Multiple Choice Answers

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1. Hurren Corporation makes a product with the following standard costs:
InputsStandard Quantity or HoursStandard Price or RateStandard Cost Per Unit
Direct materials3.9 grams$9.00 per gram$35.10
Direct labor0.7 hours$11.00 per hour$7.70
Variable overhead0.7 hours$9.00 per hour$6.30
The company reported the following results concerning this product in June.
Originally budgeted output7,400 units
Actual output7,300 units
Raw materials used in production28,330 grams
Actual direct labor-hours5,000 hours
Purchases of raw materials31,300 grams
Actual price of raw materials purchased$9.10 per gram
Actual direct labor rate$11.90 per hour
Actual variable overhead rate$8.70 per hour
The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.
The labor rate variance for June is: (Round your intermediate calculations to 2 decimal places.)
$4,500 F
$4,500 U
$4,599 F
$4,599 U

2. Hurren Corporation makes a product with the following standard costs:
InputsStandard Quantity or HoursStandard Price or RateStandard Cost Per Unit
Direct materials3.2 grams$4.00 per gram$12.80
Direct labor0.7 hours$13.00 per hour$9.10
Variable overhead0.7 hours$4.00 per hour$2.80
The company reported the following results concerning this product in June.
Originally budgeted output8,700 units
Actual output8,600 units
Raw materials used in production26,990 grams
Actual direct labor-hours3,300 hours
Purchases of raw materials30,600 grams
Actual price of raw materials purchased$4.10 per gram
Actual direct labor rate$13.90 per hour
Actual variable overhead rate$3.70 per hour
The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased.
The materials quantity variance for June is:
rev: 03_02_2012
$2,120 U
$2,120 F
$2,173 U
$2,173 F

3. The Malcolm Company uses a standard cost system in which manufacturing overhead costs are applied to products on the basis of standard direct labor-hours (DLHs). The standards call for 5 hours of direct labor per unit produced. The following data pertain to the company’s manufacturing overhead for the month of July:
Actual fixed manufacturing overhead costs incurred$28,530
Denominator activity5,072 DLHs
Number of units produced3,700 units
Budget variance$3,170 Unfavorable
The Fixed component of the predetermined overhead rate for June is: (Round your answer to 2 decimal places.)
$5.00
$5.11
$5.77
$5.63