Exam 11: Standard Costs and Variance Analysis

Paradise Energy Company produces a product with a direct labor standard of 4.5 hours per unit at a rate of $13.50 per hour. During July 2,200 units were produced using 9,825 labor hours at an actual cost of $135,094. How much is the total direct labor variance for July?

A standard costing system simplifies accounting by carrying inventory at standard cost.

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 price variance?

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 overhead volume variance for April?

Scotto Designs has the following standards to make one scarf: Standard Ouantity Standard Price Direct materials 1.2 yards per scarf \ 4.70 per yard Direct labor 0.15 hours per scarf \ 11.00 per hour The company used 985 yards of material in order to make 800 scarves in April. The company purchased 1,100 yards at $4.60 per yard. How much is the direct materials price variance?

Management of Wilson, Inc. developed standards under the assumption that a variety of factors may lead to less than perfect performance. Which type of standard was developed?

Which variances are most important to investigate?

If a management by exception approach is used to investigate variances, only variances that cause costs to be more than expected are investigated.

Standard Gears produces lawn mower gears. It uses units as the cost driver for overhead. The following information was provided concerning its standard cost system: Actual Data Budgeted and Standard Data Produced 12,400 units Materials purchased 4,650 lbs. for a total cost of \ 32,550 Materials used 4,700 lbs. Labor worked 7,460 . costing \ 79,822 Actual overhead Fixed: \ 84,800 Variable \ 36,100 Budgeted units 12,500 units Budgeted materials 0.401@\ 7.10 per 1. Budgeted labor 36 minutes @ \ 11.00 per hour Budgeted variable overhead \ 35,625 Budgeted fixed overhead \ 85,500 How much is the direct material price variance?

A favorable overhead volume variance is a signal that the actual quantity produced was greater than the quantity anticipated.

The labor rate variance is equal to the difference between the actual number of labor hours worked and the standard labor hours allowed, times the standard labor wage rate.

The difference between standard and actual costs is

Which statement is true concerning unfavorable variances in a standard costing system?

Billy Bob Subs has the following standard cost to produce a king size party sub sandwich. Direct materials = 4 pounds @ $3.00 per pound = $12.00 per sub Direct labor = 1/2 hour @ $8.00 per hour = $4.00 per sub During December, the company produced 1,000 party subs, bought 4,300 pounds and used 4,100 pounds of meat at $3.20 per pound, and used 490 hours of labor at a total cost of $4,018. How much is the direct labor rate variance?

What will result if the actual price per unit of material is greater than the standard price?

How might an emphasis on variances as performance measures lead to overproduction?

What is the cost that management believes should be incurred to produce a product under anticipated conditions called?

What are the two most likely reasons an unfavorable total materials variance may exist?

The labor rate variance measures whether the rate paid to employees is more or less than the company's standard rate.

Mohammed Company employs a standard cost system. Mohammed has established the following standards for one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 12.0 pounds \ 7.00/ pound \ 84.00 Direct labor 2.6 hours \ 22.00/ hour 57.20 During June, Mohammed planned to produce 24,000 units of product. It purchased 330,000 pounds of direct material at a total cost of $2,343,000. The total factory wages for June were $1,440,000. Mohammed manufactured 25,000 units of product during June using 302,000 pounds of direct material and 64,000 direct labor hours. How much is the labor efficiency variance?