Exam 22: Performance Evaluation Using Variances From Standard Costs

If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of 6,000 widgets that were bought at $8.00 and have a standard cost of $8.15.

Oak Company produces a chair that requires 6 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 48,875 yards. Journalize the entry to record the standard direct materials used in production.

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material price variance.

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material quantity variance.

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

Ruby Company produces a chair that requires 5 yds. of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard. Determine the (a) price variance, (b) quantity variance, and (c) cost variance.

The total manufacturing cost variance consists of:

The following data relate to direct materials costs for November: What is the direct materials quantity variance?

Which of the following conditions normally would not indicate that standard costs should be revised?

Using the following information, prepare a factory overhead flexible budget for Andover Company where the total factory overhead cost is $75,500 at normal capacity (100%). Include capacity at 75%, 90%, 100%, and 110%. Total variable cost is $6.25 per unit and total fixed costs are $38,000. The information is for month ended August 31, 2012. (Hint: Determine units produced at normal capacity.)

The principle of exceptions allows managers to

A favorable cost variance occurs when

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

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material quantity variance is:

Japan Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 19,250 hours at an hourly rate of $14.90 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.

Which of the following is not a reason standard costs are separated in two components?

In most businesses, cost standards are established principally by accountants.