Exam 22: Performance Evaluation Using Variances From Standard Costs

A favorable cost variance occurs when

If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a

Match the following formulas or descriptions with the term a-e) it defines. -Actual direct hours - Standard direct hours) × Standard rate per hour

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

An unfavorable fixed factory overhead volume variance may be due to a failure of supervisors to maintain an even flow of work.

The direct labor time variance measures the efficiency of the direct labor force.

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The fixed factory overhead controllable variance is

The Finishing Department of Pinnacle Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours. During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200. Prepare a factory overhead cost variance report for October. The budgeted amounts for actual amount produced should be based on 9,000 machine hours).

The following information relates to manufacturing overhead for the Chapman Company: Standards: Total fixed factory overhead - $450,000 Estimated production - 25,000 units 100% of normal capacity)Overhead rates are based on machine hours Standard hours allowed per unit produced - 2 Fixed overhead rate - $9.00 per machine hour Variable overhead rate - $3.50 per hour Actual: Fixed factory overhead - $450,000 Production - 24,000 units Variable overhead - $170,000 Compute a) the fixed factory overhead volume variance, b) the variable factory overhead controllable variance, and c) the total factory overhead cost variance.

If the standard to produce a given amount of product is 600 direct labor hours at $17 and the actual was 500 hours at $15, the time variance was $1,500 unfavorable.

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

*Actual hours are equal to standard hours for units produced. -The fixed factory overhead volume variance is

Standards that represent levels of operation that can be attained with reasonable effort are called

Prepare an income statement through income before income tax) for presentation to management, using the following data from the records of Greenway Manufacturing Company for November of the current year:

At the end of the fiscal year, variances from standard costs are usually transferred to the