Exam 11: Standard Costs and Variance Analysis

Which statement is true concerning a standard costing system?

Which of the following statements is true of standard cost?

Scotto Designs has the following standards for the production of scarves: 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 quantity variance?

Differences between standard and budgeted costs are referred to as standard cost variances.

Which of the following is not a criterion that a company might use to determine whether or not a variance is exceptional?

Capital Leather Company produces leather footballs. The standard cost for each football is: \begin{array}{ll}\text { Direct material}&\text { 2 feet of leather at \$ 4.00 \mathrm{per} foot }\\\text { Direct labor }&\text { \( \quad 1.5 \) hours at \( \$ 12.00 \) per hour}\\\end{array} During February, 1,200 footballs were produced and 2,600 feet of leather were purchased at $4.25 per foot. Production usage was 2,300 feet. Direct labor cost incurred was $20,930 for 1,820 hours. How much is the direct material price variance?

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 direct labor efficiency variance for July?

Capital Leather Company produces leather footballs. The standard cost for each football is: \begin{array}{ll}\text { Direct material}&\text { 2 feet of leather at \$ 4.00 \mathrm{per} foot }\\\text { Direct labor }&\text { \( \quad 1.5 \) hours at \( \$ 12.00 \) per hour}\\\end{array} During February, 1,200 footballs were produced and 2,600 feet of leather were purchased at $4.25 per foot. Production usage was 2,300 feet. Direct labor cost incurred was $20,930 for 1,820 hours. How much is the direct material quantity variance?

Ideal standards are synonymous with favorable variances, while attainable standards are synonymous with unfavorable variances.

Which of the following would cause a variance to be unfavorable?

An unfavorable controllable overhead variance indicates that more cost was incurred on overhead costs than allowed in the flexible budget.

A favorable labor efficiency variance indicates that employees worked more quickly than expected.

Which of the following may cause an unfavorable material variance? I. More material was used than planned. II. A company paid a higher price for materials than expected. III. More materials were used than purchased.

Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: Material ( 3.50 ounces at \ 1.30 per ounce ) \ 4.55 Labor (0.30 hour at \ 12.00 per hour) 3.60 Overhead Total At the start of 2014, Scotch Brand planned to produce 80,000 cases of tape during the year. Overhead is allocated based on the number of cases of tape produced. Annual fixed overhead is budgeted at $56,000 and variable overhead costs are budgeted at $1.50 per case. The following information summarizes the results for 2014: .Actual production, 75,000 cases .Purchased 275,000 ounces of material at a total cost of $343,750 .Used 266,250 ounces of material in production .Employees worked 22,000 hours, total labor cost $275,000 .Actual overhead incurred, $175,000 How much is the labor efficiency variance for 2014?

Steep, Inc. budgeted 6,000 cup holders for March. Each holder is sold for $12. Actual production for March was 6,300 cup holders. Standards and actual costs follow for March: Standards Actual Materials 1.1 pounds @ \2 .40 a pound 6,400 pounds purchased for \ 15,040 6,450 pounds used Labor 0.10 hours @ \ 14.00 per hour 620 hours @ \ 14.30 per hour Variable overhead \ 16,800 \ 18,400 Fixed overhead \ 9,600 \ 10,300 How much is the labor efficiency variance?

In a standard costing system, manufactured goods are recorded at the variable cost that should have been incurred to produce the items.

Scotch Brand Products produces packaging tape and has determined the following to be its standard cost of producing one case of budget packaging tape: Material ( 3.50 ounces at \ 1.30 per ounce) \ 4.55 Labor (0.30 hour at \ 12.00 per hour) 3.60 Overhead Total At the start of 2014, Scotch Brand planned to produce 80,000 cases of tape during the year. Overhead is allocated based on the number of cases of tape produced. Annual fixed overhead is budgeted at $56,000 and the variable overhead costs are budgeted at $1.50 per case. The following information summarizes the results for 2014: .Actual production, 75,000 cases .Purchased 275,000 ounces of material at a total cost of $343,750 .Used 266,250 ounces of material in production .Employees worked 22,000 hours, total labor cost $275,000 .Actual overhead incurred, $175,000 How much is the controllable overhead variance for 2014?

Ace Manufacturing uses a standard costing system. What amount is debited to the Work in Process Inventory when labor is incurred in production?

Which one of the following is a possible cause of an unfavorable labor rate variance?

Master Auto Parts has a standard labor rate of $10.50 per hour. In September, the company produced 10,000 gears using 24,000 labor hours. The company experienced a favorable labor rate variance of $18,000 during September. How much is Master Auto Parts' actual labor rate per hour?