Exam 10: Standard Costing: a Managerial Control Tool

During June, Cisco Company produced 12,000 chainsaw blades. The standard quantity of material allowed per unit was 1.5 pounds of steel per blade at a standard cost of $8 per pound. Cisco determined that it had a favorable materials usage variance of $1,000 for June. Calculate the actual quantity of materials Cisco used.

Figure 10-9. James Company manufactures t-shirts. During the year, it manufactured 250,000 t-shirts, using 2 hours of direct labor at a rate of $8.50 per hour. The materials and labor standards for manufacturing the t-shirts are: It took James 1,400,000 yards at $2.50 per yard to make the 250,000 t-shirts. -Refer to Figure 10-9. What is the entry to close the variances of labor and materials?

The actual quantity of input at the standard price less than the standard quantity of input at the standard price equals the usage variance.

For better control, the materials price variance is computed using actual quantity of materials purchased.

Anderson Company has the following information concerning its direct labor:

Which of the following is not an advantage of standard costing over normal costing and actual costing?

The labor rate variance is computed by

In a standard cost system, costs are assigned to all of the following, except for

Variances indicate

Dog's Best Friend manufactures dog food. During the month, it manufactured 3,000 bags of kibble, using 0.25 hour of direct labor per bag at a rate of $9.00 per hour. The materials and labor standards for manufacturing the bags of kibble are: The company actually used 3,300 pounds of beef at a price of $1.10 per pound. It also purchased 3,000 bags at a price of $0.15 per bag.

A ______________ is the difference between the sales price needed to capture a predetermined market share and the desired per-unit profit.

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 a favorable materials price variance of $500. The standard cost per pound must be

___________________ is calculated by multiplying the unit labor standard by the actual output.

Ideal standards can be achieved under efficient operating conditions.

Match the variance with its correct calculation. a. Actual Quantity *Actual Price b. (Actual Hours*Actual Rate) - (Standard Hours *Standard Rate) c. (Actual Quantity *Actual Price) - (Standard Quantity * Standard Price) d. (Actual Hours - Standard Hours) * Standard Rate e. (Actual Price -Standard Price) *Actual Quantity f. Standard Quantity * Standard Price g. (Actual Rate - Standard Rate) * Actual Hours h. (Actual Quantity - Standard Quantity) *Standard Price -Budgeted Costs

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 Perfect's standard hours allowed for a volume of 80,000 blades?

The materials price variance is computed using the actual quantity of materials used, and the materials usage variance is computed using the actual quantity of materials purchased.

Match the variance with its correct calculation. a. Actual Quantity *Actual Price b. (Actual Hours*Actual Rate) - (Standard Hours *Standard Rate) c. (Actual Quantity *Actual Price) - (Standard Quantity * Standard Price) d. (Actual Hours - Standard Hours) * Standard Rate e. (Actual Price -Standard Price) *Actual Quantity f. Standard Quantity * Standard Price g. (Actual Rate - Standard Rate) * Actual Hours h. (Actual Quantity - Standard Quantity) *Standard Price -Labor Efficiency Variance

Standard cost systems are adopted

Which of the following is not true regarding the use of labor variance information?