Exam 10: Standard Costs and Overhead Analysis

The production manager is usually held responsible for the labour efficiency variance.

The Baby Clothing Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: Labour rate variance \ 7,500 favourable Labour efficiency variance \ 12,000 favourable Variable overhead efficiency variance \ 5,000 favourable Number of units produced 10,000 Standard labour rate per direct labour hour \ 12 Standard variable overhead rate per direct labour hour \ 5 Actual labour hours used 15,000 Actual variable manufacturing overhead costs \ 78,290 -What was the total standard cost for variable overhead for May?

Patridge Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labour hours.The information below is taken from the company's flexible budget for manufacturing overhead: Percent of Capacity 70\% 80\% 90\% Direct Labour Hours 21,000 24,000 27,000 Variable Overhead \ 42,000 \ 48,000 \ 54,000 Fixed Overhead \ 108,000 \ 108,000 \ 108,000 Total Overhead \ 150,000 \ 156,000 \ 162,000 During the year,the company operated at exactly 80% of capacity,but it applied manufacturing overhead to products based on the 90% level.What was the company's fixed overhead volume variance for the year?

Which of the following variances would be useful in calling attention to possible problems in the control of spending on overhead items? Option Variable overhead spending variance Fixed overhead volume variance A No No B No Yes C Yes No D Yes Yes

An outdoor barbecue grill manufacturer has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 3,300 DLHs Fixed Overhead Cost \ 26,895 The following data pertain to operations for the most recent period: Actual Hours 3,400 Standard Hours Allowed for the Actual Output 3,420 Actual Total Fixed Overhead Cost \ 28,295 -What was the fixed overhead volume variance for the period,rounded to the nearest dollar?

A manufacturer of playground equipment 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 3,000 Fixed Overhead Cost \ 40,650 The following data pertain to operations for the most recent period: Actual Hours 3,400 Standard Hours Allowed for the Actual Output 3,172 Actual Total Fixed Overhead Cost \ 41,600 -What was the fixed overhead volume variance for the period,rounded to the nearest dollar?

The Albright Company uses standard costing and has established the following standards $f$ its single product: Direct Materials 2 litres at \3 per litre Direct Labour 0.5 hours at \8 per hour Variable Manufacturing Overhead 0.5 hours at \2 per hour During November, the company made 4,000 units and incurred the following costs: Direct Materials Purchased 8,100 litres at \ 3.10 per litre Direct Materials Used 7,600 litres Direct Labour Used 2,200 hours at \ 8.25 per hour Actual Variable Manufacturing Overhead \ 4,175 The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials price variance for November?

Warner Manufacturing has established the following master flexible budget for the current year: Production in Units Variable expenses: Raw materials \ 152,000 228,000 304,000 Direct labour 160,000 240,000 320,000 Manufacturing overhead Total variable expenses \ 432,000 \ 648,000 \ 864,000 Fixed expenses: Manufacturing overhead \ 300,000 \ 300,000 \ 300,000 Selling and administrative Total fixed expenses \ 492,000 \ 492,000 \ 492,000 Total expenses \ 924,000 \ 1,140,000 \ 1,356,000 Manufacturing overhead is applied on the basis of machine hours.At standard,each unit of product requires one machine hour to complete. Required: a)The denominator activity level is 120,000 units.What are the predetermined variable and fixed manufacturing overhead rates? b)Actual data for the year were as follows: Answer: \ 159,500 Actual variable manufacturing overhead cost Actual fixed manfacturing overhead cost \ 305,000 Actual machine hours incurred 110,000 Units produced 105,000

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 efficiency variance for March?

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 materials quantity variance for March?

A manufacturer of industrial equipment has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 9,000 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 90,700 Fixed Overhead Cost \ 102,800 $\text { The following data pertain to operations for the most recent period: }$ Actual Hours 7,800 Standard Hours Allowed for the Actual Output 7,765 Actual Total Variable Overhead Cost \ 54,210 Actual Total Fixed Overhead Cost \ 100,200 -Under which product costing system for a manufacturing company would there be no fixed manufacturing overhead volume variance?

The fixed overhead volume variance is due to which of the following?

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 fixed overhead budget variance for the period,rounded to the nearest dollar?

(Appendix 10C)Yukon Company expressed the total expenses (Y)component of its master budget for March with the cost formula Y = $100,000 + $40 * X,where X represents the expected number of units of its only product to be manufactured and sold.The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units based on an estimated industry volume of 50,000 units.Reported actual results for February were as follows: Sales 5,400 units* Sales revenue \ 324,000 Less variable costs 194,400 Contribution margin \ 129,600 Less fixed expenses 102,000 Operating income \ 27,600 *Actual industry sales volume was 60,000 units. Required: a)Calculate the flexible budget variance and analyze it into sales price variance and cost/expense variance(s). b)Calculate the sales volume variance and analyze it into market-size (industry volume)variance and market-share variance. c)On the basis of your analysis in parts (a)and (b),would you recommend a bonus be paid to the sales manager? Why or why not?

The material quantity variance is computed based on the quantity of all materials purchased during the period.

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 materials price variance for January?

Kyekyeku Company retails two models of a product: Model X and Model Y. It considers both products to be close substitutes. The following data relate to the company's operations for last year: Model X Model Y Total Sales in Units: Budget 1,000 1,000 2,000 Actual 1,008 1,092 2,100 Contribution Margins per Unit: Budget \ 30 \ 40 Actual \ 25 \ 38 Market Volume in Units: Budget 40,000 Actual 52,500 - What were the sales quantity variances for Model X and Model Y,respectively,for last year?

) Saskatoon Company uses two raw materials, A and B, in the manufacture of its only product: Zizbo. The materials are very close substitutes. The standard proportions for the manufacture of a unit of Zizbo are 2 units of A and 3 units of B. The unit standard prices of A and B are $10 and $8, respectively. During the month of August, the company used 450 units of A and 750 units of B to produce 230 units of Zizbo. - For raw material B,what were the mix and yield variances,respectively?

Tyro Company has a standard cost system that applies manufacturing overhead to units of product on the basis of direct labour hours (DLHs).The following information is available: Actual Total Overhead Costs \ 15,000 Actual Fixed Overhead Costs \ 7,200 Budgeted Fixed Overhead Costs \ 7,000 Actual Hours Worked 3,500 DLHs Standard Hours Allowed for the Output 3,800 DLHs Variable Overhead Rate \ 2.50 per DLH Based on these data,what was the variable overhead spending variance?

To measure controllable production inefficiencies,which of the following is the best basis for a company to use in establishing the standard hours allowed for the output of one unit of product?