Multiple Choice Questions:

1) What does a favorable direct materials cost variance indicate?

A) The actual quantity of materials used was less than the standard quantity.

B) The actual cost of materials purchased was less than the standard cost of materials purchased.

C) The actual cost of materials purchased was greater than the standard cost of materials purchased.

D) The actual quantity of materials used was greater than the standard quantity.

2) Delicious Food Products is famous for their specialty fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was a favorable materials cost variance. Which of the following would be a logical explanation for that variance?

A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down.

B) The factory lost two experienced workers at the beginning of the quarter, and their replacements worked at a much slower rate during their training period.

C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.

D) The production staff changed the work flow process so that there was less wastage of direct materials during production.

3) Delicious Food Products is famous for their specialty fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was an unfavorable materials efficiency variance. Which of the following would be a logical explanation for that variance?

A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down.

B) The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of materials during their training period.

C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.

D) The production staff changed the work flow process so that production required fewer direct labor hours.

4) Delicious Food Products is famous for their specialty fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was an unfavorable labor cost variance. Which of the following would be a logical explanation for that variance?

A) The cost of workers' medical insurance plans jumped up dramatically during the quarter.

B) The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of materials during their training period.

C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.

D) The production staff changed the work flow process so that production required fewer direct labor hours.

5) Delicious Food Products is famous for their specialty fruit cake. The main ingredient of the cake is dried fruit, which Delicious purchases by the pound. In addition, the production requires a certain amount of direct labor. Delicious uses a standard cost system, and at the end of the first quarter, there was a favorable labor efficiency variance. Which of the following would be a logical explanation for that variance?

A) The cost of workers' medical insurance plans jumped up dramatically during the quarter.

B) The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of materials during their training period.

C) The procurement manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.

D) The production staff changed the work flow process so that production required fewer direct labor hours.

Answer rating: 100% (QA)

1 B The actual cost of materials purchased was less than the ... View the full answer