Exam 10: Standard Costing: a Managerial Control Tool

High Fly Company manufactures model airplanes. During the month, it manufactured 10,000 airplanes. Each airplane used an average of 6.5 direct labour hours and an average of 1.5 sheets of aluminum. High Fly normally manufactures 7,500 airplanes each month. Materials and labour standards for making the airplanes are as follows: 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?

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

Which of the following cost reduction methods is NOT typically used to move the actual cost to target cost?

Historical experience may provide an initial guideline for setting standards,but it should be used with caution.

Perfect Builders constructs houses. The standard labour rate is $20 per hour, and the standard number of hours is 12,000 hours per home. During the year, it constructed 10 homes using 14,000 labour hours per home and a rate of $22 per hour. -Refer to the Figure.What was Perfect Builders' labour rate variance?

MacDowell Company manufactures 100 kg bags of fertilizer that have the following unit standard costs for direct materials and direct labour: The following activities were recorded for October: Direct materials (100@\ 1.00 per kilogram) \ 100.00 Direct labour (0.5 hours at \ 24 per hour ) 12.00 Total standard direct cost per 100 bag \ 112.00 There were no beginning or ending work-in-process inventories. Required: - $\quad 1,000$ bags were manu factured. - $\quad 95,000 \mathrm {~kg}$ of materials costing $\$ 76,000$ were purchased. - $\quad 102,500 \mathrm {~kg}$ of materials were used. - $\quad \$ 12,000$ was paid for 475 hours of direct labour. A. $\quad$ Compute the direct materials variances. B. $\quad$ Compute the direct labour variances. C. $\quad$ Give possible reasons for the occurrence of each of the preceding variances.

Which statement applies to ideal standards?

Black and Digger's manufactures hedgers.During the year,it manufactured 5,000 hedgers,using 4.2 hours of direct labour per hedger at a rate of $8 per hour.The materials and labour standards for manufacturing the hedgers are as follows: Black and Digger's actually used 53,000 units of direct materials at a price of $2.25 per unit. Required:

Bronze Brick Company uses the following rule to determine whether materials usage variances should be investigated: A materials usage variance will be investigated when the variance is greater than either $5,000 or 12% of the standard cost. During May,the company purchased and used 11,000 kg of concrete for $5 per kilogram.It was able to make 20,000 bricks.Its standard quantity of materials allowed is 0.50 kg of concrete per brick at a standard price of $6.50 per kilogram. A. Determine Bronze's material usage variance and whether it is favourable or unfavourable. B. Should the vari ance be investigated?

Which of the following is NOT an advantage of standard costing over normal costing and actual costing?

AirSoar Company produces model airplanes. During August, the company produced 1,000 planes. The actual labour hours were 10 hours per plane. The company's standard labour hours are 15 hours per plane. The standard labour rate is $12 per hour. At the end of August, AirSoar found that it had a favourable labour rate variance of $7,500. -Refer to the Figure.What was AirSoar's actual cost per labour hour?

Fender Corporation produced 100 units of Product XX.The total standard and actual costs for materials and direct labour for the 100 units of Product XX are as follows: What is the labour efficiency variance for Fender Corporation? Materials: Standard Actual Standard: 200 at \ 3.00 per kilogram \6 00 Actual: 220 at \ 2.85 per kilogram \6 27 Direct labour: Standard: 400 hours at \ 15.00 per hour 6,000 Actual: 368 hours at \ 16.50 per hour 6,072

The actual quantity of input at the standard price less than the standard quantity of input at the actual price equals the usage variance.

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.

During September,a small roofing company purchased 500 bundles of a certain type of shingle at a price of $35 per bundle,$5 less than the standard price.The company's standard quantity of this type of shingles is 550 bundles.What is the journal entry to record the purchase of materials?

Which variance is the difference between the actual cost of the input and its planned cost?

Currently attainable standards can be achieved under efficient operating conditions.

In kaizen costing,each period's Kaizen standard is based on prior periods' improvement,thereby locking in these improvements.

Determine if the variance is favourable or unfavourable. -Actual price of inputs is less than the standard price.

In general,who controls the use of labour in an organization?