Exam 11: Standard Costs and Variance Analysis

Haley Fans manufactures and distributes circulators. The standard and actual costs for the manufacture of circulators follows: Standard Costs Actual Costs Variable cost, \ 24 per unit Total variable cost, \ 12,300 Fixed cost, \ 40 per unit Total fixed cost, \ 19,250 Budgeted factory overhead was $32,000. Overhead applied is based on the number of circulator units produced. The company estimated that 500 circulators would be produced, however only 480 were produced. How much is Haley's overhead volume variance for 2014?

An unfavorable overhead volume variance always indicates that overhead is overapplied during the period.

Straton Company produces one product, the H2001. Each unit of H2001 requires 6.5 pounds of raw material with a standard cost of $12.00 per pound. During July, Straton purchased 3,500 pounds of this raw material at a price of $12.25 per pound and used 3,280 pounds to produce 500 units of the H2001. How much is the material price variance?

Which of the following is a reason that most managers support the use of attainable standards rather than ideal standards?

A company developed a standard cost for overhead. Which of the following involves standard development procedures that are similar to developing overhead standard costs?

When Walston Corporation prepared its budget for 2014, it estimated fixed overhead of $540,000 ($45,000 per month) and variable overhead at $3.00 per unit produced. The company planned to produce 48,000 units during the year at a rate of 4,000 units each month. During April, the company produced 3,800 units and total overhead costs were $59,000. How much is the amount of overhead in the flexible budget for April's level of production?

Thomas Company produces one product, the E4501. The standards for E4501 include the use of 25 yards of raw material at a standard price of $4.42 per yard. During a recent month, the company used 65,000 yards of raw material to produce 2,580 units of E4501. Thomas purchased this material at a cost of $4.37 per yard. How much is the material quantity variance?

Ideal standards are developed under the assumption that no obstacles to the production process will be encountered.

What does an unfavorable overhead volume variance indicate?

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 controllable overhead variance?

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 overhead volume variance for 2014?

Which statement is true concerning the variance accounts in a standard costing system?

Why is the point of purchase the best time to compute material price variances?

Ultimate Production manufactures radon detectors. The standards for materials for each detector is 2 pounds of acrylic at a standard cost of $4.30 per pound. During May, the company purchased 890 pounds and used 830 pounds of acrylic and made 410 radon detectors. The company paid $4.45 per pound for the acrylic. There were 400 detectors budgeted for May. How much is the material quantity variance?

Electric Zero produces relay units for generators. Each relay has a standard material cost of $67. Standards call for two relays per generator. In July, the company purchased 120 relays for $7,560. The company used 104 relays in the production of 50 generators, with 4 relays damaged in the installation process. The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23. The company incurred 1,020 labor hours at a cost of $22,950. How much is the material quantity variance?

The difference between standard costs and budgeted costs is that standard cost

The material price variance is equal to the standard price per unit of material times the actual quantity of material used.

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 controllable overhead variance for 2014?

Under what condition(s) might a favorable variance be considered unfavorable? I. When a manager overproduces to fully utilize labor in a non-bottleneck department II. When a manager buys a better quality materials at a cheaper price

Blue Box Beach Chairs has the following standards to make beach chairs: Standard Ouantity Standard Price Direct materials 2.2 pounds of polywood per chair \ 3.50 per pound Direct labor 0.65 hours per chair \ 13.00 per hour The static budget was based on the production of 6,200 beach chairs. The company used 13,000 pounds of polywood in order to make 6,000 chairs in April. The company purchased 7,000 pounds of polywood at a total cost of $24,150. How much is the direct materials quantity variance?