Exam 23: Standard Costing and Variance Analysis

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 rate variance. Direct labor hours used 4,950 hours Total cost of direct labor \ 53,460 Number of good units produced 9,000 units

Which of the following statements is not true?

The flexible budget formula is an equation that determines unexpected costs at any level of output.

If the actual amount of direct materials used equals the standard amount of direct materials that should have been used,the difference between the standard cost and actual cost of direct materials is called the

Sweet Dreams manufactures candy.Its records revealed the following data: Number of urits produced 4,000 Standard direct labor hours per unit 2 Standard variable overhead rate \ 2.50 per hour Standard fixed overhead rate \ 5.00 per hour Budgeted fixed overhead costs \ 40,800 Actual variable overhead costs \ 16,800 Actual fixed overhead costs \ 40,400 Actual labor hours 8,000 direct labor hours Total actual overhead \ 57,200 The total overhead variance is

Standard costing is typically a sophisticated and inexpensive component to add to a company's existing cost accounting system.

Sweet Dreams manufactures candy.Its records revealed the following data: Number of urits produced 4,000 Standard direct labor hours per unit 2 Standard variable overhead rate \ 2.50 per hour Standard fixed overhead rate \ 5.00 per hour Budgeted fixed overhead costs \ 40,800 Actual variable overhead costs \ 16,800 Actual fixed overhead costs \ 40,400 Actual labor hours 8,000 direct labor hours Total actual overhead \ 57,200 The total fixed overhead variance is

Performance reports normally include all of the following except

Suppose the standard for a given cost during a period was $80,000.The actual cost for the period was $72,000.Under what circumstances would you consider the variance from budget to be a positive performance indication?

Although expensive to install and maintain,a standard cost accounting system can save a company considerable amounts of money by reducing resource waste.

Using the following information,compute the standard unit cost of a 20 pound bag of dog food: Direct materials quantity standard 20 pounds per unit Direct materials price standard \ 0.02 per pound Direct labor time standard 0.1 hour per unit Direct labor rate standard \ 11.60 per hour Variable overhead rate standard \ 2.50 per machine hou Fixed overhead rate standard \ 1.50 per machine hou Machine hour standard 0.25 hours per unit

A standard costing system

Even if a variance is insignificant,corrective action should be taken.

Krane Company has a standard costing system and keeps all its costs up to date.The company's main product is beach towels which are made in a single department.The standard variable costs for one beach towel (unit)are as follows: Direct materials ( 3 yards at \ 1.00 per yard) \ 3.00 Direct labor ( 1/2 hour at \ 9.00 per hour) 4.50 Variable overhead ( 1/2 hour @\ 5.00 per direct labor hour) 2.50 Standard variable cost per unit \ 10.00 The company's normal capacity is 10,000 direct labor hours.Its budgeted fixed overhead costs for the year were $24,000.During the year,it produced and sold 22,000 beach towels and it purchased 66,250 yards of direct materials; the purchase cost was $0.99 per yard.The average labor rate was $9.10 per hour,and 10,900 direct labor hours were worked.The company's actual variable overhead costs for the year were $55,100,and its fixed costs were $24,500. Using the data given,compute the following using formulas or diagram form: 1.Direct materials cost variances: a.Direct materials price variance b.Direct materials quantity variance c.Total direct materials cost variance 2.Direct labor cost variances: a.Direct labor rate variance b.Direct labor efficiency variance c.Total direct labor cost variance 3.Variable overhead variances: a.Variable overhead spending variance b.Variable overhead efficiency variance c.Total variable overhead variance 4.Fixed overhead variances: a.Fixed overhead budget variance b.Fixed overhead volume variance c.Total fixed overhead variance

The total variable overhead variance is comprised of the

During the current month,Ringo Company started 50,000 units of product and transferred 40,000 fully completed units to finished goods.The final work in process inventory was 41 percent complete as to labor operations.There was no initial work in process,and actual labor hours were 180,000 for the period.Each unit should have required 4 direct labor hours to be produced at standard.The total standard hours allowed for the period are

The total fixed overhead variance is comprised of the

When a manufacturing company employs standard costs,all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of standard or predetermined costs rather than in terms of actual costs incurred.

Golf Pro,Inc.,makes wood drivers for the professional golfer.Because of the clientele of users,only the finest materials can be used,and the quality of craftsmanship must be high.The following cost,quantity,and time standards have been set for 20xx: Direct materials: 2 board-feet of wood @ $20 per board-foot and 2 feet of leather strip @ $5 per foot Direct labor: Cutting Department,0.6 hour per driver at $10 per hour; Shaping/Finishing Department,1.4 hours per driver at $15 per hour Overhead: variable,$5 per direct labor hour; fixed,$8 per direct labor hour The wood is added at the beginning of the cutting process and the leather strip at the beginning of the shaping/finishing process. Compute the standard cost per driver.

A production manager usually is responsible for direct materials used and direct labor hours used.