Exam 10: Standard Costs and Overhead Analysis

The Baby Clothing Company makes and sells a single product, called a New bodysuit and employs a standard costing system. The following standards have been established for one unit of New bodysuit: Standard Quantity or Hours Standard Cost per New bodysuit Direct Materials 5 board metre \ 8.00 Direct Labour 0.7 hours \ 8.40 There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 14,000 board metres at the total cost of $\$ 22,000$ . Used 10,300 board metres to produce 2,100 New bodysuits. Used 1,400 hours of direct labour time at a total cost of $\$ 18,060$ . -To record the incurrence of direct labour cost and its use in production,the general ledger would include what entry to the Labour Rate Variance account?

Waste or excessive usage of overhead items will show up as part of the variable overhead efficiency variance.

The Baby Clothing Company makes and sells a single product, called a New bodysuit and employs a standard costing system. The following standards have been established for one unit of New bodysuit: Standard Quantity or Hours Standard Cost per New bodysuit Direct Materials 5 board metre \ 8.00 Direct Labour 0.7 hours \ 8.40 There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 14,000 board metres at the total cost of $\$ 22,000$ . Used 10,300 board metres to produce 2,100 New bodysuits. Used 1,400 hours of direct labour time at a total cost of $\$ 18,060$ . - To record the incurrence of direct labour costs and its use in production,the general ledger would include what entry to the Labour Efficiency Variance account?

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 materials quantity variance?

Tower Company planned to produce 3,000 units of its single product,Titactium,during November.The standards for one unit of Titactium specify six kilograms of materials at $0.30 per kilogram.Actual production in November was 3,100 units of Titactium.There was a favourable materials price variance of $380 and an unfavourable materials quantity variance of $120.Based on these variances,what could one assume?

At Overland Company,maintenance cost is exclusively a variable cost that varies directly with machine hours.The performance report for July showed that total actual maintenance costs were $9,800 and that the associated spending variance was $200 unfavourable.If 8,000 machine hours were actually worked during July,what was the budgeted maintenance cost per machine hour?

The supervisor of the cost department has just conferred with you concerning the variance analysis of direct labour for the month just ended.As she talked,you wrote feverishly,but you weren't able to record all the information she gave you before she dashed off muttering something about "another brush fire to put out." Your efforts are shown below: 4,800 hours * \7 .20 hours \ \ hours \ Efficiency variance $2,250 U Total variance,$810 U Required: a)To redeem yourself,complete the form above,adding numbers and labels.(The usual notations,AH,SH,AR,SR,etc.,may be used where appropriate.) b)If you know that 18 minutes of labour is standard per unit of production,how many units were produced?

The following materials standards have been established for a particular product: Standard quantity per unit of output 9.4 kilograms Standard price \ 16.90 per kilograms The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,300 kilograms Actual cost of materials purchased \ 116,435 Actual materials used in production 7,100 kilograms Actual output 740 units Required: a)What is the materials price variance for the month? b)What is the materials quantity variance for the month?

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

If two products are poor substitutes,the calculation of a separate market volume variance and a separate market share variance for each product is NOT useful.

$\text { The Litton Company has established standards as follows: }$ 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 labour efficiency 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 rate variance?

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 spending variance for the month?

The following materials standards have been established for a particular product: Standard quantity per unit of output 9.2 grams Standard price \ 14.70 per gram The following data pertain to operations concerning the product for the last month: Actual materials purchased 5,500 grams Actual cost of materials purchased \ 76,450 Actual materials used in production 5,100 grams Actual output 540 units Required: a)What was the materials price variance for the month? b)What was the materials quantity variance for the month?

Jessep Corporation has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour hours. The company has provided the following data concerning its fixed manufacturing overhead costs in March: Denominator Hours 15,000 hours Actual Hours Worked 14,000 hours Standard Hours Allowed for the Output 12,000 hours Flexible Budget Fixed Overhead Cost \ 45,000 Actual Fixed Overhead Costs \ 48,00 -What was the fixed overhead volume variance?

The Ferris Company applies manufacturing overhead costs to products on the basis of direct labour hours. The standard cost card shows that 3 direct labour hours are required per unit of product. For August, the company budgeted to work 90,000 direct labour hours and to incur the following total manufacturing overhead costs: Total Variable Overhead Costs \ 99,000 Total Fixed Overhead Costs \ 118,000 During August, the company completed 28,000 units of product, worked 86,000 direct labour hours, and incurred the following total manufacturing overhead costs: Total Variable Overhead Costs \ 98,900 Total Fixed Overhead Costs \ 115,300 The denominator activity used for the predetermined overhead rate was 90,000 direct labour hours. -For August,what was the variable overhead spending variance?

What does a favourable labour rate variance indicate?

Overhead cost is applied to units based on direct labour hours.For April,total overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour hours for the month.The standard cost card indicates that each unit of finished product requires 2 direct labour hours.The following data are available for April's activity: Number of Units Produced \ 9,500 Direct Labour Hours Worked \ 19,500 Actual Total Overhead Cost Incurred \ 79,500 What was the amount of total overhead cost applied to production for the month of April?

The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following: Variable manufacturing overhead cost incurred \ 48,700 Total variable overhead variance \ 300 favourable Standard hours allowed for actual production 7,000 Actual direct labour hours worked 6,840 -What was the variable overhead spending variance?

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 budget variance A No No B No Yes C Yes No D Yes Yes