Page 936 - Accounting Principles (A Business Perspective)

24. Control through standard costs

Standard quantity allowed 22,000 units
a. USD 9,300 favorable (MUV)
USD 3,000 unfavorable (MPV).
b. USD 9,300 unfavorable (MUV)

USD 3,000 favorable (MPV).
c. USD 9,000 unfavorable (MUV)
USD 2,200 favorable (MPV).
d. USD 9,000 favorable (MUV)
USD 2,500 unfavorable (MPV).
To which account would an unfavorable materials usage or labor efficiency variance caused by carelessness or
inefficiency be closed?

a. Materials Inventory.
b. Income Summary.
c. Work in Process.
d. Finished Goods Inventory.
Which of the following journal entries is correct for closing out the variance accounts?
a. Sales
Materials Usage Variance
Labor Rate Variance
Materials Price Variance

Overhead Volume Variance
Labor Efficiency Variance
Overhead Budget Variance
b. Materials Price Variance
Overhead Volume Variance
Accounts Payable
Materials Usage Variance

Labor Rate Variance
Labor Efficiency Variance
Overhead Budget Variance
c. Materials Price Variance
Overhead Volume Variance
Cost of Goods Sold
Materials Usage Variance
Labor Rate Variance
Labor Efficiency Variance

Overhead Budget Variance
d. Materials Price Variance
Overhead Budget Variance
Accounts Receivable

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