Exam 10: Standard Costs and Overhead Analysis

Purchase of poor quality materials will generally result in a favourable materials price variance and an unfavourable labour rate variance.

The Alpha Company produces toys for national distribution. Standards for a particular toy are: Materials: 12 grams per unit at 56?per gram. Labour: 2 hours per unit at $2.75 per hour. During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140. Labour: 2,500 hours worked at a total cost of $8,000. -What was the labour efficiency variance?

A favourable labour efficiency variance would result in a credit balance in the labour efficiency variance account.

Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: Standard Quantity Standard Cost per Bag Direct Materials 20 kilograms \ 8.00 Direct Labour 0.1 hours 1.10 Variable Manufacturing Overhead 0.1 hours .40 The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows: Production of Fastgro: 4,000 bags Direct Materials Purchased 85,000 kilograms at a cost of \ 32,300 Direct Labour Used 390 hours at a cost of \ 4,875 Variable Manufacturing Overhead Incurred \ 1,475 Inventory of Direct Materials on January 31 3,000 kilograms -What was the labour rate variance for January?

Under a standard cost system,who is usually held responsible for the materials price variances?

Which of the following is directly associated with a higher denominator level of activity?

For the month of April,Thorp Co.'s records disclosed the following data relating to direct labour: Actual cost \ 10,000 Rate variance \ 1,000 favourable Efficiency variance \ 1,500 unfavourable For the month of April,actual direct labour hours amounted to 2,000.In April,what was Thorp's standard direct labour rate per hour?

One cause of an unfavourable overhead volume variance would be increase in cost for fixed overhead items.

At Jacobson Company,indirect labour is a variable cost that varies with direct labour hours.Last month's performance report showed that total actual indirect labour cost was $5,780 for the month and that the associated spending variance was $245 favourable.If 24,100 direct labour hours were actually worked last month,what must be the flexible budget cost formula for indirect labour (per direct labour hour)?

Bryan Company employs a standard cost system in which direct materials inventory is carried at standard cost. Bryan has established the following standards for the prime costs of one unit of product: Standard Quantity Standard Price Standard Cost Direct Materials 6 kilograms \ 3.50/ kilogram \ 21.00 Direct Labour 1.3 hours \ 11.00/ hour \ 14.30 \ 35.30 During March, Bryan purchased 165,000 kilograms of direct materials at a total cost of $585,750. The total factory wages for March were $400,000, 90 percent of which were for direct labour. Bryan manufactured 25,000 units of product during March, using 151,000 kilograms of direct materials and 32,000 direct labour hours. -What was the direct labour rate variance for March?

The following materials standards have been established for a particular product: Standard quantity per unit of output 6.8 metres Standard price \ 17.10 per metre The following data pertain to operations concerning the product for the last month: Actual materials purchased 9,000 metres Actual cost of materials purchased \ 156,600 Actual materials used in production 8,500 metres Actual output 1,200 units -What was the materials price variance for the month?

The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following: Variable Factory Overhead: 3.0 DLHs @ $4.00 per DLH. Fixed Factory Overhead: 3.0 DLHs. @ $3.50 per DLH. For January, the company incurred $22,000 of actual fixed overhead costs and recorded an $875 favourable volume variance. -What was the denominator level of activity in direct labour hours (DLHs)used by Claus in setting the predetermined overhead rate for January?

A manufacturing company has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 6,100 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 35,075 Fixed Overhead Cost \ 77,775 The following data pertain to operations for the most recent period: Actual Hours 6,300 Standard Hours Allowed for the Actual Output 5,994 Actual Total Variable Overhead Cost \ 36,540 Actual Total Fixed Overhead Cost \ 76,875 -What was the total predetermined overhead rate,rounded to the nearest cent?

Which of the following entries would correctly record the charging of direct labour costs to Work in Process given an unfavourable labour efficiency variance and a favourable labour rate variance?

$\text { The Litton Company has established standards as follows: }$ Direct Material 3@@4/.=\ 12 per unit Direct Labour 2@\ 8/.=\ 16 per unit Variable Manufacturing Overhead 2 hrs. @ \ 5/.=\ 10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. Units Produced 600 Direct Material Used 2,000. Direct Material Purcahsed (3,000 kgs.) \ 11,400 Direct Labour Cost (1,100 hrs. ) \ 9,240 Variable Manufacturing Overhead Cost Incurred \ 5,720 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials price variance?

Which of the following statements concerning practical standards is NOT correct?

Which of the following statements is NOT correct?

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company uses direct labour hours (DLHs) as its measure of activity. Standard Hours per Unit of Output 7.2 Standard Variable Overhead Rate \ 14.20 per DLH The following data pertain to operations for the last month: Actual Direct Labour Hours 5,100 DLHs Actual Total Variable Overhead Cost \ 72,165 Actual Output 600 units -What was the variable overhead efficiency variance for the month?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 7.8 hours Standard variable overhead rate \ 12.55 per hour The following data pertain to operations for the last month: Actual hours 2,900 hours Actual total variable overhead cost \ 36,975 Actual output 200 units What was the variable overhead efficiency variance for the month?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 1.6 hours Standard variable overhead rate \ 11.55 per hour The following data pertain to operations for the last month: Actual hours 4,900 hours Actual total variable overhead cost \ 58,310 Actual output 3,000 units -What was the variable overhead efficiency variance for the month?