Exam 11: Standard Costs and Variance Analysis

Which of the following variances is most likely the responsibility of the purchasing manager?

An automobile parts company has a standard material price of $2 per pound.In October the company produced 4,500 units using 6,000 pounds of material.The company experienced a favorable materials quantity variance of $1,200.How much is the standard quantity of materials per unit?

For planning purposes, ideal standards are more useful than attainable standards.

Standard Faucets uses standard costing and recorded the following data for the month of August: Standard direct labor rate \ 10.00 per hour Standard hours allowed for actual production 20,000 hours Actual direct labor rate \ 10.50 per hour Labor efficiency variance \ 5,000 favorable How much is the labor rate variance for August?

At the start of 2017, Capital Cemetery determined its standard labor cost to be 2.5 hours for each cemetery plot prepared at $14.00 per hour.The budget for variable overhead was $8 per plot and budgeted fixed overhead was $15,000 for the year.Overhead is applied based on the number of plots prepared.The company expects to prepare 5,000 plots during 2017.During 2017, the actual cost of labor was $14.30 per hour.Capital prepared 4,900 cemetery plots requiring 11,700 direct labor hours.Actual overhead for the year was $52,100.How much is the overhead volume variance?

In some instances, process improvement can lead to unfavorable variances.

What is the cost that management believes should be incurred to produce a product under anticipated conditions called?

Mohammed Company employs a standard cost system.Mohammed has established the following standards for one unit of product: Standard Quantity Standard Price Standard Cost Direct materials 12.0 pounds \ 7.00/ pound \ 84.00 Direct labor 2.6 hours \ 22.00/ hour 57.20 During June, Mohammed planned to produce 24,000 units of product.It purchased 330,000 pounds of direct material at a total cost of $2,343,000.The total factory wages for June were $1,440,000.Mohammed manufactured 25,000 units of product during June using 302,000 pounds of direct material and 64,000 direct labor hours.How much is the labor efficiency variance?

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 is the direct labor rate variance for 2017?

An unfavorable controllable overhead variance indicates that more cost was incurred on overhead costs than allowed in the flexible budget.

Into what components is the manufacturing overhead variance decomposed when it is analyzed?

If actual demand is greater than anticipated, an overall favorable variance will exist for each of the three production costs.

Haley Fans manufactures and distributes circulators.The standard and actual costs for the manufacture of circulators are as follows: Standard Costs Actual Costs Variable cost, \ 24 per unit Total variable cost, \ 12,300 Fixed cost, \ 40 per unit Total fixed cost, \ 19,250 Budgeted factory overhead was $32,000.Overhead applied is based on the number of circulator units produced.The company estimated that 500 circulators would be produced, however only 480 were produced.How much is Haley's controllable overhead variance?

Radical Company produces versascopes.It has a standard wage rate of $9.50 per hour.It has determined that the standard time to assemble one versascope is 2.75 hours.During August, the company's employees assembled 600 versascopes, and they were paid $15,974 for 1,630 hours of work.What is Radical's labor efficiency variance?

If the controllable overhead variance is favorable, the overhead volume variance

Ultimate Production manufactures radon detectors.The standard for materials for each detector is 2 pounds of acrylic at a standard cost of $4.30 per pound.During May, the company purchased 890 pounds and used 830 pounds of acrylic and made 410 radon detectors.The company paid $4.45 per pound for the acrylic.There were 400 detectors budgeted for May.How much is the material quantity variance?

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 is the flexible budget for overhead for 2017?

Which one of the following is often used to determine a standard price for materials?

The difference between standard and actual costs is

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 is the standard cost of white sauce?