Exam 7: Standard Costing and Variance Analysis

Genesis Company Genesis Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Genesis produced 5,000 units: Standard: DLH per unit 3.00 Variable overhead per DLH \ 1.80 Fixed overhead per DLH \ 3.25 Budgeted variable overhead \ 27,250 Budgeted fixed overhead \ 49,500 Actual: Direct labor hours 16,000 Variable overhead \3 1,325 Fixed overhead \4 9,750 Refer to Genesis Company.Using the four-variance approach,what is the variable overhead efficiency variance?

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

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 spending variance for November was

The standard predominantly used in Western cultures for motivational purposes is a(n)____ standard.

A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if

Under the two-variance approach,the volume variance is computed by subtracting ____ based on standard input allowed for the production achieved from budgeted overhead.

A one-variance approach calculates only a total overhead variance.

Define the following terms: standard cost system,total variance,material price variance,and labor efficiency variance.

Wimberly Company Wimberly Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Wimberly Company.What is the labor efficiency variance?

The difference between actual and budgeted fixed factory overhead is referred to as a __________________________________________________.

The point of purchase model calculates the materials price variance using the quantity of materials used in production.

Standards that are attainable with reasonable effort are referred to as ___________________________________.

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 variable overhead spending variance?

Which of the following standards can commonly be reached or slightly exceeded by workers in a motivated work environment? $\underline{\text{Ideal}} ~~~~~~~~\underline{\text{Practical}} ~~~~~~~~~~~\underline{\text{Expected annual}}$

The total variance does not provide useful information about the source of cost differences.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the _______________________________________________________.

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 labor mix variance?

Unfavorable variances are represented by credit balances in the overhead account.

Fleetwood Company Fleetwood Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Fleetwood produced 4,500 units: Standard: DLH per unit 2.50 Variable overhead per DLH \ 1.75 Fixed overhead per DLH \ 3.10 Budgeted variable overhead \ 21,875 Budgeted fixed overhead \ 38,750 Actual: Direct labor hours 10,000 Variable overhead \2 6,250 Fixed overhead \3 8,000 Refer to Fleetwood Company.Using the three-variance approach,what is the efficiency variance?

When multiple materials are used,the effect of substituting a non-standard mix of materials during the production process is referred to as a ____________________ variance.