Exam 22: Performance Evaluation Using Variances From Standard Costs

Prepare an income statement for the year ended December 31, 2012, through gross profit for Aframe Company using the following information. Assume Aframe Company sold 8,600 units at $125 per unit. (Note: Normal production is 9,000 units)

Though favorable volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

Aquatic Corp.'s standard material requirement to produce a single of Model 2000 is 15 pounds of material @ $110.00 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. They used 162,000 pounds to produce 10,000 units of Model 2000. Required: Calculate the material price variance and material quantity variance, and indicate whether each variance is favorable or unfavorable.

Which of the following would not lend itself to applying direct labor variances?

The following data is given for the Harry Company: Overhead is applied on standard labor hours. The direct labor rate variance is:

The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor rate variance.

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the factory overhead volume variance is:

The direct labor time variance measures the efficiency of the direct labor force.

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

The formula to compute direct labor rate variance is to calculate the difference between

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: What is the amount of the factory overhead volume variance?

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows: The amount of direct materials price variance is:

Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called standard cost systems.

Volume variance measures fixed factory overhead.

The following data relate to direct labor costs for the current period: What is the direct labor rate variance?

Standard costs should always be revised when they differ from actual costs.

Standards are set for only direct labor and direct materials.

Periodic comparisons between planned objectives and actual performance are reported in:

An example of a nonfinancial measure is the number of customer complaints.

While setting standards, the managers should never allow for spoilage or machine breakdowns in their calculations.