Exam 17: Standard Costing and Variance Analysis 1

Who is responsible for unfavourable labour efficiency variances caused by poor quality materials?

The following standard costs were developed for one of Commodore Company's products: STANDARD COST CARD PER UNIT Direct materials: 4 pounds \times£5 per pound £20.00 Direct labour: 1.5 hours \times£20 per hour 30.00 Variable overhead: £10 per hour ? Fixed overhead Total standard cost per unit The following information is available regarding the company's operations for the period: Units produced 15,000 Materials purchased 90,000 pounds at £3.60 per pound Materials used 80,000 pounds Direct labour 9,000 hours at £16.50 per hour Overhead incurred: Variable £220,000 Fixed £640,000 Budgeted fixed overhead for the period is £600,000, and expected capacity for the period is 20,000 direct labour hours. a.Calculate the standard fixed overhead rate. b.Complete the standard cost card for the product.

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 efficiency variance would be

Figure 17-1 Max Company has developed the following standards for one of its products: Direct materials 15 pounds \times£16 per pound Direct labour 4 hours \times£24 per hour Variable overhead 4 hours \times£14 per hour The following activities occurred during the month of October: Materials purchased 10,000 pounds costing £170,000 Materials used 7,200 pounds Units produced 500 units Direct labour 2,300 hours at £23.60 per hour Actual variable overhead £30,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-1. Max's labour rate variance would be

Figure 17-1 Max Company has developed the following standards for one of its products: Direct materials 15 pounds \times£16 per pound Direct labour 4 hours \times£24 per hour Variable overhead 4 hours \times£14 per hour The following activities occurred during the month of October: Materials purchased 10,000 pounds costing £170,000 Materials used 7,200 pounds Units produced 500 units Direct labour 2,300 hours at £23.60 per hour Actual variable overhead £30,000 The company records materials price variances at the time of purchase. -Refer to Figure 17-1. Max's materials usage variance would be

Fortensky Construction planned to produce 275,000 units using 34,375 machine hours. Actual output was 290,000 units using 37,425 machine hours. Fortensky's volume variance

The sales price variance is created by a difference between

The labour rate variance is calculated as

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 efficiency variance would be

Figure 17-3 Tuvok Ltd. has developed the following standards for one of its products: Standard cost of materials £0.50 per pound Materials purchased and used 20,000 pounds Total paid to suppliers £11,000 Standard quantity allowed 18,000 pounds -Refer to Figure 17-3. Tuvok's material price variance is

For planning and control purposes, fixed overhead is NOT included in the standard cost per unit because:

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 price variance would be

If a company was concerned with controlling expenditures on overhead items, which variance would be useful?

During October, 14,000 direct labour hours were worked at a standard cost of £40 per hour. If the labour rate variance for October was £70,000 favourable, the actual cost per labour hour must be

If actual fixed overhead was £164,000 and there was a £4,800 favourable spending variance and a £1,000 unfavourable volume variance, budgeted fixed overhead must have been

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 rate variance would be

During April, 80,000 units of product were produced. The standard quantity of material allowed per unit was two pounds at a standard cost of £5 per pound. If there was a favourable materials usage variance of £40,000 for April, the actual quantity of materials used must have been

The following standard costs were developed for one of Commodore Company's products: STANDARD COST CARD PER UNIT Direct materials: 3 pounds \times£2 per pound £6.00 Direct labour: 2 hours \times£12 per hour 24.00 Variable overhead: £4 per hour ? Fixed overhead Total standard cost per unit ? The following information is available regarding the company's operations for the period: Units produced 12,000 Materials purchased 50,000 pounds at £2 per pound Materials used 40,000 pounds Direct labour 25,000 hours at £13 per hour Overhead incurred: Variable £90,000 Fixed £300,000 Budgeted fixed overhead for the period is £280,000, and expected capacity for the period is 28,000 direct labour hours. a.Calculate the standard fixed overhead rate. b.Complete the standard cost card for the product.

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 spending variance would be

Efficiency variances focus on the difference between