Knowledge Check 01

Voltox Inc. uses a standard costing system. It has calculated a direct labor rate variance of $3,750, unfavorable, and a direct labor efficiency variance of $2,750, favorable. The journal entry to record the direct labor costs includes a

• Debit to Direct Labor Rate Variance for $3,750
• Debit to Direct Labor Efficiency Variance for $2,750
• Credit to Wages Payable or Cash for $6,500
• Credit to Cost of Goods Sold for $6,500

Knowledge Check 02

Under a standard costing system, the direct materials price variance is recorded when the

• Cost of Goods Sold account is closed
• Raw materials are put into production
• Raw materials are purchased
• Direct materials quantity variance is recorded

Knowledge Check 04

At the end of the year, the Cost Variances account of Alpha Inc. shows a debit balance of $1,700. The balance is considered the fixed overhead spending variance of $200, favorable. The total standard cost of production is $165,500. Calculate the actual cost of goods sold.

• $163,800
• $167,200
• $165,500
• $164,000

Knowledge Check 05

Xcel Technologies, Inc. applies variable manufacturing overhead to products based on machine hours. The standard variable overhead rate is $5 per machine hour. The standard time allowed for producing one unit is 2 machine hours. During the month of August, the company produced 500 units. It incurred actual variable costs of $5,655 and used 870 machine hours. Calculate the variable overhead rate variance for the month of August.

• $1,500 unfavorable
• $1,305 favorable
• $1,500 favorable
• $1,305 unfavorable

Knowledge Check 06

Xcel Technologies, Inc. applies variable manufacturing overhead to products based on machine hours. The standard variable overhead rate is $5 per machine hour. The standard time allowed for producing one unit is 2 machine hours. During the month of August, the company produced 500 units. It incurred actual variable costs of $5,655 and used 870 machine hours. Calculate the variable overhead efficiency variance for the month of August.

• $650 favorable
• $650 unfavorable
• $845 favorable
• $845 unfavorable

Knowledge Check 07

BonJoy Co. applies variable overhead on the basis of direct labor hours. For the month of June, the variable overhead efficiency variance is unfavorable but the variable overhead rate variance is favorable. Which of the following can be concluded from this?

• The fixed overhead costs were not incurred.
• The actual variable overhead rate was more than budgeted.
• The quantity of actual direct labor hours used was more than budgeted.
• The quantity of actual direct labor hours used was less than budgeted.