Exam 11: Standard Costs and Variance Analysis

An unfavorable overhead volume variance always indicates that overhead is overapplied during the period.

Harris Manufacturing produces white sauce.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system for 2017: Budgeted and Standard Data Actual Data Material 1/4.@\ 14 per pound Froduced 6,200 units Labor 1.4 hour @\ 16 per hour Materials purchased 1,600 for \ 13.70/ pound Total fixed overhead \ 84,000 Materials used 1,520. Variable overhead \ 6.50 per unit Labor worked 8,740 . at \ 15.90 /hour Production 6,000 units Total overhead \ 122,000 How much the direct material price variance for 2017?

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis.The company estimated that 30,000 units would be produced in 2017 and uses this quantity to establish its standard overhead cost per unit.The cost formula for overhead costs used to develop the standard overhead cost per unit was: Overhead = $120,000 + $6 per unit During the year, actual overhead cost was $340,000.Actual units produced were 32,000.How much is the amount of under or over applied overhead for 2017?

A manufacturing company has a standard quantity of direct materials of 7 pounds per unit at a standard price of $2.20 per pound.In April the actual material price was $2.40 per pound and the company produced 5,500 units.If the company experienced a favorable material quantity variance of $6,600 during the month, how much was the actual quantity of material used?

For what reason(s) might the overhead volume variance occur? I.Overhead cost control is poor. II.The actual activity level was less than estimated. III.The expected production level was greater than budgeted.

Standard Gears produces lawn mower gears.It uses units as the cost driver for overhead.The following information was provided concerning its standard cost system: Actual Data Budgeted and Stand ard Data Produced 12,400 units Budgeted units 12,500 units Materials purchased 4,650. for a total cost of \ 32,550 Budgeted materials 0.40.@\ 7.10 per . Materials used 4,700. Budgeted labor 36 minutes @\ 11.00 per hour Labor worked 7,460 hrs. costing \ 79,822 Budgeted variable overhead \ 35,625 Actual overhead Fixed: \ 84,800 Variable \ 36,100 Budgeted fixed overhead \ 85,500 How much is the standard cost of each lawn mower gear?

Rumington Popcorn uses a standard cost system and applies overhead on a per unit basis.The company estimated that 30,000 units would be produced in 2017 and uses this quantity to establish its standard overhead cost per unit.The cost formula for overhead costs used to develop the standard overhead cost per unit was: Overhead = $120,000 + $6 per unit During the year, actual overhead cost was $340,000.Actual units produced were 32,000.How much is the overhead volume variance for 2017?

Under what condition(s) might a favorable variance be considered unfavorable? I.When a manager overproduces to fully utilize labor in a non-bottleneck department II.When a manager buys a better quality materials at a cheaper price

The labor rate variance is equal to the difference between the actual number of labor hours worked and the standard labor hours allowed, times the standard labor wage rate.

The use of standard costs is limited to manufacturing companies.

A material price variance measures whether more or less material was used in producing inventory.

A favorable labor efficiency variance indicates that employees worked more quickly than expected.

Barnes Company produces men's ties.The following budgeted amounts were provided by management for the current year: Category Stand ard Inputs Standard Cost Direct materials 1.1 yards per tie \ 4.00 per yard Direct labor 0.32 hours per tie \ 9.00 per hour Barnes produced and sold 4,000 ties during 2017.Actual performance for the year is: Direct Materials Direct Labor Yards used in production 4,100 Labor hours incurred 1,240 Yards purchased 3,900 Actual cost per hour \ 9.25 Actual cost per yard \ 3.75 How much is the labor rate variance?

Master Auto Parts has a standard labor rate of $10.50 per hour.In September, the company produced 10,000 gears using 24,000 labor hours.The company experienced a favorable labor rate variance of $18,000 during September.How much is Master Auto Parts' actual labor rate per hour?

The materials storeroom clerk is responsible for material price variances.

The material price variance is equal to the standard price per unit of material times the actual quantity of material used.

The difference between standard costs and budgeted costs is that standard cost

Blue Box Beach Chairs has the following standards to make beach chairs: Standard Quantity Standard Price Direct materials 2.2 pounds of polywood per chair \ 3.50 per pound Direct labor 0.65 hours per chair \ 13.00 per hour The static budget was based on the production of 6,200 beach chairs.The company used 13,000 pounds of polywood in order to make 6,000 chairs in April.The company purchased 7,000 pounds of polywood at a total cost of $24,150.It also used 3,840 labor hours at a cost of $12.70 per hour.How much is the direct labor rate variance?

Budgeted costs are the same as standard costs.

If the material quantity variance is favorable, the