Exam 10: Standard Costs and Variances

Irving Corporation makes a product with the following standards for direct labor and variable overhead: In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.The variable overhead 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 Retained Earnings account at the end of the year is closest to:

Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

Dirickson 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 July: The raw materials price variance for the month is closest to:

Irving Corporation makes a product with the following standards for direct labor and variable overhead: In November the company's budgeted production was 5,300 units, but the actual production was 5,100 units. The company used 1,650 direct labor-hours to produce this output. The actual variable overhead cost was $7,590. The company applies variable overhead on the basis of direct labor-hours.The variable overhead rate variance for November is:

The following data have been provided by Liggett Corporation: Lubricants and supplies are both elements of variable manufacturing overhead.The variable overhead rate variance for lubricants is closest to:

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 efficiency variance for the month is closest to:

Robins 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 $360,000 and budgeted activity of 20,000 hours.During the year, the company completed the following transactions:Purchased 134,700 pounds of raw material at a price of $9.10 per pound.Used 122,080 pounds of the raw material to produce 32,100 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 26,680 hours at an average cost of $17.20 per hour.Applied fixed overhead to the 32,100 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 $378,400. Of this total, $297,400 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $81,000 related to depreciation of manufacturing equipment.Completed and transferred 32,100 units from work in process to finished goods.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:

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: The direct materials purchases variance is computed when the materials are purchased.What is the materials quantity variance for the month?

Gathman 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 standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $114,000 and budgeted activity of 20,000 hours. During the year, the company completed the following transactions:Purchased 31,300 pounds of raw material at a price of $3.70 per pound.Used 32,140 pounds of the raw material to produce 17,800 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,240 hours at an average cost of $23.00 per hour.Applied fixed overhead to the 17,800 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 $133,100. Of this total, $28,270 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $104,830 related to depreciation of manufacturing equipment.Transferred 17,800 units from work in process to finished goods.Sold for cash 17,600 units to customers at a price of $62.00 per unit.Completed and transferred the standard cost associated with the 17,600 units sold from finished goods to cost of goods sold.Paid $73,360 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.Required:1. Compute all direct materials, direct labor, and fixed overhead variances for the year.2. Enter the beginning balances and record the above transactions in the worksheet that appears below. 3. Determine the ending balance (e.g., 12/31 balance) in each account.4. Prepare an income statement for the year.

Johanson 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 purchased 89,600 pounds of raw material at a price of $7.80 per pound and used 79,120 pounds of the raw material to produce 23,300 units of work in process.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 recording the raw materials purchases, the Raw Materials inventory account will increase (decrease) by:

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 materials quantity variance for June is:

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 amount of materials allowed for the actual output is closest to:

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 total standard cost per unit is closest to:

Robnett 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: During the year, the company completed the following transactions:a. Purchased 106,900 liters of raw material at a price of $6.80 per liter.b. Used 93,760 liters of the raw material to produce 24,700 units of work in process.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?

Yordy 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 $220,500 and budgeted activity of 31,500 hours. During the year, the company completed the following transactions:a. Purchased 48,700 kilos of raw material at a price of $9.30 per kilo.b. Used 43,020 kilos of the raw material to produce 30,800 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 28,820 hours at an average cost of $20.20 per hour.d. Applied fixed overhead to the 30,800 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 $208,600. Of this total, $124,600 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $84,000 related to depreciation of manufacturing equipment.e. Transferred 30,800 units from work in process to finished goods.f. Sold for cash 32,200 units to customers at a price of $46.60 per unit.g. Completed and transferred the standard cost associated with the 32,200 units sold from finished goods to cost of goods sold.h. Paid $155,000 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.3. Prepare an income statement for the year.

Zanny Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Zanny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Zanny's labor rate variance for August?

The following data have been provided by Lopus Corporation: Required: Compute the variable overhead rate variances for lubricants and for supplies. Indicate whether each of the variances is favorable (F) or unfavorable (U).

Robnett 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: During the year, the company completed the following transactions:a. Purchased 106,900 liters of raw material at a price of $6.80 per liter.b. Used 93,760 liters of the raw material to produce 24,700 units of work in process.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 used in production in transaction (b) above, the Raw Materials inventory account will increase (decrease) by:

Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 8.4 direct labor-hours per unit of D80D. The standard variable overhead rate is $5.60 per direct labor-hour. During the most recent month, 800 units of product D80D were made and 6,800 direct labor-hours were worked.The actual variable overhead incurred was $41,140.Required:a. What was the variable overhead rate variance for the month?b. What was the variable overhead efficiency variance for the month?