Exam 9: Standard Costing: a Functional-Based Control Approach

In standard costing, overhead is applied to a product by debiting work in process and crediting variable and fixed overhead control accounts.

Which of the following is true of currently attainable standards?

Fixed manufacturing overhead was budgeted at $200,000, and 25,000 direct labor hours were budgeted. If the fixed overhead volume variance was $8,000 favorable and the fixed overhead spending variance was $6,000 unfavorable, fixed manufacturing overhead applied must be

Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units: Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are: Fixed \ 6.00 Variable 10.00 \ 16.00 Units actually produced in current month 9,000 units Actual factory overhead costs incurred (includes \ 70,000 fixed) \ 156,000 Actual direct labor hours 9,000 hours What is the fixed overhead volume variance for Alumni?

The San Jose Corporation uses two materials in the production of its product. The materials, G and H, have the following standards: Material Standard Mix Standard Unit Price Standard Cost 5,250 units \ 1.50 per unit \ 7,875 2,250 units 4.50 per unit \ 10,125 Yield 6,000units During June, the following actual production information was provided: Material Actual Mix G 45,000 units H 30,000 units Yield 54,000 units What is the materials mix variance?

Quantity price standards

Price/rate variances focus on the differences between

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. Direct materials: 10 pounds \times\ 3 per pound Direct labor: 2.5 hours \times\ 8 per hour Variable manufacturing overhead: 2.5 hours \times\ 2 per hour $\text { The following activity occurred during the month of June: }$ Materials purchased: 125,000 pounds at \ 2.60 per pound Materials used: 110,000 pounds Units produced: 10,000 units Direct labor: 24,000 hours at \ 7.50 per hour Actual variable manufacturing overhead: \ 51,000 The company records materials price variances at the time of purchase. The direct labor rate variance is

Which of the following equations measures a price variance?

Formidable Company collected the following information: Standard costs per unit: Variable overhead 4 machine hours @\ 6 per machine hour Fixed overhead 4 machine hours @\ 10 per machine hour Actual output 20,000 units Denominator (normal capacity) output 21,000 units Actual machine hours 79,000 machine hours Actual variable overhead cost \ 540,000 Actual fixed overhead cost \ 810,000 Using the two variance method, what is the total variance?

Which of the following equations measures the direct labor rate variance?

The __________ variance show the difference between actual output and expected output for a given amount of input.

LaPointe Corporation uses two different types of labor to manufacture its product. The types of labor, Cutting and Setup, have the following standards: Labor Type Standard Mix Standard Unit Price Standard Cost Cutting 800 hours \ 12.00 per unit \ 9,600 Setup 200 hours 8.00 per unit \ 1,600 yield 5,000 units During January, the following actual production information was provided: Labor Type Actual Mix Cutting 7,000 hours Setup 3,000 hours Yield 45,000 units Required: Calculate the labor efficiency and mix and yield variances.

Fixed overhead volume variance is:

Care Craft Manufacturing has developed the following standards for one of its products: STANDARD VARIABLE COST CARD One Unit of Product Materials ( 4 pounds \times\ 5 per pound) \ 20.00 Direct labor ( 1 hour \times\ 7 per hour) 7.00 Variable manufacturing overhead ( 1 hour \times\ 4 perhour) 4.00 Total standard variable cost per unit \3 1.00 The company records materials price variances at the time of purchase. The following activity occurred during the month of December: Materials purchased 4,100 pounds costing \ 18,800 Materials used 3,640 pounds Units produced 900 units Direct labor 1,000 hours costing \ 7,800 Required: a.Calculate the direct materials price variance. b.Calculate the direct materials usage variance. c.Calculate the direct labor rate variance. d.Calculate the direct labor efficiency variance.

Developing standards for input prices and quantities allows for a more detailed understanding of flexible budget variances.

Somalian Corporation uses a standard costing system. Information for the month of May is as follows: Actual manufacturing overhead costs (\ 26,000 is fixed) \ 80,000 Direct labor: Actual hours worked 12,000 hrs. Standard hours allowed for actual production 10,000 hrs. Average actual labor cost per hour \ 18 The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows: Variable factory overhead \ 48,000 Fixed factory overhead 24,000 Total factory overhead What is the variable overhead efficiency variance for Somalian?

The San Jose Corporation uses two materials in the production of its product. The materials, G and H, have the following standards: Material Standard Mix Standard Unit Price Standard Cost 5,250 units \ 1.50 per unit \ 7,875 2,250 units 4.50 per unit \ 10,125 Yield 6,000units During June, the following actual production information was provided: Material Actual Mix G 45,000 units H 30,000 units Yield 54,000 units What is the materials yield variance?

Brooks Company uses a standard costing system. The following information pertains to direct materials for the month of June: Standard price per lb. \ 15.00 Actual purchase price per lb. \ 14.50 Quantity purchased 3,150 Quantity used 2,980 Standard quantity allowed for actual output 3,000 Actual output 1,000 units Brooks Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?

The three-variance method requires dividing costs into fixed and variable amounts.