Exam 7: Standard Costing and Variance Analysis

A company may set predetermined overhead rates based on normal, expected annual, or theoretical capacity. At the end of a period, the fixed overhead spending variance would

When computing variances from standard costs, the difference between actual and standard price multiplied by actual quantity used yields a

When multiple labor categories are used, the financial effect of using a different mix of workers in a production process is referred to as a labor yield variance.

Discuss why standards may need to be changed after they have been in effect for some period of time.

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

Strong Manufacturing The following information is available for Strong Manufacturing Company for the month of June when the company produced 2,100 units: Refer to Strong Manufacturing Company. What is the labor rate variance?

When multiple labor categories are used, the financial effect of using a different mix of workers in a production process is referred to as a labor mix variance.

An operations flow document shows all processes necessary to manufacture one unit of a product.

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

Standards that allow for waste and inefficiency are referred to as ______________________________.

The variance least significant for purposes of controlling costs is the

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: Refer to Fleetwood Company. Using the three-variance approach, what is the efficiency variance?

A fixed overhead volume variance is a controllable variance.

Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours were allowed for actual production, applied fixed overhead is

Specifications for materials are compiled on a purchase requisition.

In a standard cost system, when production is greater than the estimated unit or denominator level of activity, there will be a(n)

A primary purpose of using a standard cost system is

Favorable variances are always desirable for production.

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 difference between budgeted variable overhead for actual hours and standard overhead is the __________________________________________________.