Exam 10: Standard Costing: a Managerial Control Tool

The sum of the material price variance and the material usage variance will add up to the total materials variance even if the materials purchased are NOT equal to the materials used.

Ponte Company produced 2,500 widgets during December using 4,000 units of materials at a cost of $5.00 each. It also used 5,000 direct labour hours at a rate of $7.00 per hour. Its direct materials standard is 2 units per widget. Its direct labour standard is 2.5 hours per widget. Its materials price variance was a favourable $8,000, and its labour rate variance was an unfavourable $1,000. Required: A. Calculate the standard materials price per unit. B. Calculate the standard labour rate. C. Determine the materials usage variance and whether it is favourable or unfavourable. D. Determine the labour efficiency variance and whether it is favourable or unfavourable.

Match each of the following terms with their correct description from the items listed below.* Each term may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Standards that are rigorous but achievable and reflect reasonable efficiency.

The standard cost per unit of output for a particular input is calculated by multiplying the standard price per unit by the standard number of units produced.

How are costs assigned in a normal cost system?

Allan Company Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: \begin{array}{lll}\text {Direct materials ( 5 \mathrm{~m} of denim \( @ \$ 2 \) per metre) }&\$10\\\text {Direct labour (3 hours \( @ \$ 6 \) per }&18\\\end{array} The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories. -Refer to Allan Company. What is the entry to record the direct labour variances?

Refer to RJB Builders. What was the materials usage variance?

Rayvo Company has the following information: Direct Materials: Direct Labour: Standard Quantity 100,000 Standard Hours 1,000 Actual Quantity 99,500 Actual Hours 1,050 Standard Price \ 5 Standard Rate \ 12 Actual Price \ 4 Actaal Rate \ 13 Required: 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. E. Provide the journal entries to record the purchase of materials, the issuance and usage of materials, and direct labour variances. F. Provide the closing entries for the immaterial variances.

Acting Company has the following information: Direct Materials: Direct Labour: Standard Quantity 11,000 Standard Hours 3,000 Actual Quantity 13,000 Actual Hours 2,875 Standard Price \ 15 Standard Rate \ 12 Actual Price \ 13 Actual Rate \ 13 Required: 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.

Warwick Company has the following information concerning its direct labour: Direct Labour: Standard Hours 7,500 Actual Hours 7,350 Standard Rate \ 16 Actual Rate \ 19 Required: A. Determine the labour rate variance and whether it is favourable or unfavourable. B. Determine the labour efficiency variance and whether it is favourable or unfavourable. C. Provide the journal entry for the labour variances.

Which formula is used to calculate the labour efficiency variance?

Green Lawn Corporation Green Lawn Corporation wants to produce a new lawnmower. The financial data is as follows: Target price: $\quad \$ 450$ Target profit: $\quad \$ 75$ Estimated cost given current product and process designs: $400 -Refer to The Fantastic Tool Company. What were the standard hours allowed for a volume of 100,000 blades?