Exam 10: Standard Costs and Variances

Pippin 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 June: The labor efficiency variance for the month is closest to:

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 price variance for June is:

Birkland 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 labor-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.

Pioli 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 $92,000 and budgeted activity of 20,000 hours. During the year, the company completed the following transactions:Purchased 34,300 kilos of raw material at a price of $5.40 per kilo.Used 35,000 kilos of the raw material to produce 19,500 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 14,900 hours at an average cost of $28.80 per hour.Applied fixed overhead to the 19,500 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 $143,440. Of this total, $60,160 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $83,280 related to depreciation of manufacturing equipment.Transferred 19,500 units from work in process to finished goods.Sold for cash 20,100 units to customers at a price of $60.90 per unit.Completed and transferred the standard cost associated with the 20,100 units sold from finished goods to cost of goods sold.Paid $44,790 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. Record the above transactions in the worksheet that appears below. 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). 3. Determine the ending balance (e.g., 12/31 balance) in each account.4. Prepare an income statement for the year.

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

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 efficiency variance for January is:

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?

Valera Corporation makes a product with the following standards for labor and variable overhead: The company budgeted for production of 5,300 units in July, but actual production was 5,400 units. The company used 2,130 direct labor-hours to produce this output. The actual variable overhead rate was $6.10 per hour. The company applies variable overhead on the basis of direct labor-hours.The variable overhead rate variance for July is:

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for January 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?

Miguez Corporation makes a product with the following standard costs: The company budgeted for production of 3,300 units in September, but actual production was 3,200 units. The company used 6,140 liters of direct material and 1,750 direct labor-hours to produce this output. The company purchased 6,500 liters of the direct material at $7.90 per liter. The actual direct labor rate was $31.10 per hour and the actual variable overhead rate was $2.60 per hour.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 September is:

Ferrini 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 $82,500 and budgeted activity of 7,500 hours. During the year, the company completed the following transactions:a. Purchased 57,700 pounds of raw material at a price of $8.50 per pound.b. Used 52,750 pounds of the raw material to produce 19,500 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 9,950 hours at an average cost of $20.70 per hour.d. Applied fixed overhead to the 19,500 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 $97,100. Of this total, -$12,900 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $110,000 related to depreciation of manufacturing equipment.e. Transferred 19,500 units from work in process to finished goods.f. Sold for cash 20,200 units to customers at a price of $44.20 per unit.g. Completed and transferred the standard cost associated with the 20,200 units sold from finished goods to cost of goods sold.h. Paid $61,000 of selling and administrative expenses.i. 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. Record the above transactions in the worksheet that appears below. 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). 3. Determine the ending balance (e.g., 12/31 balance) in each account.4. Prepare an income statement for the year.

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

Pioli 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 $132,000 and budgeted activity of 12,000 hours.During the year, the company completed the following transactions:Purchased 22,300 kilos of raw material at a price of $7.40 per kilo.Used 20,800 kilos of the raw material to produce 9,500 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 6,900 hours at an average cost of $19.80 per hour.Applied fixed overhead to the 9,500 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 $143,000. Of this total, $60,000 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $83,000 related to depreciation of manufacturing equipment.Transferred 9,500 units from work in process to finished goods.Sold for cash 10,100 units to customers at a price of $54.30 per unit.Completed and transferred the standard cost associated with the 10,100 units sold from finished goods to cost of goods sold.Paid $43,000 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. Record the above transactions in the worksheet that appears below. Because of the width of the worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one very wide 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). 3. Determine the ending balance (e.g., 12/31 balance) in each account.4. Prepare an income statement for the year.

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 Finished Goods account will be closest to:

The Maxit Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours. The following data are available for July:Actual variable manufacturing overhead cost incurred: $26,140Actual machine-hours worked: 3,200 hoursVariable overhead rate variance: $5,820 UnfavorableTotal variable overhead spending variance: $8,140 UnfavorableThe variable overhead efficiency variance for July is:

The labor efficiency variance is labeled favorable (F) if the actual hours used is less than the standard hours allowed for the actual output.

Highfill Corporation's variable overhead is applied on the basis of direct labor-hours. The standard cost card for product D80D specifies 6.3 direct labor-hours per unit of D80D. The standard variable overhead rate is $5.80 per direct labor-hour. During the most recent month, 1,000 units of product D80D were made and 6,400 direct labor-hours were worked.The actual variable overhead incurred was $40,920.Required:a. What was the variable overhead rate variance for the month?b. What was the variable overhead efficiency variance for the month?

The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: There were no beginning inventories of direct materials.The actual cost of direct material was:

Chhom Corporation makes a product whose direct labor standards are 0.8 hours per unit and $25 per hour. In November the company produced 7,200 units using 5,260 direct labor-hours. The actual direct labor cost was $110,460.The labor efficiency variance for November is: