Exam 11: Standard Costs and Variances

A company's purchasing department negotiates all of the purchasing contracts for raw materials.Which variance is most useful in assessing the performance of the purchasing department?

Kalanja Designs,which produces earrings,is developing direct material standards.Each earring requires 0.52 kilograms of a special metal.The allowance for waste is 0.03 kilograms per earring,while the allowance for rejects is 0.02 kilograms per earring.What is the standard quantity of metal per earring?

The Chilton Corporation specializes in manufacturing one type of desk lamp.Chilton allocates variable manufacturing overhead costs on the basis of machine hours.Chilton budgeted .5 machine hours per lamp and allocates overhead at a rate of $1.80 per machine hour.Last year Chilton manufactured 23,000 lamps,used 13,800 machine hours and incurred actual overhead costs of $15,180. What was Chilton's variable manufacturing overhead rate variance last year?

The Davidson Corporation produces clocks.According to company standards,it should take 2 hours of direct labor to produce a clock.Davidson's standard labor cost is $19 per hour.During June,Thomas produced 6,200 stopwatches and used 13,500 hours of direct labor at a total cost of $260,000.What is Thomas' direct labor rate variance for June?

A cost benchmark is valid only if the standards are

A rate variance for direct labor measures how well a company keeps unit prices of labor inputs within standards.

The ________ department is most likely responsible to incur a "direct material price variance."

Michael Corporation manufactures railroad cars,which is its only product.The standards for the railroad cars are as follows: During the month of March,the company produced 1,650 cars.Related production data for the month follows: What is the direct materials quantity variance for the month?

On the line in front of each variance,put the letter of the department that is most likely responsible for that variance.A letter may be used more than once or not at all. A.Production department B.Marketing department C.Purchasing department D.Personnel department ________ Direct labor rate variance ________ Direct material price variance ________ Sales volume variance ________ Direct labor efficiency variance ________ Direct material quantity variance

Madden Corporation manufactures t-shirts,which is its only product.The standards for t-shirts are as follows: During the month of January,the company produced 1,250 t-shirts.Related production data for the month follows: What is the direct labor efficiency variance for the month?

If the Standard Quantity Allowed (SQA)for direct materials is greater than the Actual Quantity (AQ)used,the quantity variance is unfavorable.

Sherwin Chemicals produces commercial strength cleansing supplies.Two of its main products are window cleanser that uses ammonia,and floor cleanser that uses bleach.Information for the most recent period follows: What is the direct material quantity variance for the bleach?

At lean companies,employees tend to be multi-skilled and cross-trained to perform a number of duties.These workers are held in high-esteem by management and are considered to be part of a team effort,rather than a labor force to be controlled.Consequently,this

Weissfeld Corporation manufactures a single product.The direct materials standard calls for 5 pounds of direct material per unit.The standard for direct material cost per pound is $10.A computer error has wiped out the records for the direct labor standards but the following information is found for the month of October: Required: a.Calculate the number of pounds of direct materials purchased and used during October. b.Calculate the materials quantity variance. c.Calculate the standard direct labor rate per hour. d.Calculate the standard direct labor hours allowed for October's production.

Disadvantages of using standard costs and variances include all of the following except

Siberling Tire Corporation manufactures automobile tires.Siberling Tire Corporation reported the following budgeted (standard)and actual information last quarter data: What is the direct labor efficiency variance for last quarter?

Puget Company has gathered the following information about its purchase and use of raw materials for December: Puget Company uses a standard cost system.What is the materials price variance?

Jackson Industries has collected the following data for one of its products: What is the total actual cost of the direct materials used?

The Berwin Company established a master budget volume of 35,000 units for April.Actual overhead costs incurred amounted to $98,500.Actual production for the month was 34,000 units.The standard variable overhead rate was $1.75 per direct labor hour.The standard fixed overhead rate was $1.50 per direct labor hour.One direct labor hour is the standard quantity per finished unit.Assume the allocation base for fixed overhead costs is the number of direct labor hours. A.Compute the total manufacturing overhead cost variance. B.Compute the overhead flexible budget variance. C.Compute the production volume variance.

The standard variable overhead cost rate for the Gordon Company is $11.25 per unit.Budgeted fixed overhead cost is $50,000.The company budgeted 5,000 units for the current period and actually produced 4,150 finished units.What is the fixed overhead volume variance? Assume the allocation base for fixed overhead costs is the number of units expected to be produced.