Exam 10: Standard Costs, Flexible Budgets and Variance Analysis

Everett Ltd budgeted $1,488,000 for total overhead. The standard variable overhead rate was $2 per direct labor hour, or $6 per unit, based on an anticipated activity level of 600,000 direct labor hours. During the year 220,000 units were produced. Fixed overhead costs incurred were $300,000. The variable overhead budget variance was $19,800 unfavorable, and the actual variable overhead rate was $2.10 per direct labor hour. The variable overhead efficiency variance was

At the end of 2010, ELM's production manager estimated direct labor overtime hours at 200 for the first quarter of 2010. At the end of the first quarter, actual overtime hours totaled 180. This difference is most likely to lead to

The production manager of CLR calculated a material and unfavorable variance of $4,000 with respect to the cost of direct materials. Which of the following is a likely next step for the production manager?

A contract with a new supplier may cause an unfavorable materials price variance.

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: The budgeted fixed overhead was

The total standard cost for a unit of output is the sum of the standard costs for the resources used in production.

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: The variable overhead allocated was

Everett Ltd budgeted $1,488,000 for total overhead. The standard variable overhead rate was $2 per direct labor hour, or $6 per unit, based on an anticipated activity level of 600,000 direct labor hours. During the year 220,000 units were produced. Fixed overhead costs incurred were $300,000. The variable overhead budget variance was $19,800 unfavorable, and the actual variable overhead rate was $2.10 per direct labor hour. The actual variable overhead costs incurred were

Because managers use estimates in calculating overhead allocation rates, they are likely to experience

Rewarding employees in one production department for meeting or exceeding standard cost benchmarks can create new sets of problems for organisations. Which of the following is not one of them?

Variance analysis involves the steps listed below. In which order should the steps be performed? 1 Calculate variances 2 Choose variances for further investigation 3 Draw conclusions and take action 4 Identify reasons for variances

Hogle Manufacturing uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 3,000 units monthly. Overhead costs were estimated to be $135,000. The standard variable overhead rate is $5 per machine hour. During April the following results were recorded: The total overhead allocated was

Everett Ltd budgeted $1,488,000 for total overhead. The standard variable overhead rate was $2 per direct labor hour, or $6 per unit, based on an anticipated activity level of 600,000 direct labor hours. During the year 220,000 units were produced. Fixed overhead costs incurred were $300,000. The variable overhead budget variance was $19,800 unfavorable, and the actual variable overhead rate was $2.10 per direct labor hour. The standard fixed overhead rate per direct labor hour was

The budget that reflects the level of activity management expects to attain is the

Given the following account balances at the end of the first year of operations: Assuming that variances are considered material, the entry and amount of direct labor variances allocated to the Finished Goods Inventory is

Errors in the accounting records related to actual production output could lead to a fixed overhead production volume variance.

Intentional worker damage is most likely to result in which type of variance?

Welch Company budgeted the following cost standards for the current year: Direct materials = 1.40 kilos per unit @ $1.50 per kilo Direct labor = 0.75 hours per unit @ $6 per hour Actual production and costs were as follows: Units produced = 2,800 Direct materials used = 4,500 kg. Direct materials purchased = 5,000 kg. @ a cost of $5,850 Direct labor incurred = 2,000 hours at a cost of $13,000 The labor efficiency variance was

Pardee Ltd completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following: The actual direct materials price paid per unit was

Mason Ltd uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include: The cost of direct materials added to work in process would be