Exam 11: Standard Costs and Variance Analysis

What is the difference between the actual amount of overhead and the amount of overhead that would be included in a flexible budget called?

What is a standard cost?

Harris Manufacturing produces white sauce. It uses units as the cost driver for overhead. The following information was provided concerning its standard cost system for 2014: Budgeted and Standard Data Actual Data Material 1/41.@\ 14 per pound Labor 1.4@\ 16 per hour Total fixed overhead \ 84,000 Variable overhead \ 6.50 per unit Production 6,000 units Produced 6,200 units Materials purchased 1,600. for \ 13.70/ pound Materials used 1,520. Labor worked 8,740. at \ 15.90/ hour Total overhead \ 122,000 How much is the flexible budget for overhead for 2014?

Into what components is the manufacturing overhead variance decomposed when it is analyzed?

What will result if the actual overhead costs incurred are greater than the amount in the flexible budget?

Which one of the following is true concerning standard and budgeted costs?

If the material quantity variance is favorable, the

At the start of 2014, Capital Cemetery determined its standard labor cost to be 2.5 hours for each cemetery plot prepared at $14.00 per hour. The budget for variable overhead was $8 per plot and budgeted fixed overhead was $15,000 for the year. Overhead is applied based on the number of plots prepared. The company expects to prepare 5,000 plots during 2014. During 2014, the actual cost of labor was $14.30 per hour. Capital prepared 4,900 cemetery plots requiring 11,700 direct labor hours. Actual overhead for the year was $52,100. How much is the overhead volume variance?

The labor rate variance is also known as the labor efficiency variance.

If the controllable overhead variance is favorable, the overhead volume variance

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis. The company estimated that 30,000 units would be produced in 2014 and uses this quantity to establish its standard overhead cost per unit. The cost formula for overhead costs used to develop the standard overhead cost per unit was: Overhead = $120,000 + $6 per unit During the year, actual overhead cost was $340,000. Actual units produced were 32,000. How much is the overhead volume variance for 2014?

Which of the following variances is not recorded with a journal entry that involves a debit to Work in Process in a standard costing system?

The controllable variable overhead variance is inappropriately named, because managers are not expected to be able to control it.

A manufacturing company has a standard quantity of direct materials of 7 pounds per unit at a standard price of $2.20 per pound. In April the actual material price was $2.40 per pound and the company produced 5,500 units. If the company experienced a favorable material quantity variance of $6,600 during the month, how much was the actual quantity of material used?

Sigorny Company uses standard costing and applies overhead on the basis of units produced. The company provided the following for July: Predetermined overhead rate per unit produced \ 6.20 Budgeted fixed overhead \ 12,600 Variable overhead budgeted per unit \ 2.00 Actual units produced 3,100 If the controllable overhead variance was $920 favorable in July, how much were total actual overhead costs?

Last month, Investly Widgets purchased 16,400 pounds of material and used 16,600 pounds in the production of 4,200 widgets. The actual cost per pound of the material was $7.80 and the standard price was $7.75 per pound. The company budgeted 4,500 widgets for production. How much is the material quantity variance?

Budgeted costs are the same as standard costs.

When is a labor rate variance recorded in a standard costing system?

RTC Supply Co. produces cleaning equipment for professional cleaners. At the start of the year, RTC estimated variable overhead costs to be $13 per unit and total fixed overhead costs at $300,000 based on a volume of 60,000 units. The detail for the overhead estimates follows: Variable Overhead Budget @60,000 units Actual Costs Indirect materials \ 480,000 \ 469,500 Utilities 120,000 93,000 Maintenance 180,000 224,000 Total variable overhead 780,000 786,500 Fixed Overhead Supervisor salaries 125,000 127,000 Depreciation 150,000 145,000 Other fixed overhead 25,000 26,000 Total fixed overhead 300,000 298,000 Total overhead costs \ 1,080,000 \ 1,084,500 Actual production for the year totaled 62,000 units. How much is the variable overhead flexible budget variance?

Hanson produces pressure washers. The detail for the overhead estimates follows: Variable Overhead Budget @60,000 units Actual Costs Indirect materials \ 480,000 \ 469,500 Utilities 120,000 93,000 Maintenance 180,000 224,000 Total variable overhead 780,000 786,500 Fixed Overhead Supervisor salaries 125,000 127,000 Depreciation 150,000 145,000 Other fixed overhead 25,000 26,000 Total fixed overhead 300,000 298,000 Total overhead costs \ 1,080,000 \ 1,084,500 Actual production for the year totaled 62,000 units. How much is the overhead volume variance?