Exam 10: Standard Costs and Performance Reports

The management of Lorraine Enterprises is analyzing fixed manufacturing overhead variances for the fiscal period just ended. It notices that the total fixed manufacturing overhead variance was $360,000 Unfavorable and that the fixed overhead budget variance was $140,000 Favorable. However, Lorraine's accountants had failed to calculate the fixed overhead volume variance. The standard fixed overhead rate was $20 per machine hour and Lorraine had allowed for 18,000 machine hours. What is the amount of Lorraine's budgeted cost for fixed manufacturing overhead?

It is not possible to reconcile the differences between actual and budgeted net income for an entire organization with multiple responsibility centers.

CRS Engineering Company uses a standard cost system. The following information pertains to 2017: Calculate CRS's labor efficiency variance.

Which of the following facets of performance reporting is most likely to lead employees to distrust the entire budgeting and performance evaluation system?

In what way does a cost center differ from either an investment center or a profit center?

Which of these factors is not a possible cause for a favorable materials price variance?

The management of Sawmill Industries is analyzing variable overhead variances for the fiscal period just ended. It notices that the total flexible budget variable overhead variance was $120,000 Favorable and that the variable overhead spending variance was $260,000 Favorable. However, Sawmill's accountants had failed to calculate the variable overhead efficiency variance. Management examined the budget and discovered that the flexible budget had allowed for $600,000 variable overhead. It also discovered that actual usage of direct materials (the single variable overhead cost driver) was 100,000 pounds. Calculate Sawmill's variable overhead efficiency variance.

The total fixed overhead flexible budget variance is equal to the:

Jacksonville uses a standard cost system for each of its refineries. For the Louisiana refinery, the monthly fixed overhead budget is $8,000 for a planned output of 5,000 barrels. For September, the actual fixed cost was $8,750 for 5,100 barrels. If fixed overhead is applied on a per-barrel basis, the fixed overhead volume variance is:

Which factor listed below is a possible cause for unfavorable materials quantity variances?

Which of the following variances is sometimes referred to as the capacity variance?

A flexible budget variance for a manufacturing cost is computed as the difference between:

Assume that the standard cost to make one finished unit includes 1 hour of direct labor at $4 per hour. During March, 11,000 direct labor-hours were worked, 5,250 units of product were manufactured, and total direct labor cost was $40,000. What is the labor rate variance for April?

The management of Green Energy Manufacturing is analyzing variable overhead variances for the fiscal period just ended. The flexible budget called for $176,000 in variable overhead but actual variable overhead was $100,000. In computing the overhead variances, Green's management discovered that it had used 40,000 pounds of direct material, rather than the budgeted amount of 44,000 pounds. (Pounds of direct material is the single overhead driver of variable overhead). The standard variable overhead rate per pound of direct material is $2.00. What is Green's variable overhead efficiency variance?

Prince Company uses standard costs to control materials costs. The standards call for 3 pounds of materials for each finished unit produced. The standard cost per pound of materials is $2.00. During May, 5,000 finished units were manufactured, 10,000 pounds of materials were used. The price paid for materials was $2.25 per pound. There were no beginning or ending materials inventories. Required: a. Determine the flexible budget materials cost for the manufacture of 5,000 finished units. b. Determine the actual materials cost incurred for the manufacture of 5,000 finished units, and compute the total (flexible budget) materials variance. c. How much of the difference between the answers to requirements (a) and (b) was related to the price paid for the purchase of materials? d. How much of the difference between the answers to requirements (a) and (b) was related to the quantity of materials used?

The following budgeted and actual contribution statement is for a component sold by Jana, Inc. for July of this year: Required: a. Compute the sales price variance, the net sales volume variance, and the operating cost variance for July. b. How would you evaluate the performance of Jana, Inc.'s manager?

If the actual level of activity for a period is greater than the level budgeted before the period began, a performance report of operating costs based on a flexible budget will likely show more favorable than unfavorable variances.

Jasmin Company's budgeted sales were 2,000 units at $50 per unit. During 2017 it had actual sales of 1,800 units at $55 per unit. Budgeted variable costs were $30 per unit. Calculate Jasmin's net sales volume variance.

Xing Pahang Products had the following variances for the year 2017: These variances were based on a standard of 12,000 total labor hours allowed (to produce 2,000 actual units) and a standard of $10 per hour of labor. How many total hours did it actually take Xing Pahang employees to make 2,000 units?

A standard cost of a product is the amount that it should cost to produce a given product as determined by the International Cost Standards organization.