Exam 23: Standard Costing and Variance Analysis

The Silent Door Company manufactures soundproof doors.Each door requires two pieces of 16-gauge sheet steel measuring 94 inches by 50 inches.The standard cost of each piece of steel is $150.During the month of July,2,040 doors were started and completed,and there were no beginning or ending work in process inventories.Accounting records revealed that 4,200 pieces of sheet steel were purchased during July at a cost of $623,700.All 4,200 pieces were used during the month.Compute the direct materials price and direct materials quantity variances for July production,assuming the price variance is isolated at the time of purchase.Note whether the variances are favorable or unfavorable.Round to the nearest dollar.

The static budget can be adjusted automatically for changes in the level of output.

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard variable overhead rate \ 2 per machine how Standard fixed overhead rate \ 1 per machine hour Actual variable overhead costs \ 390,000 Actual fixed cverhead costs \ 175,000 Budgeted fixed cverhead costs \ 190,000 Standard machine hours per unit produced 10 Good units produced 18,000 Actual machine hours 200,000 Compute the fixed overhead volume variance.

Variance analysis includes all of the following except

Standard costs are realistically predetermined costs of direct materials,direct labor,and overhead that usually are expressed as a cost per unit.

Using the standard costs of $5 per pound for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct materials variance. Direct materials purchased and used 99,000 pounds Price paid far direct materials \ 4.00 per pound Number of pood urits produced 9,000 units

Discuss the keys to preparing a performance report based on standard costs and related variances.

Standard costs are based solely on expected future costs and conditions.

The direct materials price standard is a carefully derived estimate or projected amount of what a particular type of direct material will cost when purchased during the next accounting period.

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard variable overhead rate \ 2 per machine howr Standard fixed overhead rate \ 1 per machine hour Actual variable overhead costs \ 389,000 Actual Eixed dverhead costs \ 175,000 Budgeted fixed overhead costs \ 190,000 Standard machine hours per urit produced 10 Good urits produced 18,000 Actual machine hours 200,000 Compute the variable overhead spending variance.

Using the labor time standard of 0.5 labor hour per unit and a labor cost standard of $10 per labor hour for a 10 pound bag of chocolate and the following actual cost and usage data,compute the direct labor variance. Direct labar hours used 4,950 hours Total cost of direct labor \ 53,460 Number of good units produced 9,000 units

The standard fixed overhead rate is usually based on the expected number of standard machine hours.

The direct labor rate standard is either set by a labor contract or defined by the company.

A standard cost accounting system can be used for

Camping for Fun,Inc.,produces a variety of camping products on a year-round basis.The best-selling item is a compact portable camping stove made from sheets of rust-free aluminum.Production of this stove requires two main operations: cutting/assembly and coating.The basic direct materials used are aluminum sheeting,a polyurethane base coating,and a gas jet assembly.Quantity,time,and cost standards for the camping stove are as follows: Direct materials consist of sheet aluminum (two 2-by-3-meter sheets per stove at $1.15 per sheet),1.2 liters of coating materials per stove at $0.80 per liter,and a gas jet assembly purchased at $11.30.Direct labor in the Cutting/Assembly Department is expected to produce 50 stoves per hour at $9.50 per hour.Direct labor in the Coating Department can handle 32 stoves per hour at $8 per hour.Normal capacity is 126,000 stoves per year. The firm actually produced 120,000 units during the year,and the production records contain the following information: For direct materials,the firm used 241,200 sheets of aluminum at $1.10 per sheet,148,500 liters of coating at $0.77 per liter,and 120,100 gas jet assemblies costing a total of $1,369,140.Direct labor in the Cutting/Assembly Department amounted to 2,800 hours at $9.25 per hour; in the Coating Department,it amounted to 3,560 hours at $7.50 per hour. Using the information provided,determine the following (remember to indicate whether the variance is favorable or unfavorable): a. Standard hours allowed for the Cutting/Assembly and Coating Departments for the year (by department) b. Direct materials price variances (by material) c. Direct materials quantity variances (by material) d. Direct labor rate variances (by department) e. Direct labor efficiency variances (by department)

Keerin,Inc.,produces a complete line of women's athletic apparel.Sweatsuits are very popular in the northern states.During August,the company's records revealed the following information about the production of sweatsuits: Standards: Direct materials 5 yards @ \2 .50 per yard Direct labor 1 hour @ \ 9.50 per hour Overhead: Variable \ 5.50 per direct labor hour Fixed 7 per direct labor hour Compute the standard unit cost for a sweatsuit.

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. Direct materials quantity standard 3 pounds per product Direct labor time standard 5 hours per product Direct materials price standard \ 10 per pound Direct labor rate standard \ 9 per hour Standard variable overhead rate \ 5 per labor hour Standard fixed overhead rate \ 10 per labor hour The total standard unit cost is

An expression of the hourly labor pay cost per function or job classification that is expected to exist during the next accounting period is the definition of a

Predetermined overhead costs are the same as standard costs.

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard varable cverhead rate \ 2 per machine hour Standard fixed cverhead rate \ 1 per machine hour Actual variable cverhead costs \ 361,000 Actual fixed cverhead costs \ 17,000 Budgeted fixed cverhead costs \ 190,000 Standard machine hours per urit produced 10 Good urits produced 18,000 Actual machine hours 200,000 Compute the variable overhead variance.