Patterson Company The following information is for Patterson Company's July production: $\begin{array}{l} \text { Standards: }\\ \begin{array}{ll} \text { Material } & 3.0 \text { feet per unit@ } \$ 4.20 \text { per foot } \\ \text { Labor } & 2.5 \text { hours per unit@ } \$ 7.50 \text { per hour } \end{array} \end{array}$ $\begin{array}{l} \text { Actual: }\\ \begin{array}{ll} \text { Production } & 2,750 \text { units produced during the month } \\ \text { Material } & 8,700 \text { feet used; } 9,000 \text { feet purchased @ } \$ 4.50 \text { per foo } \\ \text { Labor } & 7,000 \text { direct labor hours@ } \$ 7.90 \text { per hour } \end{array} \end{array}$ (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material quantity variance?

A) $3,105 F B) $1,050 F C) $3,105 U D) $1,890 U A) $3,105 F B) $1,050 F C) $3,105 U D) $1,890 U

Patterson Company The following information is for Patterson Company's July production: $\begin{array}{l} \text { Standards: }\\ \begin{array}{ll} \text { Material } & 3.0 \text { feet per unit@ } \$ 4.20 \text { per foot } \\ \text { Labor } & 2.5 \text { hours per unit@ } \$ 7.50 \text { per hour } \end{array} \end{array}$ $\begin{array}{l} \text { Actual: }\\ \begin{array}{ll} \text { Production } & 2,750 \text { units produced during the month } \\ \text { Material } & 8,700 \text { feet used; } 9,000 \text { feet purchased @ } \$ 4.50 \text { per foo } \\ \text { Labor } & 7,000 \text { direct labor hours@ } \$ 7.90 \text { per hour } \end{array} \end{array}$ (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material price variance (calculated at point of purchase)?

A) $2,700 U B) $2,700 F C) $2,610 F D) $2,610 U A) $2,700 U B) $2,700 F C) $2,610 F D) $2,610 U

Exam 7: Standard Costing and Variance Analysis

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance.

(True/False)

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Question 21

Provide the correct term for each of the following definitions: a. a cost that fluctuates with large changes in level of activity b. a range of activity over which costs behave as precicted c. the capacitylevel at which a firm believes it will operate at chring the coming prochuction cycle d. the difference between actual variable overhead and buclgeted variable overhe ad based on inputs e. the difference between total actual overhead and total applied overhead f. the difference between total budgeted overhead based on inputs and applied overhead g. the difference betwe en actual variable overhead and buclgeted variable overhe ad based on output h. the difference between actual fixed overhead and budgeted fixed overhead.

(Essay)

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Question 22

Explain the source of fixed overhead spending and volume variances and how these variances are computed.

(Essay)

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Question 23

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:

DLH per unit 2.20

Variable overhead per DLH $2.50

Fixed overhead per DLH

Budgeted variable overhead $3.00

(based on 11,990 DLHs)

Actual:
Units produced 4,400

Direct labor hours 8,800

Variable overhead $29,950

Fixed overhead $42,300

Refer to Pearce Company Using the four-variance approach,what is the volume variance?

(Multiple Choice)

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Question 24

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a _________________________ variance.

(Short Answer)

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Question 25

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Staudard: Material 2 pounds per unit @$5.80 per pound Labor 3 direct labor hours per unit @ $\$ 10.00$ per hour Actual: Material 4,250 pounds purchased and used@$5.65 per poume Labor $\quad 6,300$ direction hours at $\$ 9.75$ per hour Refer to Jenkins Manufacturing Company.What is the labor efficiency variance?

(Multiple Choice)

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Question 26

A fixed overhead volume variance is a noncontrollable variance.

(True/False)

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Question 27

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:

DLH per unit 2.20

Variable overhead per DLH $2.50

Fixed overhead per DLH

Budgeted variable overhead $3.00

(based on 11,990 DLHs)

Actual:
Units produced 4,400

Direct labor hours 8,800

Variable overhead $29,950

Fixed overhead $42,300

Refer to Pearce Company Using the three-variance approach,what is the efficiency variance?

(Multiple Choice)

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Question 28

The formula for price/rate variance is (AP - SP)´ AQ.

(True/False)

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Question 29

Pests Away Company manufactures a product effective in controlling beetles.The company uses a standard cost system and a flexible budget.Standard cost of a gallon is as follows:

Direct material:

2 quarts of A $14

4 quarts of B 16

Total direct material $30

Direct labor:

2 hours 16

Manufacturing overhead 12

Total $58

The flexible budget system provides for $50,000 of fixed overhead at normal capacity of 10,000 direct labor hours.Variable overhead is projected at $1 per direct labor hour. Actual results for the period indicated the following:

Production: 5,000 gallons

Direct material:

A 12,000 quarts purchased at a cost of $7.20/quart; 10,500 quarts used

B 20,000 quarts purchased at a cost of $3.90/quart; 19,800 quarts used

Direct labor: 9,800 hours worked at a cost of $79,380

Overhead: Fixed $48,100

Variable 21,000

Total overhead $69,100

Required: 1. What is the application rate per direct labor hour, the total overhead cost equation, the standard quantity for each material, and the standard hours? 2. Compute the following variances: a. Total material price variance b. Total material quantity variance c. Labor rate variance d. Labor efficiency variance e. MOH volume variance f. MOH efficiency variance g. MOH spending variance, both fixed and variable

(Essay)

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Question 30

In a totally automated organization,using theoretical capacity will generally provide the highest fixed overhead application rate.

(True/False)

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Question 31

Standards that provide for no human limitations or operating delays are referred to as ______________________________.

(Short Answer)

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Question 32

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a labor mix variance.

(True/False)

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Question 33

A favorable fixed overhead volume variance occurs if

(Multiple Choice)

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Question 34

The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance.

(True/False)

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Question 35

Teague Company uses a two-way analysis of overhead variances.Selected data for the March production activity are as follows: Actual variable $\mathrm{OH}$ incurred $\$ 196,000$ Variable $\mathrm{OH}$ rate per $M \mathrm{H}$ $\$ 6$ StandardMHs allowed 33,000 Actual $\mathrm{MHs}$ $32.000$ Assuming that budgeted fixed overhead costs are equal to actual fixed costs,the controllable variance for March is

(Multiple Choice)

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Question 36

Patterson Company The following information is for Patterson Company's July production: Standards: Material 3.0 feet per unit@ \ 4.20 per foot Labor 2.5 hours per unit@ \ 7.50 per hour Actual: Production 2,750 units produced during the month Material 8,700 feet used; 9,000 feet purchased @ \ 4.50 per foo Labor 7,000 direct labor hours@ \ 7.90 per hour (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material quantity variance?

(Multiple Choice)

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Question 37

A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when

(Multiple Choice)

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Question 38

Patterson Company The following information is for Patterson Company's July production: Standards: Material 3.0 feet per unit@ \ 4.20 per foot Labor 2.5 hours per unit@ \ 7.50 per hour Actual: Production 2,750 units produced during the month Material 8,700 feet used; 9,000 feet purchased @ \ 4.50 per foo Labor 7,000 direct labor hours@ \ 7.90 per hour (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material price variance (calculated at point of purchase)?

(Multiple Choice)

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Question 39

Actual fixed overhead minus budgeted fixed overhead equals the

(Multiple Choice)

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Question 40

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance.

Explain the source of fixed overhead spending and volume variances and how these variances are computed.

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a _________________________ variance.

A fixed overhead volume variance is a noncontrollable variance.

The formula for price/rate variance is (AP - SP)´ AQ.

In a totally automated organization,using theoretical capacity will generally provide the highest fixed overhead application rate.

Standards that provide for no human limitations or operating delays are referred to as ______________________________.

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a labor mix variance.

A favorable fixed overhead volume variance occurs if

The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance.

A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when

Actual fixed overhead minus budgeted fixed overhead equals the

Introduction to Cost Accounting

Cost Terminology and Cost Behaviors

Predetermined Overhead Rates, Flexible Budgets, and Absorptionvariable Costing

Activity-Based Management and Activity-Based Costing

Job Order Costing

Process Costing

The Master Budget

Break-Even Point and Cost-Volume-Profit Analysis

Relevant Information for Decision Making

Allocation of Joint Costs and Accounting for By-Products

Introduction to Cost Management Systems

Responsibility Accounting,support Department Allocations,and Transfer Pricing

Performance Measurement, balanced Scorecards, and Performance Rewards

Capital Budgeting

Managing Costs and Uncertainty

Implementing Quality Concepts

Inventory and Production Management

Emerging Management Practices

Filters

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Direct material:
2 quarts of A	$14
4 quarts of B	16
Total direct material	$30

Direct labor:
2 hours	16
Manufacturing overhead	12
Total	$58

Production:	5,000 gallons
Direct material:
A	12,000 quarts purchased at a cost of $7.20/quart; 10,500 quarts used
B	20,000 quarts purchased at a cost of $3.90/quart; 19,800 quarts used
Direct labor:	9,800 hours worked at a cost of $79,380
Overhead:	Fixed	$48,100
	Variable	21,000
	Total overhead	$69,100