Exam 11: Standard Costs and Variances

When auto manufacturer BMW purchased the Rolls-Royce brand name, BMW had to hire and train a new staff of assembly workers. The new workers were paid $27 per hour, worked a total of 7200 hours, and produced 2100 cars. BMW budgeted for a standard labor rate of $32 per hour and 3.50 direct labor hours per car. What is the direct labor rate variance for the Rolls-Royce division?

Perry Company gathered the following actual results for the current month: Actual amounts: Budgeted production and standard costs were: What is the direct labor efficiency variance?

Benny Company budgeted 610 pounds of direct materials costing $18.00 per pound to make 8000 units of product. The company actually used 650 pounds of direct materials costing $30.00 per pound to make the 8000 units. What is the direct materials quantity variance?

A price variance for direct materials measures how well a company keeps unit prices of material within standards.

How is the direct labor efficiency variance calculated?

A credit balance means that a variance is favorable since it increases income (just like a revenue).

A credit balance means that a variance is unfavorable since it decreases income (just like a revenue).

The entry to allocate manufacturing overhead costs to production involves which of the following?

LampLight Industries gathered the following information for the month of July: Overhead flexible budget: LampLight actually produced 14,000 units in 17,500 machine hours. Total actual overhead cost of $85,500 consisted of $35,000 variable costs and $50,500 fixed costs. The standard variable and fixed overhead rates are based on a master (static)budget of 15,000 units. Assume the allocation base for fixed overhead costs is the number of units. A. Compute the total manufacturing overhead cost variance. B. Compute the overhead flexible budget variance. C. Compute the production volume variance.

Trendy T's Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of January, the company produced 1000 t-shirts. Related production data for the month follows: What is the direct labor efficiency variance for the month?

Up-to-date standard costs provide a benchmark by which to evaluate actual costs and operations.

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 direct material quantity variance for plastic in the dolls?

A standard cost for production inputs is a carefully predetermined cost that usually is expressed on a per-unit basis.

Mike's Service Station performs oil changes for cars. Each oil change has a standard time of 0.4 direct labor hours. The standard direct labor hour rate is $14.00 per hour. Data relating to oil changes for the month of September follow: What is the labor rate variance for September?

The standard for the direct labor rate per hour does not include fringe benefits such as health care insurance and vacations.

Oliver Enterprises has collected the following data for one of its products: How much is the direct materials quantity variance?

Green Toys is a regional manufacturer of baby toys produced from plastic derived from organic and non-toxic sources. Management budgeted one-half hour of direct labor per toy at a standard rate of $16.50 per hour. The most current production run produced 1600 toys and used 1750 labor hours at a total cost of $29,750. What is the direct labor rate variance for this production run?

Mountain View Company produces hiking boots. The direct labor standard for each pair of boots is 1 hour at a cost of $20 per direct labor hour. During the month of May, Mountain View Company used 2200 direct labor hours to produce 2100 pairs of boots. Total direct labor cost for May was $39,600. What is the labor rate variance for May?

Raw materials inventory is credited for which of the following when recording the use of direct materials in the production process?

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products: What is Perry's fixed manufacturing overhead volume variance?