Exam 10: Standard Costing: a Managerial Control Tool

MATCHING Match each item with the correct statement below. a. Quantity Standards b. Ideal Standards c. Price Standards d. Standard Cost Sheet e. Upper Control Limit f. Currently Attainable Standards g. Kaizen Standards -These reflect the amount that should be paid for the quantity of input to be used.

The _____________________ measures the difference between the direct materials actually used and the direct materials that should have been used for the actual output.

Figure 10-4. High Fliers Company produces model airplanes. During the month of November, it produced 2,000 planes. The actual labor hours were 7 hours per plane. Its standard labor hours are 10 hours per plane. The standard labor rate is $11 per hour. At the end of November, High Fliers found that it had a favorable labor rate variance of $10,500. -Refer to Figure 10-4. What was High Fliers' actual cost per labor hour?

Wiltshire Limited produces woolen blankets and clothing. During Year 1, Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle. The difference between the actual quantity of materials and the standard quantity of materials is due to waste. At the end of Year 1, Wiltshire developed a new process that would cut down on the waste by 60%. By the end of Year 2, the company had actually cut down its waste by 50%.

Ideal standards

During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound. At the end of March, Baker's Express found that it had an unfavorable materials price variance of $500. The standard cost per pound must be

Moving Baby Company produces baby strollers. During the year 90,000 strollers were produced. The actual labor used was 225,000 hours at $12.75 per hour. Moving Baby has the following labor standards: 2 hours at $13.00 per hour.

The standard cost system differs from the actual cost system in the assignment of

Which of the following is true regarding historical experience in standard setting?

During April, Rain Gear Unlimited produced 5,500 umbrellas from nylon that costs $0.45 per yard, which is $0.05 cheaper than the standard cost. It also used 3,000 direct labor hours at a rate of $6.50. Its direct materials standard is 1 yard per umbrella. Its direct labor standard is 0.5 hour per umbrella. Its materials usage variance was a favorable $500 and its labor rate variance was a favorable $900.

Figure 10-2. Highland Company's standard cost is $250,000. The allowable deviation is $\pm$ 10%. Its actual costs for six months are -Refer to Figure 10-2. The upper and lower control limits are, respectively,

_________________ occur whenever actual prices or actual usage of inputs are greater than standard prices or standard usage.

Which of the following is not true concerning direct materials variances?

An acceptable range is established in order to determine if whether variances are significant. The acceptable range is the standard, plus or minus an allowable deviation.

Engineering studies are often too rigorous and may not be achievable by operating personnel.

Favorable variances are credits and unfavorable variances are debits.

During June, Cisco Company produced 15,000 chainsaw blades. The standard quantity of material allowed per unit was 1.5 pounds of steel per blade at a standard cost of $5 per pound. The actual purchase price was $6.25 per pound. Cisco determined that it had a favorable materials usage variance of $2,500 for June. What is the journal entry to record the issuance and usage of materials?

The amount that should be paid for the quantity of the input to be used is known as the ______________.

Figure 10-8. The Perfect Tool Company (South America Division) produced 80,000 saw blades during the year. It took 1.5 hours of labor per blade at a rate of $8.50 per hour. However, its standard labor rate is $8.00. Its labor efficiency variance was an unfavorable $40,000. -Refer to Figure 10-8. What is the journal entry to record both labor variances?

During October, 10,000 direct labor hours were worked at a standard cost of $10 per hour. If the direct labor rate variance for October was $4,000 unfavorable, the actual cost per direct labor hour must be