Exam 10: Standard Costs and Overhead Analysis

Standard costs should generally be based on the actual costs of prior periods.

From a standpoint of cost control,the most effective time to recognize material price variances is when the materials are placed into production.

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 purchase of direct materials,the general ledger would include what entry to the Materials Price Variance account?

An outdoor barbecue grill manufacturer 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 4,600 Fixed Overhead Cost \ 50,140 The following data pertain to operations for the most recent period: Actual Hours 5,000 Standard Hours Allowed for the Actual Output 4,743 Actual Total Fixed Overhead Cost \ 48,960 -What was the fixed overhead volume variance for the period,rounded to the nearest dollar?

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 variable overhead spending variance for May?

A mix variance for direct materials can be derived as the difference between the quantity variance and the yield variance.

Dori Castings is a job order shop that uses a standard cost system to account for its production costs. Manufacturing overhead costs are applied to production on the basis of direct labour hours. -A volume variance will exist for Dori in a month under which of the following conditions?

) 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 A,what were the mix and yield variances,respectively?

During March,Younger Company's direct material costs for product T were as follows: Actual unit purchase price \ 6.50 per metre Standard quantity allowed for actual Production 2,100 metres Quantity purchased and used for actual Production 2,300 metres Standard unit price \ 6.25 per metre What was Younger's material quantity variance for March?

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 actual direct labour rate for May in dollars per hour?

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 direct labour for May?

The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: Labour rate variance \ 7,000 favourable Labour efficiency variance \ 12,000 favourable Variable overhead efficiency variance \ 4,000 favourable Number of units produced 10,000 Standard labour rate per direct labour hour \ 12 Standard variable overhead rate per direct labour hour \ 4 Actual labour hours used 14,000 Actual variable manufacturing overhead costs \ 58,290 -What was the total standard cost for direct labour for May?

The following labour standards have been established for a particular product: Standard labour hours per unit of output 1.7 hours Standard labour rate \ 14.05 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 3,700 hours Actual total labour cost \ 50,690 Actual output 2,300 units What was the labour rate variance for the month?

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 price variance for the direct materials acquired by the company during March?

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 total variance for variable overhead 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 -How much overhead was applied to products during the period,rounded to the nearest dollar?

Dori Castings is a job order shop that uses a standard cost system to account for its production costs. Manufacturing overhead costs are applied to production on the basis of direct labour hours. -Dori's choice of a production volume as a denominator for calculating its predetermined overhead rate will have NO effect on which of the following?

Tracton Corporation uses a standard costing system in which manufacturing overhead costs are applied to products on the basis of machine time. Required: a)Several numbers and labels have been omitted from the analysis of fixed overhead below.Supply the missing numbers and labels. \begin{array}{|l|l|l} \hline & \text { Flexible Budget Fixed } & \text { Fixed Overhead Cost } \\\text { Answer: } & \text { Overhead Cost } & \text { Applied to Work in } \\\text { Actual Fixed Overhead } & & \text { Process 302,100 MH x } \\\text { Cost } & & \$ 1.08\\\hline ?&?&?\\\hline\underline{\quad\quad}&\underline{\quad\quad}&\underline{\quad\quad}\\\hline& \text { Budget variance,}&?\\\hline& \text { \$ 1,880 \mathrm{U} }&?\\\hline& \text { Total variance, \( \$ 388 \mathrm{~F} \)}\\ \hline\end{array} b)Suppose that 6 minutes of machine time is standard per unit of production.How many units were actually produced in the situation above? c)Again suppose that 6 minutes of machine time is standard per unit of production.How many units of production were assumed when the predetermined application rate for fixed overhead was established?

Standards can be either theoretical ("impossible dream")or practical (attainable all the time or only part of the time).Theoretically either can be used as the framework for the budgeting process. Required: a)What is the major distinction,if any,between a standard amount and a budgeted amount? b)Which standard,theoretical or practical,provides the better benchmark for evaluating subsequent performance in a budgeting system? Explain.

The following labour standards have been established for a particular product: Standard labour hours per unit of output 2.8 hours Standard labour rate \ 11.50 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 6,900 hours Actual total labour cost \ 80,385 Actual output 2,300 units Required: a)What was the labour rate variance for the month? b)What was the labour efficiency variance for the month?