Exam 7: Standard Costing and Variance Analysis

Ritchie Company Ritchie Company uses a standard cost system for its production process.Ritchie Company applies overhead based on direct labor hours.The following information is available for July: Refer to Ritchie Company Using the three-variance approach,what is the efficiency variance?

National Toy Company National Toy Company has developed standard overhead costs based on a capacity of 180,000 machine hours as follows: During November,85,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to National Toy Company.The variable overhead efficiency variance for November was

One unit requires 2 direct labor hours to produce.Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75.If 330 units were produced this month,what total amount of overhead is applied to the units produced?

Distinguish between the four-variance,three-variance,two-variance,and one-variance approaches for computing factory overhead variances.

Moore Company Moore Company has the following information available for the current year: Refer to Moore Company.Compute the material purchase price and quantity variances.

Ritchie Company Ritchie Company uses a standard cost system for its production process.Ritchie Company applies overhead based on direct labor hours.The following information is available for July: Refer to Ritchie Company Using the four-variance approach,what is the fixed overhead spending variance?

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

In a totally automated organization,using theoretical capacity will generally provide the lowest fixed overhead application rate.

Specifications for materials are compiled on a bill of materials.

Truman Company Truman Company applies overhead based on direct labor hours and has the following available for the current month: Refer to Truman Company.Compute all the appropriate variances using the three-variance approach.

A company using very tight (high)standards in a standard cost system should expect that

Classic Cleaning Company Classic Cleaning Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Classic Cleaning Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Classic Cleaning Company.What is the total material yield variance?

The formula for usage variance is (AQ - SQ)* AP.

Luther Manufacturing Company uses a standard cost system and prepared the following budget at normal capacity for October: Direct labor hours 24,000 Variable OH \ 48,000 Fixed OH \ 108,000 Total OH per DLH \ 6.50 Actual data for October were as follows: Direct labor houss worked 22,000 Total OH \ 147,000 Standard DLHs allowed for capacity attained 21,000 Using the two-way analysis of overhead variances,what is the controllable variance for October?

If actual direct labor hours (DLHs)are less than standard direct labor hours allowed and overhead is applied on a DLH basis,a(n)

The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead spending variance.

The point of purchase model calculates the materials price variance using the quantity of materials purchased.

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance

Variance analysis for overhead normally focuses on

Favorable variances are always desirable for production.