Exam 9: Standard Costing and Variances

Melrose Inc. uses standard costing. Last period, it spent $145,000 for labor. The direct labor rate variance was $5,000 favorable, and the direct labor efficiency variance was $6,000 unfavorable. In the journal entry to record the use of direct labor, the amount debited to cost of goods sold would be:

Tulip Inc. uses standard costing, and its manufacturing standards are as follows: 2 pounds of materials at $13 per pound, and 3 hours of labor at $10 per hour. Budgeted production last period was 5,000 units, and actual production was 4,800 units. Last period, Tulip purchased and used 9,800 pounds of materials for $135,000, and used 15,000 labor hours, costing $145,000. What is the journal entry to record the use of materials?

Fletcher has budgeted fixed overhead of $135,000 based on budgeted production of 9,000 units. During July, 9,400 units were produced and $142,800 was spent on fixed overhead. What is the fixed overhead spending variance?

Pearl Co. produces pearl necklaces and uses a standard cost system. Fixed overhead is applied to production at a rate of $34 per unit, based on budgeted production of 3,000 per month. During December, Pearl produced 3,100 pearl necklaces. Fixed overhead incurred totaled $114,940. Calculate the: a. fixed overhead spending variance. b. fixed overhead volume variance. c. over- or under-applied fixed overhead.

Beech has budgeted fixed overhead of $202,500 based on budgeted production of 13,500 units. During July, 14,100 units were produced and $214,200 was spent on fixed overhead. What is the fixed overhead volume variance?

Cascade Inc. has provided the following information: Budgeted production = 5,000 units Calculate the: a. direct materials price variance. b. direct materials quantity variance. c. direct labor rate variance. d. direct labor efficiency variance. e. variable overhead rate variance. f. variable overhead efficiency variance. g. fixed overhead spending variance.

Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon. During July, Scarlett Company purchased and used 7,500 gallons. The direct material quantity variance was $750 unfavorable and the direct material price variance was $3,000 favorable. What price per gallon was paid for the purchases?

Wharton Tooling uses a standard cost system to account for the costs of its one product. Variable overhead standards are 14 hours of labor at a standard rate of $9. Fixed overhead is applied at a rate of $150 per unit, based on budgeted production of 650 units. During July, Wharton Tooling produced 600 units. Payroll totaled $112,930 for 8,770 hours worked. Overhead incurred was $77,490 variable and $98,750 fixed. Calculate the: a. variable overhead rate variance. b. variable overhead efficiency variance. c. fixed overhead spending variance.

A standard cost system records cost at their actual amounts

Lakewood Inc. uses a standard cost system. Materials standards are 7 components per widget at $12 per component. During August, Lakewood Inc. purchased 64,500 components for $768,750, using the components to produce 8,600 widgets. Calculate the: a. direct materials price variance. b. direct materials quantity variance.

Cooper Company has a direct material standard of 2 gallons of input at a cost of $7.50 per gallon. During July, Cooper Company purchased and used 13,000 gallons, paying $93,200. The direct materials quantity variance was $1,500 unfavorable. How many units were produced?

In a standard cost system, an unfavorable variance will appear as:

Bonnie Company has a direct labor standard of 15 hours per unit of output. Each employee has a standard wage rate of $14 per hour. The standard variable overhead rate is $10 per hour. During March, employees worked 13,100 hours. The direct labor rate variance was $9,170 favorable, the variable overhead rate variance was $13,100 unfavorable, and the direct labor efficiency variance was $15,400 unfavorable. What is the variable overhead efficiency variance?

When completing a variance analysis, we describe variances as ____________ or _________.

Jupiter Co. applies overhead based on direct labor hours. The variable overhead standard is 4 hours at $12 per hour. During February, Jupiter Co. spent $113,400 for variable overhead. 9,150 labor hours were used to produce 2,400 units. How much is variable overhead on the flexible budget?

________ variances are calculated by comparing the master budget to the flexible budget, and ___________ variances are calculated by comparing actual costs to the flexible budget (not the master budget).

Which of the following statements is correct about the way managers set standards for employees?

Whitman has a direct labor standard of 2 hours per unit of output. Each employee has a standard wage rate of $22.50 per hour. During July, Whitman paid $94,750 to employees for 4,445 hours worked. 2,350 units were produced during July. What is the direct labor rate variance?

Patrick Co. produces computer desks and uses a standard cost system. Material standards are 6.75 pounds of material at $10.40 per pound and 5.2 hours of labor at a standard wage rate of $10.50. During December, Patrick Co. produced and sold 3,100 desks. Material purchases totaled 20,800 pounds at a total cost of $224,780. Material usage totaled 20,970 pounds. Payroll totaled $183,660 for 17,140 hours worked. Patrick Co. does not maintain inventories other than direct materials. Prepare journal entries to record the following transactions. a. Direct materials purchase b. Direct materials usage c. Direct labor incurred

Raven applies overhead based on direct labor hours. The variable overhead standard is 2 hours at $11 per hour. During July, Raven spent $116,700 for variable overhead. 8,890 labor hours were used to produce 4,700 units. What is the variable overhead efficiency variance?