Exam 10: Standard Costs and Variances

Woodhead Incorporated manufactures one product. It does not maintain any beginning or ending inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. Its standard cost per unit produced is $37.45. During the year, the company produced and sold 24,400 units at a price of $47.40 per unit and its selling and administrative expenses totaled $92,000. The company does not have any variable manufacturing overhead costs. It recorded the following variances during the year: When the company closes its standard cost variances, the Cost of Goods Sold will increase (decrease) by:

Creger Corporation, which makes landing gears, has provided the following data for a recent month: Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variances are favorable or unfavorable.

Tharaldson Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor efficiency variance for June is:

Alvino Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $70,000 and budgeted activity of 14,000 hours.During the year, the company completed the following transactions:Purchased 32,200 kilos of raw material at a price of $7.80 per kilo. The materials price variance was $22,540 Favorable.Used 30,480 kilos of the raw material to produce 27,800 units of work in process. The materials quantity variance was $850 Favorable.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 18,260 hours at an average cost of $20.50 per hour. The direct labor rate variance was $9,130 Unfavorable. The labor efficiency variance was $24,000 Favorable.Applied fixed overhead to the 27,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $59,500. Of this total, $22,500 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $82,000 related to depreciation of manufacturing equipment. The fixed manufacturing overhead budget variance was $10,500 Favorable. The fixed manufacturing overhead volume variance was $27,300 Favorable.Completed and transferred 27,800 units from work in process to finished goods.Sold (for cash) 29,000 units to customers at a price of $31.90 per unit.Transferred the standard cost associated with the 29,000 units sold from finished goods to cost of goods sold.Paid $101,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. The ending balance in the Cash account will be closest to:

The following standards for variable overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: Required: a. What is the variable overhead rate variance for the month?b. What is the variable overhead efficiency variance for the month?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials price variance for the month?

Ester Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $168,000 and budgeted activity of 24,000 hours.During the year, the company applied fixed overhead to the 22,600 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $149,800. Of this total, $83,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $66,000 related to depreciation of manufacturing equipment.Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: Required:a. What is the labor rate variance for the month?b. What is the labor efficiency variance for the month?

The following data have been provided by Furr Corporation: Indirect labor and power are both elements of variable manufacturing overhead.The variable overhead rate variance for indirect labor is closest to:

Moozi Dairy Products processes and sells two products: milk and butter. Last year, Moozi budgeted $1,200,000 of fixed manufacturing overhead and chose a denominator level of activity of 80,000 machine-hours. Each unit of milk at Moozi has a standard of 0.1 machine-hours and each unit of butter has a standard of 0.08 machine-hours. Last year, Moozi processed 560,000 units of milk and 340,000 units of butter. Moozi's total fixed manufacturing overhead incurred last year was $1,256,000. Actual machine-hours incurred for the year were 82,000. Moozi applies manufacturing overhead to its products on the basis of standard machine-hours. Required: Compute Moozi's fixed manufacturing overhead variances for last year.

Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company:The company produced 2,400 units during the month.A total of 19,400 pounds of material were purchased at a cost of $13,580.There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,620 pounds of material remained in the warehouse.During March, 1,090 direct labor-hours were worked at a rate of $30.50 per hour.Variable manufacturing overhead costs during March totaled $14,061.The direct materials purchases variance is computed when the materials are purchased.The materials price variance for March is:

The standard cost card for one unit of a finished product shows the following: If the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is:

Bulluck Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for July is:

Eagan Corporation manufactures one product. The company uses a standard cost system in which inventories are recorded at their standard costs. The standard cost card for the company's only product is as follows: During the year, direct labor workers (who were paid in cash) worked 11,250 hours at an average cost of $19.70 per hour on 22,300 units. These units were started and completed during the year. Required:Completely record the direct labor costs, along with any direct labor variances, in the below worksheet. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).

Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for December: The labor rate variance for the month is closest to:

Handerson Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor rate variance for August is:

At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July showed that actual maintenance costs totaled $9,870 and that the associated rate variance was $300 unfavorable. If 5,500 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was:

Hardigree Corporation makes a product that has the following direct labor standards: In May the company's budgeted production was 8,900 units, but the actual production was 8,800 units. The company used 2,820 direct labor-hours to produce this output. The actual direct labor cost was $70,218.The labor efficiency variance for May is:

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead efficiency variance for the month?

As defined it the text, the ending balance in retained earnings equals the beginning balance in retained earnings plus net operating income minus dividends.