Exam 11: Standard Costs and Variance Analysis

Reference: 11-07 The following materials standards have been established for a particular product: Standard quantity per unit of output: 4.4 grams Standard price: $13.20 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams Actual cost of materials purchased: $62,880 Actual materials used in production: 4,300 grams Actual output: 700 units -What is the materials quantity variance for the month?

Reference: 11-08 The following materials standards have been established for a particular product: Standard quantity per unit of output 1.9 grams Standard price \ 18.00 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 grams Actual cost of materials purchased \ 108,460 Actual materials used in production 5,200 grams Actual output 2,700 units -What is the materials price variance for the month?

Reference: 11-07 The following materials standards have been established for a particular product: Standard quantity per unit of output: 4.4 grams Standard price: $13.20 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams Actual cost of materials purchased: $62,880 Actual materials used in production: 4,300 grams Actual output: 700 units -What is the materials price variance for the month?

Reference: 11-11 The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance: \ 7,000 Labour efficiency variance: \ 12,000 Variable overhead efficiency variance: \ 4,000 Number of units produced: 10,000 Standard labour rate per direct labour hour: \ 12 Standard variable overhead rate per direct labour hour: \ 4 Actual labour hours used: 14,000 Actual variable manufacturing overhead costs: \ 58,290 -The unitization of fixed overhead costs is useful from a control perspective.

Reference: 11-13 The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following: Variable manufacturing overhead cost incurred: $48,700 Total variable overhead variance: $300 F Standard hours allowed for actual production: 7,000 Actual direct labour hours worked: 6,840 -Which of the following could result in a situation where the use of a standard cost system to control labour costs might not be the most useful?

Reference: 11-11 The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance: \ 7,000 Labour efficiency variance: \ 12,000 Variable overhead efficiency variance: \ 4,000 Number of units produced: 10,000 Standard labour rate per direct labour hour: \ 12 Standard variable overhead rate per direct labour hour: \ 4 Actual labour hours used: 14,000 Actual variable manufacturing overhead costs: \ 58,290 -When all direct material units purchased in a period are not used in production for that period, both direct material price and direct material quantity variances may be calculated for the period.

Reference: 11-05 The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: Standard Quantity of Hours Standard Cost per Mip Direct materials 6 board metres \ 9.00 Direct labour 0.8 hours \ 9.60 There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000. Used 12,000 board feet to produce 2,100 Mips. Used 1,700 hours of direct labour time at a total cost of $20,060. -Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per gram from a supplier at $1.60 per gram would include a:

Reference: 11-02 The Litton Company has established standards as follows: Direct material 3 kg @ $4/kg = $12 per unit Direct labour 2 hrs. @ $8/hr. = $16 per unit Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units produced 600 Direct material used 2,000 kg Direct material purchased (3,000 kg) $11,400 Direct labour cost (1,100 hrs.) $ 9,240 Variable manuf. overhead cost incurred $ 5,720 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -In a certain standard costing system the following results occurred last period: labour rate variance, $1,000 U; labour efficiency variance, $2,800 F; and the actual labour rate was $0.20 more per hour than the standard labour rate. The number of actual direct labour hours used last period was:

Reference: 11-03 The Albright Company uses standard costing and has established the following standards for its single product: Direct materials 2 litres at \ 3 per litre Direct labour 0.5 hours at \ 8 per hour Variable manuf. overhead 0.5 hours at \ 2 per hour During November, the company made 4,000 units and incurred the following costs: Direct materials purchased 8,100 litres at \ 3.10 per litre Direct materials used 7,600 litres Direct labour used 2,200 hours at \ 8.25 per hour Actual variable manuf. overhead \ 4,175 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -Paul Co. direct labour-hours. For April, total fixed overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour-hours for the month. The following data are available for April's activity: Number of units produced 9,500 Direct labour-hours worked 19,500 Actual total fixed overhead cost incurred \ 79,500 What amount of total fixed overhead cost would have been applied to production for the month of April?

Reference: 11-08 The following materials standards have been established for a particular product: Standard quantity per unit of output 1.9 grams Standard price \ 18.00 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,800 grams Actual cost of materials purchased \ 108,460 Actual materials used in production 5,200 grams Actual output 2,700 units -Last month 75,000 grams of direct material were purchased and 70,000 grams were used. If the actual purchase price per gram was $0.25 more than the standard purchase price per gram, then the material price variance was?

Reference: 11-02 The Litton Company has established standards as follows: Direct material 3 kg @ $4/kg = $12 per unit Direct labour 2 hrs. @ $8/hr. = $16 per unit Variable manuf. overhead 2 hrs. @ $5/hr. = $10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units produced 600 Direct material used 2,000 Direct material purchased (3,000) \ 11,400 Direct labour cost (1,100 hrs. ) \ 9,240 Variable manuf. overhead cost incurred \ 5,720 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -The labour rate variance is:

Reference: 11-12 The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 1.6 hours Standard variable overhead rate \ 11.55 per hour The following data pertain to operations for the last month: Actual hours 4,900 hours Actual total variable overhead cost \ 58,310 Actual output 3,000 units -What is the variable overhead spending variance for the month?

Reference: 11-11 The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance: \ 7,000 Labour efficiency variance: \ 12,000 Variable overhead efficiency variance: \ 4,000 Number of units produced: 10,000 Standard labour rate per direct labour hour: \ 12 Standard variable overhead rate per direct labour hour: \ 4 Actual labour hours used: 14,000 Actual variable manufacturing overhead costs: \ 58,290 -The labour efficiency variance is?

Reference: 11-01 Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 6.0 grams \ 3.50/ gram \ 21.00 Direct labour 1.3 hours \ 11.00/ hour 14.30 \ 35.30 During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours. -The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 7.8 hours Standard variable overbead rate \ 12.55 per hour The following data pertain to operations for the last month: Actual hours 2,900 hours Actual total variable overhead cost \ 31,330 Actual output 200 units What is the variable overhead efficiency variance for the month?

Reference: 11-03 The Albright Company uses standard costing and has established the following standards for its single product: Direct materials 2 litres at \ 3 per litre Direct labour 0.5 hours at \ 8 per hour Variable manuf. overhead 0.5 hours at \ 2 per hour During November, the company made 4,000 units and incurred the following costs: Direct materials purchased 8,100 litres at \ 3.10 per litre Direct materials used 7,600 litres Direct labour used 2,200 hours at \ 8.25 per hour Actual variable manuf. overhead \ 4,175 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -The labour efficiency variance for November was:

Reference: 11-11 The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance: \ 7,000 Labour efficiency variance: \ 12,000 Variable overhead efficiency variance: \ 4,000 Number of units produced: 10,000 Standard labour rate per direct labour hour: \ 12 Standard variable overhead rate per direct labour hour: \ 4 Actual labour hours used: 14,000 Actual variable manufacturing overhead costs: \ 58,290 -If a company has a favourable labour efficiency variance, it used less units of labour than were budgeted for the output units achieved.

Reference: 11-11 The Clark Company makes a single product and uses standard costing. Variable overhead is assigned to production on the basis of direct labour hours. Some data concerning this product for the month of May follow: Labour rate variance: \ 7,000 Labour efficiency variance: \ 12,000 Variable overhead efficiency variance: \ 4,000 Number of units produced: 10,000 Standard labour rate per direct labour hour: \ 12 Standard variable overhead rate per direct labour hour: \ 4 Actual labour hours used: 14,000 Actual variable manufacturing overhead costs: \ 58,290 -From a standpoint of cost control, the most effective time to recognize material price variances is when the materials are placed into production.

Reference: 11-06 The Alpha Company produces toys for national distribution. Standards for a particular toy are: Materials: 12 grams per unit at 56 per gram. Labour: 2 hours per unit at $12.75 per hour. During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140. Labour: 2,500 hours worked at a total cost of $33,000. -The materials quantity variance is?

Reference: 11-10 The following labour standards have been established for a particular product: Standard labour hours per unit of output 7.5 hours Standard labour rate \ 15.25 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 9,600 hours Actual total labour cost \ 144,480 Actual units of output 1,200 -What is the labour rate variance for the month?

Reference: 11-01 Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 6.0 grams \ 3.50/ gram \ 21.00 Direct labour 1.3 hours \ 11.00/ hour 14.30 \ 35.30 During March, Bryan purchased 165,000 grams of direct material at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March using 151,000 grams of direct material and 32,000 direct labour hours. -Cox Company's direct material costs for the month of January were as follows: 78 Actual quantity purchased 18,000 kilograms Actual unit purchase price \ 3,60 per kilogram Materials price variance-unfavourable (based on purchases) \ 3,600 Standard quantity allowed for actual production 16,000 Actual quantity used 15,000 kilograms For January there was a favourable direct material quantity variance of?