Exam 10: Standard Costs and Overhead Analysis

What does an unfavourable labour efficiency variance indicate?

Which of the following is (are)NOT used in calculating sales mix variances for two products that are close substitutes?

Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period?

Direct labour efficiency variance can be analyzed further into mix and yield variances if more than one class of direct labour that are good substitutes is used in operations.

The fixed overhead budget variance is NOT controllable by managers because fixed costs are NOT controllable.

(Appendix 10C)Iraj Company retails two grades of Persian carpets: Grade X and Grade Y.The carpets are sold by rolls.The following is a summary of the company's activities for last year: Grade X Grade Y Total Sales in rolls: Budget 1,600 400 2,000 Actual 1,980 220 2,200 Contribution margin per roll: Budget \ 800 \ 2,000 Actual \ 700 \ 2,500 Market volume in rolls: Forecast 10,000 Actual 13,750 Required: Arswer: Required: a)Assume the two grades of carpet are close substitutes.Calculate the sales volume variance for each grade of carpet and analyze each into a sales mix variance and a sales quantity variance. b)Analyze the sum of the sales quantity variance into its two components: market volume variance and market share variance. c)Comment on the appropriateness of the assumption of close substitution between the two grades of carpet.Comment also on the effect,if any,on the analysis in part a)above if this assumption is considered inappropriate.

The Fletcher Company uses standard costing.The following data are available for October: Actual quantity of direct materials used 23,500 kilograms Standard price of direct materials \ 2 per kilogram Materials quantity variance \ 1,000 favourable What was the standard quantity of material allowed for October production?

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 predetermined fixed overhead rate,rounded to the nearest cent?

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 quantity variance for November?

Hart Company's labour standards call for 500 direct labour hours to produce 250 units of product.During October,the company worked 625 direct labour hours and produced 300 units.What were the standard hours allowed for October?

A manufacturer of industrial equipment has a standard costing system based on machine hours $( \mathrm { MHs } )$ as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 39,00 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 33,345 Fixed Overhead Cost \ 61,425 The following data pertain to operations for the most recent period: Actual Hours 3,900 Standard Hours Allowed for the Actual Output 3,952 Actual Total Variable Overhead Cost \ 32,565 Actual Total Fixed Overhead Cost \ 60,675 -What was the total predetermined overhead rate,rounded to the nearest cent?

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 8,000 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 56,400 Fixed Overhead Cost \ 100,800 The following data pertain to operations for the most recent period: Actual Hours 7,800 Standard Hours Allowed for the Actual Output 7,735 Actual Total Variable Overhead Cost \ 54,210 Actual Total Fixed Overhead Cost \ 100,200 -How much overhead was applied to products during the period,rounded to the nearest dollar?

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 variable overhead 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 variable overhead spending variance for May?

A manufacturer of industrial equipment has a standard costing system based on machine hours $( \mathrm { MHs } )$ as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: Denominator Level of Activity 39,00 Overhead Costs at the Denominator Activity Level: Variable Overhead Cost \ 33,345 Fixed Overhead Cost \ 61,425 The following data pertain to operations for the most recent period: Actual Hours 3,900 Standard Hours Allowed for the Actual Output 3,952 Actual Total Variable Overhead Cost \ 32,565 Actual Total Fixed Overhead Cost \ 60,675 -How much overhead was applied to products during the period,rounded to the nearest dollar?

Lab Corp.uses a standard cost system.Direct labour information for Product CER for the month of October follows: Standard direct labour rate \ 6.00 per hour Actual direct labour rate paid \ 6.10 per hour Standard hours allowed for actual production 1,500 hours Labour efficiency variance-unfavourable \ 600 What were the actual hours worked?

King Company estimated that it would operate its manufacturing facilities at 800,000 direct labour hours for the year, which served as the denominator activity in the predetermined overhead rate. The total budgeted manufacturing overhead for the year was $2,000,000, of which $1,600,000 was variable and $400,000 was fixed. The standard variable overhead rate was $2 per direct labour hour. The standard direct labour time was 3 direct labour hours per unit. The actual results for the year are presented below: Actual Finished Units 250,000 Actual Direct Labour Hours 764,000 Actual Variable Overhead \ 1,610,000 Actual Fixed Overhead \ 392,000 -What was the fixed overhead volume variance for the year?

The following labour standards have been established for a particular product: Standard labour hours per unit of output 7.5 hours Standard labour rate \ 15.25 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 9,600 hours Actual total labour cost \ 144,480 Actual output 1,200 units -What was the labour efficiency variance for the month?

The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip: Standard Quantity or Hours Standard Cost per Mip Direct Materials 6 board metre \ 9.00 Direct Labour 0.8 hours \ 9.60 There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $\$ 24,000$ . Used 12,000 board metres to produce 2,100 Mips. Used 1,700 hours of direct labour time at a total cost of $\$ 20,060$ . - To record the purchase of direct materials,the general ledger would include what entry to the Materials Price Variance account?

Union Company uses a standard cost accounting system.The following overhead costs and production data are available for August: Standard Fixed Overhead Rate \ 1.00 per hour Standard Variable Overhead Rate \ 4.00 per hour Denominator Activity 40,000 hours Actual Hours 39,500 hours Standard Hours Allowed for Output 39,000 hours Overapplied Overhead \ 2,000 What was the total amount of overhead applied to work in process in August?