Exam 18: Standard Costing and Variance Analysis

The Standard Cost Card for a batch of 3,000 bottles of shampoo includes the following: 1,500 litres of liquid S at £0.30 per litre 1)5kg of powder P at £1.20 per kg A batch of 3,000 bottles had the following usage: 1,700 litres of liquid S which cost £476 and 1.2kg of powder which cost £1.80 What are the material price and usage variances for the liquid?

While standard costing can help establish how actual performance differs from standard performance,it is not compatible with performance related pay systems

Direct materials price variance can be expressed as:

What might you assume if a company had a favourable material price variance and an unfavourable material usage variance?

The LAH company produces product BG,which includes variable overhead standard cost of 5 hours at £15 per hour,based on a budget production of 3,000 units.The actual results for the last period were as follows: Production 3,100 Hours incurred 16,000 Variable overhead £235,00 Calculate the variable overhead efficiency variance.

A company is reviewing the variances for the previous month: Which of the following statements is most likely to be INCORRECT?

Which of the following would lead to a labour usage variance?

An adverse variable overhead cost variance might mean that some item of variable overhead,such as cleaning costs,has cost more than expected

The LAH company produces product BG,which includes variable overhead standard cost of 5 hours at £15 per hour,based on a budget production of 3,000 units.The actual results for the last period were as follows: Production 3,100 Hours incurred 16,000 Variable overhead £235,00 Calculate the variable overhead cost variance.

Direct materials usage variance can be expressed as:

A company has a total budgeted fixed overhead of £135,000 for the year. Budgeted production is 15,000 units per year.Each unit takes 45 minutes. Production and costs are spread evenly throughout the year.Overheads are absorbed on the basis of labour hours. In one month,1,200 units are made and 800 hours are worked.The overhead cost is £10,000. Which of the following statements are correct? (i) The Budgeted Overhead Absorption Rate is £12.00 per hour (ii) The Overhead Absorption Rate is £12.50 (iii) The Fixed Overhead Expenditure Variance is £1,250 Favourable (iv) The Fixed Overhead Expenditure Variance is £400 Adverse (v) The Fixed Overhead Volume Variance is £1,650 Adverse (vi)The Fixed Overhead Volume Variance is £450 Adverse

Standard costing can help establish variances in costs,but does not consider the volume of production

Which of the following is likely to cause an adverse fixed overhead variance?

Variable overhead variances are typically in proportion to direct labour variance,as variable overheads are typically charged as a proportion of direct labour hours

Variable overhead price variance can be expressed as:

Which of the following statements is INCORRECT?

Fixed overhead expenditure variance can be expressed as:

LR Kinncaid Company assembles steel components for trains.The standard labour cost per unit is: 3 hours @ £3.20 per hour The actual results for last period were: Production 6,000 components Hours 33,000 Wage rate (per hour) £3.25 Calculate the direct labour efficiency variance

Which of the following would lead to a materials price variance?

LR Kinncaid Company assembles steel components for trains.The standard labour cost per unit is: 3 hours @ £3.20 per hour The actual results for last period were: Production 6,000 components Hours 33,000 Wage rate (per hour) £3.25 Calculate the direct labour rate variance