The standard quantity per unit defines the ________.

• price that should be paid for each unit of direct materials.

• total cost of direct materials that should be used for each unit of finished product.

• amount of direct materials that should be used for each unit of finished product including an allowance for normal inefficiencies, such as scrap and spoilage.

• amount of direct labor-hours that should be used to produce one unit of finished goods.

A flexible budget performance report for variable manufacturing costs shows _______.

• only the activity variances.

• both the activity variances and the spending variances.

• both the revenue variances and the spending variances.

• both the quantity variances and the price variances.

The standard quantity allowed is _______.

• the amount of an input that should have been used to complete the planned output for the period.

• the actual amount of input that was used to complete the planned output for the period.

• the amount of an input that should have been used to complete the actual output for the period.

• the actual amount of input that was used to complete the actual output for the period.

The standard hours allowed is ________.

• the direct labor-hours that should have been used to complete the planned output for the period.

• the direct labor-hours that should have been used to complete the actual output for the period.

• computed by multiplying the standard labor-hours allowed per unit by the planned output for the period.

• computed by multiplying the actual labor-hours per unit by the planned output for the period.

Knowledge Check 01

When computing variable manufacturing overhead variances, the standard rate represents the ________.

• predetermined overhead rate.

• variable portion of the predetermined overhead rate.

• standard hourly pay rate for direct laborers.

• the amount of hours allowed for the actual output.

Assume that direct labor-hours are used as the overhead allocation base. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance ________.

• will be favorable.

• will be unfavorable.

• cannot be determined without additional information.convert materials into the finished product.

• will be equal to zero.