1. A company uses 40,000 gallons of materials for which it paid $9.00 a gallon. The materials price variance was $80,000 favorable. What is the standard price per gallon?

a)    $2.00

b)   $7.00

c)    $10.00

d)   $11.00

e)    None of the above

2. Pine Company produced 96,000 units in 45,000 direct labor hours. Production for the period was budgeted at 99,000 units and 45,500 direct labor hours. A flexible budget would compare budget and actual, respectively at

a)    48,000 hours and 49,500 hours.

b)   49,500 hours and 45,000 hours.

c)    48,000 hours and 45,000 hours.

d)   45,000 hours and 45,000 hours.

3.  An unfavorable materials quantity variance would occur if

a)    actual labor hours used were greater than the standard labor hours allowed.

b)   actual pounds of materials used were less than the standard pounds allowed.

c)    more materials are purchased than are used.

d)   actual pounds of materials used were greater than the standard pounds allowed.

4.  An unfavorable materials quantity variance would occur if

a)    more materials are purchased than are used.

b)   actual pounds of materials used were less than the standard pounds allowed.

c)    actual labor hours used were greater than the standard labor hours allowed.

d)   actual pounds of materials used were greater than the standard pounds allowed.

5.  Make-In-It Corp. has an unfavorable labor quantity variance. Which statement is not true?

a)    An unfavorable labor quantity variance is usually not related to material price variance, but it could be if the company purchases poor quality material.

b)   An unfavorable labor quantity variance could be caused by using inexperienced workers.

c)    An unfavorable variance means someone, somewhere, is performing poorly.

d)   An unfavorable labor quantity variance means more time was required than the standard allows.