Exam 10: Standard Costs, Flexible Budgets and Variance Analysis

Variable overhead spending variances can result from unattainable variable allocation rates. In turn, those rates may be caused by

Calculating variances is a necessary, but not sufficient, step for completing a variance analysis.

Standard costs should be reviewed

Accountants investigate manufacturing overhead spending variances to determine

Which of the following is not a typical step in variance analysis?

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 variable overhead spending variance is

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 material price variance for materials purchased was

Which of the following is a possible cause of an unfavorable materials efficiency variance?

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labor hour. The overhead rate is based on 10,000 hours. Actual results were: The variable overhead efficiency variance was

The total direct labor variance can be broken down into two components: the efficiency variance and the price variance.

For overhead variances, the difference between the flexible budget amounts and actual costs incurred is called the

Which department is customarily responsible for an unfavorable material price variance?

LST entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from LST. This reduces LST's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: The direct materials inventory increased during the period by 1,000 (at standard cost). What was the actual cost of direct materials purchased during the period?

Taylor Manufacturing has gathered the following data in preparing to record their direct labor payroll costs for the week: The standard direct labor price was

The variable overhead budget variance is the difference between allocated variable overhead cost and actual variable overhead cost.

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 the direct material price variance allocated to Cost of Goods Sold is

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 direct materials efficiency variance is

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: The actual cost of direct labor incurred was

Hyteck Ltd is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labor hours, are derived from the master budget. The budget variance for variable overhead was