Exam 10: Standard Costing: a Managerial Control Tool

Rhodes Corporation manufactures a product with the following standard costs: Standards are based on normal monthly production involving 2,000 direct labor hours (500 units of output). The following information pertains to July: Required:

Mover Company has developed the following standards for one of its products: The following activity occurred during March: The company records materials price variances at the time of purchase.The variable standard cost per unit for materials and labor is

Figure 10-5. Refer to Figure 10-5.What is Seaside's labor rate variance?

Figure 10-2. Highland Company's standard cost is $250,000.The allowable deviation is $\pm$ 10%.Its actual costs for six months are Refer to Figure 10-2.The upper and lower control limits are,respectively,

Leeds Company uses the following rule to determine whether labor efficiency variances should be investigated: A labor efficiency variance will be investigated when the variance is greater than either $100 or 10 percent of the standard labor cost. During September,the company used 500 direct labor hours at a rate of $15 per hour.Its standard rate is 475 direct labor hours at a rate of $14.50 per hour.

The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.

Eider Company has the following information:

Grandma's Attic Company produces soft pillows made from goose down.The company uses a standard cost system and has set the following standards for materials and labor for each pillow: During the month,the company produced 1,000 goose down pillows.Actual geese purchased were 5,100,at $4 per goose.Actual fabric purchased was 2,900 yards at $2.10 per yard.There were no beginning or ending inventories of geese or fabric.Actual direct labor was 5,200 hours at $7.75 per hour.

An unfavorable price variance occurs whenever the actual prices are greater than the standard prices.

Which of the following is true regarding standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Mersey Company produced 1,000 trash cans during March using 450 direct labor hours and purchased and used 3,100 pounds of rubber.Its materials and labor standards are: Its materials price variance was a favorable $620 and its labor rate variance was an unfavorable $900.

Managers develop quantity standards when they decide what amount of input should be used per unit of output.

The sources of quantitative standards include

Kaizen costing provides fixed standards which reflect continuous improvement efforts.

Starling Manufacturing has developed the following standards for one of its products. The company records materials price variances at the time of purchase. The following activity occurred during December: Required:

The quantity of each input that should be used to produce one unit of output is documented on the standard cost sheet.

Variances indicate

Eastminster Company has the following information:

During October,10,000 direct labor hours were worked at a standard cost of $10 per hour.If the direct labor rate variance for October was $4,000 unfavorable,the actual cost per direct labor hour must be

For better control,the materials price variance is computed using actual quantity of materials purchased.