Exam 10: Standard Costs and Variances

The standards for product V28 call for 7.5 pounds of a raw material that costs $18.10 per pound. Last month, 1,400 pounds of the raw material were purchased for $24,990. The actual output of the month was 160 units of product V28. A total of 1,300 pounds of the raw material were used to produce this output.The direct materials purchases variance is computed when the materials are purchased.Required:a. What is the materials price variance for the month?b. What is the materials quantity variance for the month?

Boldrin Incorporated has a standard cost system. The standards for direct labor for one of its products specify 0.20 hours per unit at $18.70 per hour. The company has reported the following actual results for the product for August: Required: a. Compute the labor rate variance for August. b. Compute the labor efficiency variance for August.

Milar Corporation makes a product with the following standard costs: In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.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 variable overhead rate variance for January is:

Majer Corporation makes a product with the following standard costs: The company reported the following results concerning this product in February. 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 February is:

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 purchases in transaction (a) above, the Raw Materials inventory account will increase (decrease) by:

If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period.

Landoni 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 standards for direct materials for the company's only product specify 2.7 kilos per unit at $5.00 per kilo or $13.50 per unit. During the year, the company purchased 75,200 kilos of raw material at a price of $4.90 per kilo and used 69,290 kilos of the raw material to produce 25,700 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:

Duboise Corporation makes a product with the following standard costs: The company reported the following results concerning this product in October. The materials price variance is recognized when materials are purchased. Variable overhead is applied on the basis of direct labor-hours. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance. e. Compute the variable overhead efficiency variance. f. Compute the variable overhead rate variance.

Decena 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. Information concerning the direct labor standards for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor 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 direct labor cost is recorded, which of the following entries will be made?

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 5,100 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 5,250 machine-hours during the month. The standard hours allowed for the actual output were 5,240 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

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 materials quantity variance for August is:

Luma 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 September: The raw materials price variance for the month is closest to:

Freiling 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 assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 14,890 hours at an average cost of $22.80 per hour.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 direct labor cost is recorded in transaction (c) above, which of the following entries will be made?

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 price variance for the month?

If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance.

Milanese 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 $161,000 and budgeted activity of 10,000 hours. During the year, the company completed the following transactions:Purchased 24,400 gallons of raw material at a price of $3.90 per gallon.Used 21,460 gallons 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 9,300 hours at an average cost of $23.40 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 $170,800. Of this total, $122,790 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $48,010 related to depreciation of manufacturing equipment.Transferred 17,800 units from work in process to finished goods.Sold for cash 17,700 units to customers at a price of $46.60 per unit.Completed and transferred the standard cost associated with the 17,700 units sold from finished goods to cost of goods sold.Paid $53,390 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.

Freytag Corporation's variable overhead is applied on the basis of direct labor-hours. The company has established the following variable overhead standards for product N06C: The following data pertain to the most recent month's operations during which 1,800 units of product N06C were made: Required: a. What was the variable overhead rate variance for the month?b. What was the variable overhead efficiency variance for the month?

Gipple Corporation makes a product that uses a material with the quantity standard of 9.2 grams per unit of output and the price standard of $7.90 per gram. In January the company produced 5,300 units using 26,770 grams of the direct material. During the month the company purchased 29,300 grams of the direct material at $8.00 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for January is:

Descamps 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 variable overhead rate variance for the month is closest to:

The following standards have been established for a raw material used to make product O84: The following data pertain to a recent month's operations: The direct materials purchases variance is computed when the materials are purchased.Required:a. What is the materials price variance for the month?b. What is the materials quantity variance for the month?