Exam 10: Standard Costing: a Managerial Control Tool

Standard direct labour rate per hour \ 15.00 Actual direct labour rate per hour \ 13.50 Labour rate vari ance \ 18,000 favourable Actual output 1,000 units Standard hours allowed for actual production 10,000 hours -Refer to the Figure.How many actual labour hours were worked during March for Bear Company?

Direct materials ( 1 sheet of aluminum @\ 10.00 per sheet) \ 10.00 Direct materials (other accessories @\ 8.75) 8.75 Direct labour ( 6 hours (07.00 per hour) 42.00 -Refer to the Figure.How many standard hours are allowed for a volume of 10,000 airplanes?

Islander Corporation manufactures a product with the following standard costs: Direct materials (20@\ 1.85 per metre ) \ 37.00 Direct labour (4 hours @\ 12.00 per hour ) 48.00 Standards are based on normal monthly production involving 2,000 direct labour hours (500 units of output). The following information pertains to the month of April: Direct materials purchased (16,000(\ 1.80 per metre ) \2 8,800 Direct materials used (9,400) Direct labour (1,880 hours @\ 12.20 per hour ) 22,936 Actual production in July: 460 units Required: A. Compute the following variances for the month of April, indicating whether each variance is favourable or unfavourable: 1. Materials purchase price variance 2. Materials quantity variance 3. Labour rate variance 4. Labour efficiency variance B. Give potential reasons for each of the variances. Be sure to consider interrelationships among variances.

Match each item with the correct statement below. -This is the standard plus the allowable deviation when determining whether variances are significant.

How are costs assigned in a standard cost system?

Wiltshire Limited produces woollen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle. Standard bundles of wool $\quad$$\quad$ 4,000 Standard price $\quad$$\quad$$\quad$$\quad$$\$ 20$ per bundle The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60%.By the end of Year 2,the company had actually cut down its waste by 50%. A. Identify the kaizen and materials standards in place at the beginning of Year 2. Express the standards in both physical and financial terms. B. Calculate the expected cost reduction. C. Calculate the actual cost reduction.

What do variances indicate?

Which of the following is characteristic of the disposition of materials and labour variances?

Direct materials ( 2 sheets of glass $(\$ 2$ per sheet) $\quad$$\$ 4$ Direct labour (3 hours $@ \$ 8$ per hour) $\quad$$\quad$$\quad$$\quad$$\quad$ 24 -Refer to the Figure.What is Aqua's total labour variance?

Direct materials ( 2 sheets of glass $(\$ 2$ per sheet) $\quad$$\$ 4$ Direct labour (3 hours $@ \$ 8$ per hour) $\quad$$\quad$$\quad$$\quad$$\quad$ 24 -Refer to the Figure.What is the materials price variance?

In kaizen costing,the cost reduction process is controlled by repetitive use of continuous improvements and maintenance.

Refer to the Figure.Risco determined that it had a favourable materials usage variance of $2,0001,000 for April.What was the actual quantity of materials Risco used?

Match the variance with its correct calculation. -Total direct labour variance

Match each item with the correct statement below. -Standards that are rigorous but achievable and reflect reasonable efficiency.

Dawson Corporation has the following information: Direct Materials: Direct Labour: Standard Quantity 2,500 Standard Hours 600 Actual Quantity 2,400 Actual Hours 625 Standard Price \ 22 Standard Rate \ 15 Actual Price \ 20 Actual Rate \ 15 A. Determine the materials price variance and whether it is favourable or unfavourable. B. Determine the materials usage variance and whether it is favourable or unfavourable. C. Determine the labour rate variance and whether it is favourable or unfavourable. D. Determine the labour efficiency variance and whether it is favourable or unfavourable.

How do standard cost systems enhance operational control?

Which of the following is NOT a characteristic of kaizen standards?

What is target cost?

The materials price variance is computed using the actual quantity of materials used,and the materials usage variance is computed using the actual quantity of materials purchased.

What results from implementing standard cost systems in manufacturing environments emphasize continuous improvement and just-in-time manufacturing and purchasing?