Exam 23: Standard Costing and Variance Analysis

A flexible budget is most useful

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

Love-My-Lips specializes in manufacturing lipstick.Legally Pink,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 \ 6.30 per gallon Beeswax \ 3.53 per pound Aloe vera \ 19.90 per gallon Base compound \ 21.00 per gallon The direct labor time standard is 4 hours per case at a standard direct labor rate of $10.00 per hour.The standard overhead rates are $16.00 per direct labor hour for the standard variable overhead rate and $12.00 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 Legally Pink lipstick if it takes 0.4 gallon of castor oil, 1 pound of beeswax, 0.2 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 Legally Pink lipstick.

A(n)________ cost is synonymous with the product cost calculated in a conventional standard cost accounting system.

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

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard variable overhead rate \ 2 per machine hour Standard fixed overhead rate \ 1 per machine hour Actual variable overhead costs \ 390,000 Actual fixed overhead costs \ 175,000 Budgeted fixed overhead costs \ 190,000 Standard machine hours per unit produced 10 Good units produced 18,000 Actual machine hours 200.000 Compute the variable overhead efficiency variance.

The overhead variance is equal to the difference between

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.

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

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

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.

During April 20xx,production is expected to be 30,000 units with the following costs: direct materials,$195,000; direct labor,$300,000; variable overhead,$120,000; and fixed overhead,$150,000.Prepare a flexible budget for 25,000 and 35,000 units.

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: Price difference: Standard price \ 1.00 per yard Less actual price per yard Difference \ 0.01 (F) $\text { Direct materials price variance: }$ =( Standard Price - Actual Price )\times Actual Quantity =\ 0.01()\times66,250 =\ 662.50() 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

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 labor is

The direct materials standards for the main product of Duchess Company are 8 grams of direct materials per product at a cost of $3 per gram.During April,974 grams of direct materials were used to produce 120 products at a direct materials cost of $2,900.The direct materials quantity variance for April was

The direct materials price variance is the difference between the actual price and the standard price,multiplied by the standard quantity.

Underfoot Products uses standard costing.The following information about overhead was generated during May: Standard variable overhead rate \ 2 per machine hour Standard fixed overhead rate \ 1 per machine hour Actual variable overhead costs \ 390,000 Actual Eixed overhead costs \ 175,000 Budgeted fixed overhead costs \ 190,000 Standard machine hours per unit produced 10 Good units produced 18,000 Actual machine hours 195000 Compute the variable overhead spending variance.

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 overhead is

Direct labor time standards express the hourly labor cost per function or job classification that exists during the current accounting period.

Point Company uses the standard costing method.The company's main product is a fine-quality audio speaker that normally takes 0.25 hour to produce.Normal annual capacity is 3,000 direct labor hours,and budgeted fixed overhead costs for the year were $6,750.During the year,the company produced and sold 8,000 units.Actual fixed overhead costs were $4,800.Compute the fixed overhead budget variance.