Exam 7: Standard Costing and Variance Analysis

Berkshire Company The following information is available for Berkshire Company for the current year: Standard: Material X: 3.0 pounds per unit @ $4.20 per pound Material Y: 4.5 pounds per unit @ $3.30 per pound Class S labor: 3 hours per unit @ $10.50 per hour Class US labor: 7 hours per unit @ $8.00 per hour Actual: Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used) Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used) Class S labor: 3.8 hours per unit @ $10.60 per hour Class US labor: 5.7 hours per unit @ $7.80 per hour Berkshire Company produced a total of 45,750 units. Refer to Berkshire Company.Compute the labor rate,mix,and yield variances (round to the nearest dollar).

The effect of substituting a non-standard mix of materials during the production process is referred to as a material mix variance.

Lincoln Company Lincoln Company applies overhead based on direct labor hours and has the following available for the current month: Standard: Direct labor hous per unit                                                  6 Variable overhead per DLH                                            $\$ .80$ Fixed overhead per DLH $\text { (based on 11,900 DLHs) }$                                      $\$ 2.10$ Actual: Units prochuced                                                              2,000 Direct labor hours                                                           11,900 Variable overhead                                                         $9,900 Fixed overheacl                                                            $25,500 Refer to Lincoln Company.Compute all the appropriate variances using the two-variance approach.

The formula for usage variance is (AQ - SQ)* SP.

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

Standards that allow for waste and inefficiency are referred to as ______________________________.

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 three-variance approach,what is the volume variance?

Aldrich Company Aldrich Company has the following information available for the current year: Standard: Material           $3.5$ feet per unit @ $\$ 2.60$ per foot Labor                5 direct labor hours@ $\$ 8.50$ per unit Actual: Material               95,625 feet used(100,000 feet purchased @ $\$ 2.50$ per foot Labor                    122,400 chrect labor hours incurred @ $\$ 8.35$ per hour                               25,500 units were produced. Refer to Aldrich Company.Compute the material purchase price and quantity variances.

The price variance reflects the difference between the quantity of inputs used and the standard quantity allowed for the output of a period.

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 mix variance?

Lincoln Company Lincoln Company applies overhead based on direct labor hours and has the following available for the current month: Standard: Direct labor hous per unit                                                  6 Variable overhead per DLH                                            $\$ .80$ Fixed overhead per DLH $\text { (based on 11,900 DLHs) }$                                      $\$ 2.10$ Actual: Units prochuced                                                              2,000 Direct labor hours                                                           11,900 Variable overhead                                                         $9,900 Fixed overheacl                                                            $25,500 Refer to Lincoln Company.Compute all the appropriate variances using the four-variance approach.

The effect of substituting a non-standard mix of materials during the production process is referred to as a material yield variance.

The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor efficiency variance.

A one-variance approach calculates only a total overhead variance.

The following information is available from the Ryan Company: Actual \ 15,00 Fixed expenses, actual \ 7,200 Fixed expenses, budgeted \ 7,000 Actual hours 3,500 Standard hours 3,800 Variable OH rate per DLH \ 2.50 Assuming that Ryan uses a three-way analysis of overhead variances,what is the overhead spending variance?

Roberts Company Roberts Company has the following information available for the current year: Standard: Material           $4.25$ feet per unit @ $\$ 2.75$ per foot Labor                7direct labor hours@ $\$9.25$ per unit Actual: Material               128,000 feet used(130,000 feet purchased @ $\$ 2.80$ per foot Labor                    212,000 chrect labor hours incurred @ $\$ 9.30$ per hour                               30,000 units were produced. Refer to Roberts Company.Compute the material purchase price and quantity variances.

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 spending variance for November was

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

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 three-variance approach,what is the efficiency variance?

The difference between budgeted and applied fixed factory overhead is referred to as a __________________________________________________.