Exam 10: Standard Costs and Variances

Solly Corporation produces a product for national distribution. Standards for the product are:Materials: 12 ounces per unit at 60¢ per ounce.Labor: 2 hours per unit at $8 per hour.During the month of December, the company produced 1,000 units. Information for the month follows:Materials: 14,000 ounces purchased and used at a total cost of $7,700.Labor: 2,500 hours worked at a total cost of $20,625.The materials price variance is:

Lemke Corporation 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. The standard cost card for the company's only product is as follows: During the year, the company started and completed 12,300 units. Direct labor employees worked 10,540 hours at an average cost of $22.40 per hour.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net). All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When the direct labor cost is recorded, which of the following entries will be made?

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.

Fenderson Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: The company incurred a total of $370,077 in manufacturing overhead cost during the year. Required: a. Compute the variable component of the company's predetermined overhead rate. b. Compute the fixed component of the company's predetermined overhead rate. c. Compute the company's predetermined overhead rate. d. Determine whether overhead was underapplied or overapplied for the year and by how much.

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 3,400 units during the month.A total of 20,400 pounds of material were purchased at a cost of $14,580.There was no beginning inventory of materials on hand to start the month; at the end of the month, 4,620 pounds of material remained in the warehouse.During March, 1,190 direct labor-hours were worked at a rate of $40.50 per hour.Variable manufacturing overhead costs during March totaled $15,061.The direct materials purchases variance is computed when the materials are purchased.The variable overhead rate variance for March is:

Lacrue 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 actual output for the period was 3,700 units.The standard hours allowed for the actual output is closest to:

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

Rhine Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Required: a. Determine the fixed overhead budget variance for the year. b. Determine the fixed overhead volume variance for the year.

Ravena Labs., Incorporated makes a single product which has the following standards:Direct materials: 2.5 ounces at $20 per ounceDirect labor: 1.4 hours at $12.50 per hourVariable manufacturing overhead: 1.4 hours at 3.50 per hourVariable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:3,750 units of compound were produced during the month.There was no beginning direct materials inventory.Direct materials purchased: 12,000 ounces for $225,000.The ending direct materials inventory was 2,000 ounces.Direct labor-hours worked: 5,600 hours at a cost of $67,200.Variable manufacturing overhead costs incurred amounted to $18,200.Variable manufacturing overhead applied to products: $18,375.The variable overhead rate variance for October is:

Millonzi 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 company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $236,250 and budgeted activity of 13,500 hours. During the year, the company completed the following transactions: a. Purchased 21,000 liters of raw material at a price of $8.70 per liter.b. Used 19,510 liters of the raw material to produce 5,300 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 4,570 hours at an average cost of $19.70 per hour.d. Applied fixed overhead to the 5,300 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 $225,150. Of this total, $165,150 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $60,000 related to depreciation of manufacturing equipment.e. Transferred 5,300 units from work in process to finished goods.f. Sold for cash 5,500 units to customers at a price of $108.90 per unit.g. Completed and transferred the standard cost associated with the 5,500 units sold from finished goods to cost of goods sold.h. Paid $27,000 of selling and administrative expenses.i. Closed all standard cost variances to cost of goods sold. Required:1. Enter the beginning balances and record the above transactions in the worksheet that appears below. 2.Determine the ending balance (e.g., 12/31 balance) in each account.

Suver Corporation has a standard costing system. The following data are available for June: The actual price per pound of direct materials purchased in June was:

Thyne 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 actual output for the period was 3,900 units.The standard hours allowed for the actual output is closest to:

Held Incorporated makes a single product--an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Required: a. Compute the variable component of the company's predetermined overhead rate. b. Compute the fixed component of the company's predetermined overhead rate. c. Compute the company's predetermined overhead rate. d. Determine the variable overhead rate variance for the year. e. Determine the variable overhead efficiency variance for the year. f. Determine the fixed overhead budget variance for the year. g. Determine the fixed overhead volume variance for the year. h. Determine whether overhead was underapplied or overapplied for the year and by how much.

Bohon 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 contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials:a. Purchased 19,700 pounds of raw material at a price of $4.70 per pound.b. Used 18,500 pounds of the raw material to produce 18,400 units of work in process.The company calculated the following direct materials variances for the year: 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 purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made?

Bohon 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 contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials:a. Purchased 19,700 pounds of raw material at a price of $4.70 per pound.b. Used 18,500 pounds of the raw material to produce 18,400 units of work in process.The company calculated the following direct materials variances for the year: 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 recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by:

Canel Incorporated makes a single product--an electrical motor used in many long-haul trucks. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Required: a. Determine the fixed overhead budget variance for the year. b. Determine the fixed overhead volume variance for the year.

Chhom Corporation makes a product whose direct labor standards are 0.4 hours per unit and $19.00 per hour. In November the company produced 1,800 units using 760 direct labor-hours. The actual direct labor cost was $13,300.The labor efficiency variance for November is:

Arena 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 $81,000 and budgeted activity of 18,000 hours.During the year, the company completed the following transactions:Purchased 35,400 pounds of raw material at a price of $4.60 per pound.Used 32,180 pounds of the raw material to produce 26,900 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour.Applied fixed overhead to the 26,900 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 $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment.Completed and transferred 26,900 units from work in process to finished goods.Sold (for cash) 27,100 units to customers at a price of $36.60 per unit.Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold.Paid $149,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.The company calculated the following variances for the year: 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:

Turrubiates Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,400 units in April, but actual production was 3,500 units. The company used 27,200 liters of direct material to produce this output. The company purchased 19,700 liters of the direct material at $2.2 per liter.The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for April is:

Devoto Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for June: The raw materials quantity variance for the month is closest to: