Exam 10: Standard Costs and Variances

Sakelaris Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance. e. Compute the variable overhead efficiency variance. f. Compute the variable overhead rate variance.

The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predetermined overhead rate.

Doogan Corporation makes a product with the following standard costs: The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for January is:

Leonesio Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,100 units in August, but actual production was 3,200 units. The company used 27,600 kilos of direct material to produce this output. The company purchased 29,000 kilos of the direct material at a total cost of $118,900. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for August is:

Poorly trained workers could have an unfavorable effect on which of the following variances? Labor Rate Variance Materials Quantity Variance A) Yes Yes B) Yes No C) No Yes D) No No

Dirickson Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for July: The raw materials price variance for the month is closest to:

The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used.

Doogan Corporation makes a product with the following standard costs: The company produced 5,200 units in January using 39,310 grams of direct material and 2,380 direct labor-hours. During the month, the company purchased 44,400 grams of the direct material at $1.70 per gram. The actual direct labor rate was $19.30 per hour and the actual variable overhead rate was $6.80 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for January is:

Milar Corporation makes a product with the following standard costs: In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for January is:

Hermansen Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 5,100 doors. Actual production was 5,400 doors. According to standards, each door requires 3.8 machine-hours. The actual machine-hours for the month were 20,880 machine-hours. The standard supplies cost is $7.90 per machine-hour. The actual supplies cost for the month was $152,063. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 3,600 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 3,900 machine-hours during the month. The standard hours allowed for the actual output were 3,890 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.1 hours per unit. The variable overhead rate standard is $8.00 per hour. In January the company produced 8,700 units using 910 direct labor-hours. The actual variable overhead rate was $7.90 per hour. The variable overhead rate variance for January is:

An unfavorable materials quantity variance indicates that:

Lido Company's standard and actual costs per unit for the most recent period, during which 500 units were actually produced, are given below: All of the materials purchased during the period were used in production during the period. Required: From the foregoing information, compute the following variances. Indicate whether the variance is favorable (F) or unfavorable (U): a. Material price variance. b. Material quantity variance. c. Labor rate variance. d. Labor efficiency variance. e. Variable overhead rate variance. f. Variable overhead efficiency variance.

Valera Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 5,300 units in July, but actual production was 5,400 units. The company used 2,130 direct labor-hours to produce this output. The actual variable overhead rate was $6.10 per hour. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for July is:

Ravena Labs., Inc. makes a single product which has the following standards: Direct materials: 2.5 ounces at $20 per ounce Direct labor: 1.4 hours at $12.50 per hour Variable manufacturing overhead: 1.4 hours at 3.50 per hour Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October: $\bullet$ 3,750 units of compound were produced during the month. $\bullet$ There was no beginning direct materials inventory. $\bullet$ Direct materials purchased: 12,000 ounces for $225,000. $\bullet$ The ending direct materials inventory was 2,000 ounces. $\bullet$ Direct labor-hours worked: 5,600 hours at a cost of $67,200. $\bullet$ Variable manufacturing overhead costs incurred amounted to $18,200. $\bullet$ Variable manufacturing overhead applied to products: $18,375. The materials price variance for October is:

The Maxit Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours. The following data are available for July: $\bullet$ Actual variable manufacturing overhead cost incurred: $11,310 $\bullet$ Actual machine-hours worked: 1,600 hours $\bullet$ Variable overhead rate variance: $1,710 U $\bullet$ Total variable overhead spending variance: $2,310 U The standard number of machine-hours allowed for July production is closest to:

A partial standard cost card for the single product produced by Mercer Company is given below: Direct materials: 3 pounds @ $8 per pound Direct labor: ? hours @ ? per hour Last period the company produced 4,000 units of product. Cost and other data associated with this production are given below: The direct materials purchases variance is computed when the materials are purchased. Required: a. Determine the number of pounds of direct materials purchased and used during the period. b. Determine the materials quantity variance. c. Determine the standard direct labor rate per direct labor hour. d. Determine the standard hours allowed for the production of the period.

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: The direct materials purchases variance is computed when the materials are purchased. What is the materials quantity variance for the month?

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 2,600 units in September, but actual production was 2,500 units. The company used 5,440 liters of direct material and 1,680 direct labor-hours to produce this output. The company purchased 5,800 liters of the direct material at $7.20 per liter. The actual direct labor rate was $24.10 per hour and the actual variable overhead rate was $1.90 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for September is: