Exam 24: Standard Costing and Variance Analysis

Choco Sweet Inc.gives you the following information: The standard labor time of 0.75 labor hour is required to produce one unit.The standard labor cost for a 10 pound bag of chocolate is $8 per labor hour.The following is data relating to the actual cost and usage data. -Using the above information provided for Choco Sweet,compute the direct labor rate variance for Choco Sweet Inc.

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Using the above information provided for Underfoot Products,compute the variable overhead efficiency variance.

Harrison Inc.has computed direct labor standards for the manufacture of its product to be 4 hours of labor per product at a cost of $15 per hour.During March,Harrison produced 45 products in 190 hours and incurred direct labor costs of $2,720.Harrison's direct labor efficiency variance was

Which of the following is true of standard costing?

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.

The total variable overhead variance is comprised of the

Which of the following costs generally do not include standard unit costs?

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.)

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Using the above information provided for Underfoot Products,compute the fixed overhead budget variance.

Choco Sweet Inc.gives you the following information: The standard labor time of 0.75 labor hour is required to produce one unit.The standard labor cost for a 10 pound bag of chocolate is $8 per labor hour.The following is data relating to the actual cost and usage data. -Using the above information provided for Choco Sweet,compute the direct labor variance for Choco Sweet Inc.

Another name for a flexible budget is a variable budget.

A purpose of standard costing is to

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?

A standard unit cost can be determined after developing standard costs for direct materials,direct labor,and variable and fixed overhead.

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

For which of the following can a standard cost accounting system be used?

Differentiate between the variable overhead spending variance and the variance overhead efficiency variance.

Mention a few reasons for an unfavorable direct labor cost variance.

Which of the following statements is not true of performance reports?

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