Exam 10: Standard Costing and Analysis of Direct Costs

Quinton Company has set the following standards for one unit of product: Direct material Quantity: 6.2 pounds per unit Price per pound: $11 per pound Direct labor Quantity: 6 hours per unit Rate per hour: $23 per hour Actual costs incurred in the production of 2,800 units were as follows: Direct material: $194,350 ($11.50 per pound) Direct labor: $393,750 ($22.50 per hour) All materials purchased were consumed during the period. Required: Calculate the direct-material price and quantity variances, and the direct-labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

Which of the following variances are most similar with respect to the manner in which they are calculated?

Waterstone Industries is setting standard costs for one of its products.The main material is fiber board sold by the square foot.The current cost of fiber board is $4.00 per square foot from Waterstone's preferred supplier.Delivery costs are $0.25 per board foot.Waterstone's wages per hour are $25.00.Payroll costs are $3.60 per hour and benefits are $5.00 per hour.How much is the direct materials cost standard per square foot?

Maki, Inc.manufactures a product that has the following standard costs: The following information pertains to July: Direct material purchased: 42,500 yards at $2.78 per yard, or $118,150 Direct material used: 36,000 yards Direct labor: 7,500 hours at $18.30 per hour, or $137,250 Actual completed production: 1,050 units Use the information to compute the following variances: Required: Calculate the direct-material price and quantity variances, and the direct-labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

Significant departures investigated, when using management by exception, are uniform across all size and types of organizations with varying production processes.

Standard costs:

A perfection standard:

A man ager is more likely to investigate the variance for a cost that is controllable by someone in the organization than one that is not.

A favorable labor efficiency variance is created when actual labor hours worked exceed standard hours allowed.

Product costs are used only in managerial accounting.

A production supervisor generally has little influence over the:

One of the most important conditions for the successful use of standard costing is a stable production process.

Which of the following would be considered if a company desires to establish a series of practical manufacturing standards?

Which of the following variances are most similar with respect to the manner in which they are calculated?

Timber Enterprises purchased 67,000 pounds (cost = $616,400) of direct material to be used in the manufacture of the company's only product.According to the production specifications, each completed unit requires four pounds of direct material at a standard cost of $9 per pound.Direct materials consumed by the end of the period totaled 65,500 pounds in the manufacture of 16,050 finished units. An examination of Timber's payroll records revealed that the company worked 42,000 labor hours (cost = $621,600) during the period, and specifications called for each completed unit requiring 2.6 hours of labor at a standard cost of $15 per hour. Use the information to compute the following variances: Required: Calculate the direct-material price and quantity variances, and the direct-labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

During June, Fraser Company's material purchases amounted to 6,000 pounds at a price of $7.35 per pound.Actual costs incurred in the production of 2,000 units were as follows: Required: Compute the direct-material price and quantity variances, the direct-material purchase price variance, and the direct-labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Variance proration is the process of closing all variance accounts directly into Cost of Goods Sold.

Vasquez, Inc.is establishing the direct materials and direct labor standards for its leading product.Materials cost from the supplier are $5 per square foot, net of purchase discount.Freight-in amounts to $0.10 per square foot.Basic wages of the assembly line personnel are $10 per hour.Payroll taxes are approximately 20% of wages.Benefits amount to $2 per hour.How much is the direct material cost standard per square foot?

Airon Company recently completed 10,600 units of its single product, consuming 32,000 labor hours that cost the firm $480,000.According to manufacturing specifications, each unit should have required 3 hours of labor time at $15.40 per hour. On the basis of this information, determine Airon's labor rate variance and labor efficiency variance.

James at the Mill Barn Woods produces handcrafted frames.A standard-size 11 × 14 inch frame requires 6 board feet of rustic barn wood in the finished product.In addition, 1 board foot of scrap lumber is normally left from the production of one frame.James pays a demolition company $1.50 per board foot, plus $1.00 in transportation charges per board foot. Required: Compute the standard direct-material cost of a frame.