Exam 17: Standard Costing and Variance Analysis 1

Figure 17-8 The following information was extracted from the accounting records of Noelle Company: STANDARD COST CARD PER UNIT Direct materials: 8 pounds \times£1.20 per pound £9.60 Direct labour: 3 hours \times£20 per hour 60.00 Variable overhead: 3 hours \times£6 per hour 18.00 Fixed overhead ? Total standard cost per unit ? Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours. The following information is available regarding the company's operations for the period: Units produced 10,500 Direct labour 29,000 hours costing £590,000 Overhead incurred: £182,000 Variable £430,000 -Refer to Figure 17-8. Noelle's variable overhead spending variance would be

A favourable materials usage variance may be caused by

Figure 17-6 Budgeted fixed overhead for the year £300,000 Budgeted direct labour hours for the year 30,000 Actual fixed overhead for August £24,000 Actual variable overhead for August £10,000 Direct labour hours worked in August 2,600 Standard variable overhead cost per direct labour hour £4 Standard direct labour hours allowed for August production 2,750 -Refer to Figure 17-6. The variable overhead efficiency variance would be

Price variances focus on the difference between

Figure 17-2 Rax Company has developed the following standards for one of its products: Direct materials 12 pounds * £14 per pound Direct labour 3 hours * £18 per hour Variable overhead 3 hours * £8 per hour The following activities occurred during the month of October: Materials purchased 10,000 pounds at £13.60 per pound Materials used 9,000 pounds Units produced 800 units Direct labour 2,500 hours at £19.00 per hour Actual variable overhead £22,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-2. Rax's labour efficiency variance would be

The volume variance is caused by:

Labour efficiency variances may be caused by

Figure 17-7 Orient Company has developed the following standards for one of its products: Direct materials 10 pounds \times£8 per pound Direct labour 6 hours \times£20 per hour Variable overhead 6 hours \times£6 per hour The following activities occurred during the month of November: Materials purchased 8,000 pounds costing £70,000 Materials used 6,500 pounds Units produced 600 units Direct labour 4,200 hours costing £75,600 Actual variable overhead £26,400 The company records materials price variances at the time of purchase. -Refer to Figure 17-7. Orient's materials price variance would be

Mills Company uses standard costing for direct materials and direct labour. Management would like to use standard costing for variable and fixed overhead. The following monthly cost functions were developed for overhead items: Overhead Item Cost Function Indirect materials £0.30 per DLH Indirect labour £0.20 per DLH Utilities £0.25 per DLH Insurance £2,000 Depreciation £10,000 The cost functions are considered reliable within a relevant range of 70,000 to 100,000 direct labour hours. The company expects to operate at 80,000 direct labour hours per month. Information for the month of September is as follows: Actual overhead costs incurred: Indirect materials £22,500 Indirect labour 15,000 Utilities 21,000 Insurance 2,500 Depreciation 10,000 Total £71,000 Actual direct labour hours worked 85,000 Standard direct labour hours allowed for production achieved 82,000 a.Calculate the following standard overhead rates based upon expected capacity:Variable overhead rateFixed overhead rateTotal overhead rate b.Calculate the following variances:Variable overhead spending varianceVariable overhead efficiency varianceFixed overhead spending varianceFixed overhead volume variance

To determine the unit standard cost for a particular input, a company must decide how much

Figure 17-5 Ebola Company has developed the following standards for one of its products: Direct materials 20 pounds \times£4 per pound Direct labour 5 hours \times£18 per hour Variable overhead 5 hours \times£4 per hour The following activities occurred during the month of October: Materials purchased 230,000 pounds at £4.20 per pound Materials used 220,000 pounds Units produced 10,000 units Direct labour 51,000 hours at £17.70 per hour Actual variable overhead £240,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-5. Ebola's materials usage variance would be

The purchase of inferior direct materials at a lower price might affect which of the following variances?

Figure 17-7 Orient Company has developed the following standards for one of its products: Direct materials 10 pounds \times£8 per pound Direct labour 6 hours \times£20 per hour Variable overhead 6 hours \times£6 per hour The following activities occurred during the month of November: Materials purchased 8,000 pounds costing £70,000 Materials used 6,500 pounds Units produced 600 units Direct labour 4,200 hours costing £75,600 Actual variable overhead £26,400 The company records materials price variances at the time of purchase. -Refer to Figure 17-7. Orient's variable overhead spending variance would be

A 5 per cent wage increase for all factory employees would affect which of the following variances?

The two variances for fixed overhead are

Figure 17-8 The following information was extracted from the accounting records of Noelle Company: STANDARD COST CARD PER UNIT Direct materials: 8 pounds \times£1.20 per pound £9.60 Direct labour: 3 hours \times£20 per hour 60.00 Variable overhead: 3 hours \times£6 per hour 18.00 Fixed overhead ? Total standard cost per unit ? Budgeted fixed overhead for the period is £420,000, and the budgeted fixed overhead rate is based on an expected capacity of 30,000 direct labour hours. The following information is available regarding the company's operations for the period: Units produced 10,500 Direct labour 29,000 hours costing £590,000 Overhead incurred: £182,000 Variable £430,000 -Refer to Figure 17-8. Noelle's fixed overhead volume variance would be

The standard fixed overhead rate is calculated as

An unfavourable materials price variance may be caused by

Figure 17-5 Ebola Company has developed the following standards for one of its products: Direct materials 20 pounds \times£4 per pound Direct labour 5 hours \times£18 per hour Variable overhead 5 hours \times£4 per hour The following activities occurred during the month of October: Materials purchased 230,000 pounds at £4.20 per pound Materials used 220,000 pounds Units produced 10,000 units Direct labour 51,000 hours at £17.70 per hour Actual variable overhead £240,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-5. Ebola's variable overhead spending variance would be

Figure 17-2 Rax Company has developed the following standards for one of its products: Direct materials 12 pounds * £14 per pound Direct labour 3 hours * £18 per hour Variable overhead 3 hours * £8 per hour The following activities occurred during the month of October: Materials purchased 10,000 pounds at £13.60 per pound Materials used 9,000 pounds Units produced 800 units Direct labour 2,500 hours at £19.00 per hour Actual variable overhead £22,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-2. Rax's materials usage variance would be