Exam 10: Standard Costing and Variance Analysis

What is the correct formula for the direct material usage variance?

ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 8 hours of direct labour. Variable overhead is incurred at the rate of £0.75 per labour hour. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2019, ABC produced 5,500 shirts. A total of 45,000 direct labour hours were worked and the total variable overhead expenditure was £31,500. Based on the above information, what is the variable overhead total variance for the year ended 30 April 2019?

A standard cost card includes just details of product costs.

Potters Limited uses a standard costing system for all its products. Potters Limited produces hand painted teapots. The standard direct labour time to paint one teapot is 1½ hours. Variable overhead is allocated to each teapot on the basis of £6 per labour hour. Budgeted production is 1,500 teapots per month with budgeted monthly labour hours of 2,250. In October, Potters Limited produced 1,480 teapots and incurred total variable overhead expenditure of £13,000. 2,205 labour hours were paid in October. What is the variable overhead efficiency variance for October?

What is the correct formula for the direct labour total variance?

What is the correct formula for the variable overhead expenditure variance?

Potters Limited uses a standard costing system for all its products. Mugs have a standard selling price of £10 and budgeted total sales for December are 4,000 mugs. The actual selling price for mugs throughout December was £10.50 and the actual number of mugs sold was 3,800. The actual variable costs of producing mugs during December were £5.00 per while the standard variable cost of each mug is £4.75. Based on the above information, what is the sales volume variance for mugs in December?

Zany Cushion Covers Limited uses a standard costing system. Each cushion cover uses a standard 2 metres of material at a standard cost of £1.50 per metre. Budgeted production is 2,000 cushion covers per month. During November, Zany Cushion Covers Limited produced 2,200 cushion covers, using 4,950 metres of material at a cost of £6,930. Based on the above information, what is the direct material price variance for November?

ADB Limited uses a standard costing system for all its products. ADB produces and sells dinner plates. Each dinner plate has a standard selling price of £15 and budgeted total sales for June of 4,000 plates. The actual selling price for dinner plates throughout June was £14.50 and the actual number of dinner plates sold was 3,900. The actual variable costs are £7 per dinner plate while the standard variable cost of each plate is £6.75. Based on the above information, what is the sales price variance for dinner plates for June?

BFM Limited uses a standard costing system for all its products. BFM Limited produces Product

The Pottery Limited uses a standard costing system for all its products. The Pottery Limited produces decorative vases. The standard direct labour time to paint one decorative vase is 2 hours and the standard cost of labour is £16 per direct labour hour. Budgeted production is 1,000 decorative vases per month with budgeted labour hours of 2,000 per month. In April, The Pottery Limited produced 1,050 decorative vases and incurred total labour costs for painting the vases of £33,075, paying £17.50 per hour for labour. What is the direct labour rate variance for April?

What is the correct formula for the variable overhead efficiency variance?

XDT Limited uses a standard costing system for all its services. XDT Limited services photocopiers. The standard direct labour time to service one photocopier is 2½ hours and the standard cost of labour is £18 per direct labour hour. The company budgets 750 photocopier services per month with budgeted monthly labour hours of 1,875. In September, XDT Limited serviced 800 photocopiers and paid their service engineers for a total of 1,950 labour hours. Direct labour cost for the month was £36,075. What is the direct labour efficiency variance for September?

MSC Limited uses a standard costing system for all its products. MSC Limited produces hoodies. Each hoodie uses a standard 5 metres of material at a standard cost of £3 per metre. Budgeted production is 2,000 hoodies per annum. During the financial year ended 30 April 2019, MSC produced 2,200 hoodies. The cost of each metre of material was £3.25 and 4.8 metres of material were used in each hoodie produced. Based on the above information, what is the direct material price variance for the year ended 30 April 2019?

Which one of the following is the correct formula used in calculating the variable overhead total variance?

ABC Limited uses a standard costing system for all its products. ABC Limited produces shirts. Each shirt uses a standard 8 hours of direct labour at a standard rate of pay of £10 per direct labour hour. Budgeted production is 5,000 shirts per annum. During the financial year ended 30 April 2019, ABC produced 5,500 shirts. The cost of each direct labour hour was £9.60 and a total of 45,000 direct labour hours were paid. Based on the above information, what is the direct labour total variance for the year ended 30 April 2019?

JMJ Limited operates a standard costing system for all its products. The standard selling price of product A is £50 and the budgeted sales for the year ended 31 March 2019 are 5,000 units. During the year ended 31 March 2019, 6,000 Product As were sold and the average selling price during the year was £52. What is the sales price variance for the year ended 31 March 2019?

ZDT Limited uses a standard costing system for all its products. ZDT Limited produces picture frames. The standard direct labour time to produce one picture frame is 20 minutes. Variable overhead is allocated to picture frames at the rate of £6 per direct labour hour. Budgeted production is 15,000 picture frames per month. In October, ZDT Limited produced 15,300 picture frames, incurring variable overhead costs of £32,000 and total labour hours paid were 4,800. What is the variable overhead expenditure variance for October?

What is the correct formula for the direct labour rate variance?

Podcaster University Press uses a standard costing system for all its book production. The standard paper usage for the Accounting Standards Book is 600 sheets at a cost of £1.20 for 500 sheets. Budgeted production of the Accounting Standards book is 5,000 copies per annum. During the financial year ended 31 December 2018, Podcaster University Press printed 5,500 copies of the Accounting Standards book, using a total of 3,600,000 sheets of paper at a cost of £1.25 per 500 sheets. Based on the above information, what is the direct material usage variance for the Accounting Standards book in the year ended 31 December 2018?