Exam 11: Standard Costs and Variances

On the line in front of each variance, put the letter of the department that is most likely responsible for that variance. A letter may be used more than once or not at all. A. Production department B. Marketing department C. Purchasing department D. Personnel department ________ Direct labor rate variance ________ Direct material price variance ________ Sales volume variance ________ Direct labor efficiency variance ________ Direct material quantity variance

It is possible to encounter a situation where the direct labor rate variance is favorable and the direct labor efficiency variance is unfavorable.

River Mills manufactures reproduction antique furniture using historic manufacturing methods. River often uses waterpower, which is not only historically accurate, but also saves energy costs. Although River uses old-fashioned manufacturing techniques it is still a modern company that performs modern business analysis. River incurred actual fixed manufacturing overhead costs of $265,000. Using standard costing, River allocated $255,000 in fixed manufacturing overhead costs. If River observed a $1500 unfavorable fixed manufacturing overhead volume variance, what amount had management budgeted for fixed manufacturing overhead?

A cost benchmark is valid only if the standards are

The variable overhead rate variance tells managers whether more or less was spent on variable overhead than they expected for the hours worked.

Price and quantity variances are a way to motivate employees.

When a company uses direct materials, the amount of the debit to Work in Process Inventory is based on the standard quantity of the materials that should have been used times the Standard price (SP)per unit of the materials.

Riverside Manufacturing designs and manufactures bathtubs for home and commercial applications. Riverside recorded the following data for its commercial bathtub production line during the month of March: What is the variable manufacturing overhead efficiency variance in March?

Fitness Bands Corporation gathered the following information for Job #928: What is the direct materials quantity variance?

Nexus Industries uses a standard costing system to apply manufacturing costs to its production process. In May, Nexus anticipated producing 2050 units with fixed manufacturing overhead costs allocated at $8.4 per direct labor hour with a standard of 2.5 direct labor hours per unit. In May, actual production was 3300 units and actual fixed manufacturing overhead costs were $29,000. What was Nexus' fixed manufacturing overhead budget variance in May?

If a company produces many different products, it will develop a standard cost for each type of product.

If a company recognizes variances at the earliest point possible, raw materials inventory will be debited for the Actual Quantity (AQ)of raw materials purchased and costed at the Actual Price (AP)paid per unit.

Panther Tire Corporation manufactures automobile tires. Panther Tire Corporation reported the following budgeted (standard)and actual information last quarter data: What is the direct labor efficiency variance for last quarter?

The variable overhead rate variance may be affected by both indirect labor and indirect materials.

Frames Incorporated budgeted two hours of direct labor per unit at $10.75 per hour to produce 600 units of product. The 600 units were completed using 1800 hours of direct labor at $13.00 per hour. What is the direct labor efficiency variance?

Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows: What is the price variance for steel used to manufacture the trains?

Culinary Kitchen Supply produces bamboo cutting boards. The standard material cost for the bamboo used in each lamp is $18 per square foot. Each board requires 2 square feet of bamboo. In August, the company produced 700 cutting boards. There were 1100 square feet of bamboo used during the month. The bamboo used had an actual cost $26 per square foot. What was the materials quantity variance in August for bamboo?

The ________ tells managers how much of the overall variance id due to paying a higher or lower price than expected for the quantity of materials it purchased.

Standard costs for production inputs are used to develop flexible budgets.

A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?