Exam 10: Standard Costing: a Managerial Control Tool

Figure 10-3. Bortello Corporation produces high-quality leather boots.The company has a standard cost system and has set the following standards for materials and labor: During the year Bortello produced 125 boots.Actual leather purchased was 1,700 strips,at $16 per strip.There were no beginning or ending inventories of leather.Actual direct labor was 1,500 hours at $15 per hour. Refer to Figure 10-3.Compute the total budget variances for materials and labor,respectively.

Price standards are based on

Pontefract Company produced 2,500 widgets during November using 4,000 units of materials at a cost of $5.00 each.It also used 5,000 direct labor hours at a rate of $7.00.Its direct materials standard is 2 units per widget.Its direct labor standard is 2.5 hours per widget. Its materials price variance was a favorable $8,000 and its labor rate variance was an unfavorable $1,000.

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' labor rate variance?

The Cat's Meow manufactures gourmet cat food.During the month,it manufactured 5,000 cans of tuna,using 0.10 hour of direct labor per can at a rate of $8.00 per hour.The materials and labor standards for manufacturing the cans of tuna are as follows: The company actually used 4,900 pounds of tuna at a price of $0.65 per pound.It also purchased 5,000 cans at a price of $0.45 per can.

Just Right Inc.produces jeans.The following standards have been established: During the year 25,000 pairs of jeans were produced.150,000 yards of denim were purchased and used at $1.23 per yard.Actual direct labor hours were 36,800 at $9.25 per hour.

The _____________________ measures the difference between the direct materials actually used and the direct materials that should have been used for the actual output.

One reason for adopting a standard cost system is to make product costing easier.

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

Ideal standards

To compute the standard direct labor hours allowed,multiply the unit labor standard by the actual output.

Which of the following is true regarding variances?

Which of the following is not true concerning control limits?

Standards are set by using historical experiences,___________________,and input from operating personnel,marketing,and accounting.

During January,7,000 direct labor hours were worked at a standard cost of $20 per hour.If the direct labor rate variance for January was $17,500 favorable,the actual cost per direct labor hour must be

All of the following are true regarding variance investigation except

All of the following are true except

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

Which of the following is not true regarding the use of labor variance information?

Favorable variances are credits and unfavorable variances are debits.