Exam 23: Standard Costing and Variance Analysis

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard variable dverhead rate \ 2 per machine how Standard Eixed overhead rate \ per machine hour Actual variable cverhead costs \ 390,000 Actual fixed overhead 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 budget variance.

"The difference between actual hours worked and standard hours allowed for the good units produced,multiplied by the standard labor rate" is a description of the

The use of realistic predetermined unit costs to facilitate product costing,cost control,cost flow,and inventory valuation is a description of the

The final step in variance analysis is determining the cause of the variance.

A favorable fixed overhead volume variance for a manufacturing company could indicate

Comparing "what did happen" with "what should have happened" aids in the performance evaluation of a company.

The variable overhead spending variance is also called the variable overhead efficiency variance.

Variance analysis involves computing the difference between standard and actual costs.

Once standard costs for direct materials,direct labor,and variable and fixed overhead have been developed,a total standard unit cost can be determined at any time.

When actual capacity exceeds expected capacity,the result is a(n)

The difference between actual quantity used and standard quantity multiplied by standard price is the equation for computing the

Standard unit costs generally do not include which of the following?

Discuss standard costing.As part of your discussion,define a standard cost.In addition,compare and contrast standard costs and predetermined overhead costs.Include in your discussion at least three reasons why standard costs are introduced into a standard cost accounting system.How is a standard cost accounting system useful to management?

Harrison,Inc.,has computed direct labor standards for the manufacture of its product to be 4 hours of labor per product at a cost of $15 per hour.During March,Harrison produced 45 products in 190 hours and incurred direct labor costs of $2,720.Harrison's direct labor efficiency variance was

Prepare a flexible budget for 8,000,9,000,and 10,000 units of output,given the following data: Variable costs: Budgeted fixed overhead \ 90,000 Direct materials \5 Direct labor 4 Overhend 8

Fantastic Lips,Inc.,specializes in manufacturing lipstick.Racy Red,one of more than 75 shades produced by the company,is made from castor oil,beeswax,aloe vera,and a base compound.For the next 12 months,the company's purchasing agent believes that the cost of ingredients will be as follows: Ingredient Standard Cost Castor oil \ 6.95 per gallon Beeswax \ 5.40 per pound Aloe vera \ 19.60 per gallon Base campound \ 25.00 per gallon The direct labor time standard is 4 hours per case at a standard direct labor rate of $11.00 per hour.The standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hour for the standard fixed overhead rate. a. Using these production standards, compute the standard unit cost of direct materials per case of Racy Red if it takes 0.2 gallon of castor oil, 0.5 pound of beeswax, 0.3 gallon of aloe vera, and 1 gallon of base compound to produce one case. b. Using the standard unit cost of direct materials per case determined in (a) and the production standards given for direct labor and overhead, compute the standard unit cost of one case of Racy Red lipstick.

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 standard unit cost for direct materials is

The total overhead variance is the difference between standard variable overhead costs and standard fixed overhead costs.

Service organizations do not develop standards for

The "flex" in the flexible budget formula occurs in the variable cost segment.