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# Accounting Quiz Week 7

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Acct Quiz week 7

1. Which of the following might cause a materials variance?
Failing to take purchase discounts. Using a better grade of raw material. Changes in the market supply for the raw materials. All of the above.

2. What is the term that describes the rate companies frequently use to apply fixed overhead costs to units produced?
Predetermined overhead rate.

3. Activity-based costing is commonly used with standard costing. Using more activity drivers increases the potential for managers to get much more information from activity-based costing than from the traditional approach.

4. What is the result of substituting computerized equipment for direct labor?
Less direct labor and more manufacturing overhead.

5. Java Gourmet Coffee reports the following data for April 2010 where 200,000 pounds of roasted gourmet coffee beans were actually produced (note: standard costs do not allow for any wastage),

Actual: Direct Materials: Quantity of coffee beans: 210,000 pounds Cost per pound: \$0.55 per pound Direct Labor: Direct labor rate: \$19.00 per hour Labor hours used: 11,000 hours Variable Overhead: Actual costs: \$21,000 Standard: Direct Materials: Quantity of coffee beans: 200,000 pounds Cost per pound: \$0.50 per pound Direct Labor: Direct labor rate: \$20.00 per hour Labor hours to be used: 0.05 hours per pound Variable overhead: \$.10 per pound Refer to Java Gourmet Coffee. Calculate the total direct materials variance.

 15,500

SP ́ SQ \$0.50 ́ 200,000 = \$100,000
SP ́ SQ \$0.50 ́ 200,000 = \$100,000
\$0.55 ́ 210,000 = \$115,500
\$0.50 ́ 210,000
= \$105,000 |_____\$10,500 U _____|________ \$5,000 U_____|
Direct materials price variance = \$10,500 U Direct materials efficiency variance = \$5,000 U Total direct materials…...

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