds $20 per pound
Direct labor 0.30 hours $14 per hour

During July, GII produced and sold 4,000 containers using 2,700 pounds of direct materials at an
average cost per pound of $19 and 1,290 direct manufacturing labor hours at an average wage of
$14.30 per hour.

The direct manufacturing labor flexible-budget variance during July is:

A) $1,260.00 unfavorable B) $900.00 favorable
C) $1,647.00 unfavorable D) $3,300.00 favorable
46. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.20 pounds $20 per pound
Direct labor 0.60 hours $18 per hour

During July, GII produced and sold 3000 containers using 700 pounds of direct materials at an
average cost per pound of $16 and 1825 direct manufacturing labor hours at an average wage of
$18.30 per hour.

The direct manufacturing labor price variance during July is:

A) $450.00 unfavorable B) $547.50 unfavorable
C) $540.00 favorable D) $800.00 unfavorable

47. Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In
2020, GII estimated the following standard costs for one of their major products, the 30-gallon
heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.30 pounds $50 per pound
Direct labor 0.50 hours $18 per hour

During July, GII produced and sold 4000 containers using 1400 pounds of direct materials at an
average cost per pound of $45 and 2090 direct manufacturing labor hours at an average wage of
$18.75 per hour.

The direct manufacturing labor efficiency variance during July is:

A) $1620.00 unfavorable B) $1567.50 favorable
C) $3187.50 favorable D) $1687.50 unfavorable

48. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 1 pounds $5.40 per pound
Direct labor 0.50 hours $13.00 per hour

During September, MCP produced and sold 1,000 units using 1,300 pounds of direct materials at
an average cost per pound of $5.00 and 480 direct labor hours at an average wage of $13.15 per
hour.

September's direct material flexible-budget variance is:

A) $400 unfavorable B) $120 favorable
C) $1,100 unfavorable D) $520 favorable

49. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 1 pounds $8.60 per pound
Direct labor 0.20 hours $13.00 per hour

During September, MCP produced and sold 1,000 units using 1,400 pounds of direct materials at
an average cost per pound of $8.00 and 160 direct labor hours at an average wage of $13.50 per
hour.

The direct material price variance during September is:

A) $840 favorable B) $840 unfavorable
C) $2,600 unfavorable D) $2,600 favorable
50. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 2 pounds $2.30 per pound
Direct labor 0.40 hours $15.00 per hour

During September, MCP produced and sold 1,000 units using 2,200 pounds of direct materials at
an average cost per pound of $2.00 and 360 direct labor hours at an average wage of $15.15 per
hour.

The direct material efficiency variance during September is:

A) $660 favorable B) $660 unfavorable
C) $460 favorable D) $460 unfavorable

51. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 7 pounds $7.30 per pound
Direct labor 0.50 hours $10.00 per hour

During September, MCP produced and sold 2,000 units using 14,400 pounds of direct materials
at an average cost per pound of $7.00 and 950 direct labor hours at an average wage of $10.40 per
hour.

The direct labor flexible-budget variance during September is:

A) $120.00 favorable B) $120.00 unfavorable
C) $520.00 favorable D) $520.00 unfavorable

52. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 6 pounds $4.25 per pound
Direct labor 0.50 hours $15.00 per hour

During September, MCP produced and sold 2,000 units using 12,400 pounds of direct materials
at an average cost per pound of $4.00 and 950 direct labor hours at an average wage of $15.15 per
hour.

The direct labor price variance during September is:

A) $750.00 unfavorable B) $150.00 favorable
C) $142.50 unfavorable D) $142.50 favorable

53. Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In
2020, MCP estimated the following standard costs for one of their most popular products.

Budgeted quantity Budgeted price

Direct materials 4 pounds $7.25 per pound
Direct labor 0.60 hours $17.00 per hour

During September, MCP produced and sold 2,000 units using 8,200 pounds of direct materials at
an average cost per pound of $7.00 and 1,160 direct labor hours at an average wage of $17.50 per
hour.

The direct labor efficiency variance during September is:

A) $680 favorable B) $700 unfavorable
C) $600 favorable D) $100 unfavorable

54. The flexible-budget variance for materials is $2,000 (U). The sales-volume variance is $18,000
(U). The price variance for material is $38,000 (F). The efficiency variance for direct
manufacturing labor is $12,000 (F). Calculate the efficiency variance for materials.
A) $40,000 favorable B) $18,000 unfavorable
C) $6,000 favorable D) $40,000 unfavorable
55. A company purchases $650,000 of materials on credit. The standard cost for the materials is
$675,000. Which of the following would be the correct journal entries to record the purchase
under a standard costing system?
A)
Direct Materials Control $675,000
Direct Materials Price Variance $25,000
Accounts Payable Control $650,000
B)
WIP Control $675,000
Direct Materials Price Variance $25,000
Accounts Payable Control $650,000
C)
Accounts Payable Control $650,000
Direct Materials Price Variance $25,000
Direct Materials Control $675,000
D)
Accounts Payable Control $650,000
Direct Materials Price Variance $ 25,000
WIP Control $675,000

56. Handley Manufacturing Company has prepared the following flexible budget for August and is in
the process of interpreting the variances. F denotes a favorable variance and U denotes an
unfavorable variance.

Flexible Variances-
Budget Price Efficiency
Material A $45,000 $1,100F $3,200U
Material B 61,000 800U 2,000F
Direct manufacturing labor 83,000 600U 2,500F

The actual amount spent for Material B was:

A) $58,200 B) $59,800 C) $61,000 D) $62,200

57. Handley Manufacturing Company has prepared the following flexible budget for August and is in
the process of interpreting the variances. F denotes a favorable variance and U denotes an
unfavorable variance.

Flexible __Variances__
Budget Price Efficiency
Material A $ 48,000 $1,900F $3,400U
Material B 69,000 800U 1,600F
Direct manufacturing labor 88,000 900U 2,200F

The actual amount spent for direct manufacturing labor was:

A) $88,000 B) $91,100 C) $89,300 D) $86,700

58. Madden's Camera Shop has prepared the following flexible budget for September and is in the
process of interpreting the variances. F denotes a favorable variance and U denotes an
unfavorable variance.

Flexible ___Variances____
Budget Price Efficiency
Material A $27,000 $2,000U $1,200F
Material B 32,000 400F 700U
Material C 46,000 1,800U 2,300F

The actual amount spent for Material A was:

A) $30,200 B) $26,200 C) $27,800 D) $23,800

59. Madden's Camera Shop has prepared the following flexible budget for September and is in the
process of interpreting the variances. F denotes a favorable variance and U denotes an
unfavorable variance.

Flexible Variances
Budget Price Efficiency
Material A $26,000 $1,200U $1,600F
Material B 39,000 400F 800U
Material C 46,000 1,400U 2,400F
 The actual amount spent for Material B was:
A) $38,600 B) $37,800 C) $40,200 D) $39,400

60. Madden's Camera Shop has prepared the following flexible budget for September and is in the
process of interpreting the variances. F denotes a favorable variance and U denotes an
unfavorable variance.

Flexible Variances
Budget Price Efficiency
Material A $29,000 $1,200U $1,900F
Material B 37,000 800F 700U
Material C 44,000 1,500U 2,500F

The explanation that lower-quality materials were purchased is most likely for:
A) Material A B) Material B
C) Material C D) both Material A and C