Exam 10: Standard Costing: a Managerial Control Tool

McDaniel Company manufactures 100-pound bags of fertilizer that have the following unit standard costs for direct materials and direct labor: The following activities were recorded for October: There were no beginning or ending work-in-process inventories. Required:

Currently attainable standards can be achieved under efficient operating conditions.

Claire Company uses a standard costing system.The following information pertains to direct labor costs for February: What is the total labor budget variance for Claire Company?

____________________ is the difference between the actual and standard unit price of an input multiplied by the number of inputs used. or

Figure 10-9. James Company manufactures t-shirts.During the year,it manufactured 250,000 t-shirts,using 2 hours of direct labor at a rate of $8.50 per hour.The materials and labor standards for manufacturing the t-shirts are: It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts. Refer to Figure 10-9.What is James' materials usage variance?

During September,40,000 units were produced.The standard quantity of material allowed per unit was 5 pounds at a standard cost of $2.50 per pound.If there was a favorable usage variance of $25,000 for September,the actual quantity of materials used must have been

Figure 10-6. Extreme Builders constructs houses.The standard labor rate is $25 per hour and the standard number of hours is 15,000 hours per home.During the year,it constructed 12 homes using 18,000 labor hours per home and a rate of $28 per hour. Refer to Figure 10-6.Calculate the Extreme Builders' labor rate variance.

Overland Automotive Company is considering on manufacturing a new brand of car.Given the current product and process designs,the cost data are: The company expects the selling price to be $20,000 and has set a target profit of $5,000. A supplier told Overland that it could purchase a couple of similar components under a different brand name at a lower price.This would result in cost savings of $2,000 per car.Furthermore,the company found that it could redesign its manufacturing process to cut down on both inspection labor and worker labor,which would result in cost savings of $1,000 per car.

Wiltshire Limited produces woolen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle. The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60 percent.By the end of Year 2,the company had actually cut down its waste by 50 percent.

Which of the following is true concerning the materials price variance?

Standards based on the amount of input that should be used per unit of output are called

An acceptable range is established in order to determine if whether variances are significant.The acceptable range is the standard,plus or minus an allowable deviation.

The standard cost system differs from the actual cost system in the assignment of

Bender Corporation produced 100 units of Product AA.The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows: What is the labor efficiency variance for Bender Corporation?

Which of the following is true regarding historical experience in standard setting?

Moving Baby Company produces baby strollers.During the year 90,000 strollers were produced.The actual labor used was 225,000 hours at $12.75 per hour.Moving Baby has the following labor standards: 2 hours at $13.00 per hour.

Standard hours allowed are computed using the equation

A ______________ is the difference between the sales price needed to capture a predetermined market share and the desired per-unit profit.

Figure 10-5. Refer to Figure 10-5.What is the materials price variance?

The ____________________ is the difference between the actual cost of the input and its planned cost.