Exam 24: Standard Costs and Balanced Scorecard

Which one of the following describes the total overhead variance?

The direct materials price standard should include an amount for all of the following except

Labor efficiency is measured by the

Which one of the following statements is true?

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135. Dillon's materials price variance is

The two levels that standards may be set at are

Platt Company produces one product, a putter called PAR-putter. Platt uses a standard cost system and determines that it should take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The total budgeted overhead at normal capacity is $500,000 comprised of $200,000 of variable costs and $300,000 of fixed costs. Platt applies overhead on the basis of direct labor hours. During the current year, Platt produced 85,000 putters, worked 89,000 direct labor hours, and incurred variable overhead costs of $160,000 and fixed overhead costs of $300,000. Instructions (a) Compute the predetermined variable overhead rate and the predetermined fixed overhead rate. (b) Compute the applied overhead for Platt for the year. (c) Compute the total overhead variance.

The following information was taken from the annual manufacturing overhead cost budget of Cinnamon Manufacturing: During the year, 30,000 units were produced, 64,000 hours were worked, and the actual manufacturing overhead costs were $322,000. The actual fixed manufacturing overhead costs did not deviate from the budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Instructions (a) Compute the total, fixed, and variable predetermined manufacturing overhead rates. (b) Compute the total, controllable, and volume overhead variances.

In developing a standard cost for direct materials used in making a product, consideration should be given to two factors: (1) __________________ per unit of direct materials and (2) the __________________ of direct materials to produce one unit of product.

Alex Co. prepared its income statement for management using a standard cost accounting system. Which of the following appears at the "standard" amount?

The standard predetermined overhead rate must be based on direct labor hours as the standard activity index.

Scorpion Production Company planned to use 1 yard of plastic per unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard. The company actually made 3,900 units, although it had planned to make only 3,300 units. Total yards used for production were 3,960. How much is the total materials variance?

The use of standard costs in inventory costing is prohibited in financial statements.

If a company is concerned with the potential negative effects of establishing standards, it should

The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Monster's actual payroll during January was $98,280. What is the labor quantity variance?

Normal standards incorporate normal contingencies of production into the standards.

The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the

Shep Corporation estimated it would produce 6,200 buckets, though actual production was 6,000 during August. The standard labor cost is 2 buckets per hour at $18.00 per hour. Actual cost per hour was $18.40 with a total labor cost of $53,360. Instructions Determine the amounts of the labor price and the labor quantity variances for August.

Fulmar Manufacturing Co. is the manufacturer of miniature models, especially of automobiles with historical interest. The company is developing new standard costs. Patrick Webb suggests that the new standards for materials should not include any waste for liquid plastics that spill out of the molds. "After all," he says, "we're trying to be a world class company. When we build in waste, we tell the workers it's okay to waste some." Sharon Berry, another manager, disagrees. "If we don't allow for some normal human error," she says, "we'll have a mighty unhappy work force. Also, I think that these kinds of perfection standards exploit the workers. I certainly wouldn't want to be held up to perfection every day-what could I do but fail?" The argument continued. Finally, the standards were prepared. All standards were prepared according to normal expected performance, except that for materials, an ideal standard was used. Sharon, still maintaining the unfairness of the system, refused to hold her workers accountable for materials quantity variances. Required: 1. Are ideal standards unethical? Explain briefly. 2. Is it unethical for Sharon to refuse to support the standards? Explain.