Exam 22: Standard Costing and Variance Analysis

The direct labor efficiency variance is the difference between standard hours allowed and actual hours worked for good units produced,multiplied by the standard labor rate.

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 actual costs rather than in terms of standard costs incurred.

The Silent Door Company manufactures soundproof doors.Each door requires two pieces of 16-gauge sheet steel measuring 94 inches by 50 inches.The standard cost of each piece of steel is $150.During the month of July,2,040 doors were started and completed,and there were no beginning or ending work in process inventories.Accounting records revealed that 4,200 pieces of sheet steel were purchased during July at a cost of $623,700.All 4,200 pieces were used during the month.Compute the direct materials price and direct materials quantity variances for July production,assuming the price variance is isolated at the time of purchase.Note whether the variances are favorable or unfavorable.Round to the nearest dollar.

Standard costs are realistically predetermined costs of direct materials,direct labor,and overhead that usually are expressed as a cost per unit.

Outdoors Inc.manufactures steel hitches for camping trailers.The company's direct labor rates have been set by the terms of the current labor contract.Direct labor rate standards have been assigned for each job classification.In May 2014,a young apprentice was being trained during regular working hours to become a machine operator on one of the turret lathes.A timekeeper determined that the apprentice had spent a total of 48 hours as a novice machine operator in May.Standard time for the same work output is 32 hours.The apprentice earned $6.25 per hour in May.The standard direct labor rate for machine operators working on turret lathes is $10 per hour. a.From the data provided,determine the direct labor efficiency variance and the direct labor rate variance that resulted from the temporary substitution of the apprentice for the regular machine operator.(Note that,according to the labor contract,the apprentice is not entitled to the same rate as a regular machine operator during the training period. ) b.Did the company benefit financially from the situation? Why or why not? (Show calculations. )

Another name for a flexible budget is a variable budget.

The direct materials quantity variance is the difference between the actual quantity used and the standard quantity times the actual price.

James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. Using the above information provided for James Corporation. -The standard overhead cost for each unit is

Candy Stores Inc.gives you the following information: The standard material cost is $7 per pound for a 15 pound bag of chocolate.The following is the actual cost and usage data: Using the above information provided for Candy Stores. -Compute the direct materials price variance for Candy Stores.

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

Gunnie Inc.produces and sells dog food.Each bag contains 20 pounds of dog food. Following additional information is provided by the company: Compute the standard unit cost for each bag.

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

The direct materials price standard for a period is determined by averaging that period's cost of direct material purchases.

It is not necessary to provide an area on the performance report for a manager's reasons for variances.

The formula used to compute budgeted total cost at any level of activity is presented in the

Standard costs are not used for

Service organizations do not develop standard rates for which of the following?

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Compute the variable overhead efficiency variance.

A direct labor rate variance would occur in which of the following?

Good Sleep Inc.manufactures soft pillows.Its records revealed the following data: -Using the above information provided for Good Sleep,the total variable overhead variance is