Exam 7: Standard Costing and Variance Analysis

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: Standard cost par unit: Variable partion 2 hours @ \ 3= \ 6 Fixed portion 2 hours@ \ 5=                                                                                                               $\underline{\$ 16}$ During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The fixed overhead spending variance for November was

Standard costs may be used for

A variable overhead spending variance is caused by

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: Standard cost par unit: Variable partion 2 hours @ \ 3= \ 6 Fixed portion 2 hours@ \ 5=                                                                                                               $\underline{\$ 16}$ During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The variable overhead efficiency variance for November was

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

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

Wisteria Corporation produces a product using the following standard proportions and costs of material:

	Pounds	Cost Per Pound	Amount
Material A	50	$5.00	$250
Material B	40	6.00	240
Material C	60	3.00	180
	150	4.4667	$670
Standard shrinkage (33 1/3%)	50
Net weight and cost	100	6.70	$670

A recent production run yielding 100 output pounds required an input of:

	Amount	Cost Per Pound
Material A	40	$5.15
Material B	50	6.00
Material C	65	2.80

Required:Material price,mix,and yield variances.

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 material price variance?

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the labor yield variance?

Which of the following capacity levels has traditionally been used to compute the fixed overhead application rate?

A standard cost card is prepared before developing manufacturing standards for direct materials,direct labor,and factory overhead.

In a standard cost system,Work in Process Inventory is ordinarily debited with

The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate variance.

A company has a favorable variable overhead spending variance,an unfavorable variable overhead efficiency variance,and underapplied variable overhead at the end of a period.The journal entry to record these variances and close the variable overhead control account will show which of the following? VOH spencing                         $\mathrm{VOH}$ efficiency $\text {\underline{ variance} }$                                 $\text {\underline{variance} }$                                           $\text {\underline{ VMOH} }$

A fixed overhead volume variance is a controllable variance.

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units:

Standard:
DLH per unit	2.50
Variable overhead per DLH	$1.75
Fixed overhead per DLH	$3.10
Budgeted variable overhead	$21,875
Budgeted fixed overhead	$38,750

Actual:
Direct labor hours	10,000
Variable overhead	$26,250
Fixed overhead	$38,000

Refer to Buckingham Company.Using the four-variance approach,what is the fixed overhead spending variance?

Discuss how variable and fixed overhead application rates are calculated.

Which of the following factors should not be considered when deciding whether to investigate a variance?

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Standards: 3.5 pounds Material per unit @ \ 4.50 per pound 5.0 hours Labor per unit @ \ 10.25 per hour Actual: Material purchased 12,300 pounds @ \ 4.25 Material used 11,750 pounds 17,300 direct1abor hours @ $\$ 10.20 \text { per hour }$ Refer to Wimberley Company.What is the material price variance (based on quantity purchased)?

In a standard cost system,when production is greater than the estimated unit or denominator level of activity,there will be a(n)

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the total material price variance?