Exam 11: Standard Costs and Variance Analysis

Explain why the variance accounts need to be closed at the end of each accounting period.

For overhead variances, the difference between the flexible budget amounts and actual costs incurred is called the:

The direct materials price variance compares:

Burkett Company uses a standard cost system. Indirect costs were budgeted at $200,000 plus $15 per direct labour hour. The overhead rate is based on 10,000 hours. Actual results were: Standard direct labour hours 9,000 Actual direct labour hours 10,000 Fixed overhead $190,000 Variable overhead $185,000 The fixed overhead production volume variance was:

Cryolite uses a standard costing system to gauge results for their single product. 70,000 kilograms of direct materials were purchased for $385,000. Two kilograms of direct materials are needed to produce one unit of product. In March, the company produced 12,000 units. The standard cost allowed for direct material was $120,000, and there was an unfavourable direct materials efficiency variance of $2,500. (CMA)The kilograms of direct materials used in March to produce output totalled:

The budget that reflects the level of activity management expects to attain is the:

(Appendix 11A)How are the revenue sales quantity variance and sales price variance related?

Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labour hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labour hour, respectively. Data relevant for the current period include: Direct materials purchased 50,000 kg. @ $12 per kg. Direct materials used 50,000 kg. Standard quantity of direct materials For actual production 45,000 kg. Direct materials standard price $13 per kg. Direct labour costs incurred 75,000 hours @ $12 per hour Standard direct labour hours for Actual production 78,000 hours Standard direct labour cost per hour $11 per hour Variable overhead costs incurred $77,070 Fixed overhead costs incurred $381,920 The purchase of direct materials would be recorded in direct materials inventory at:

Baldwin, Inc uses a standard job cost system and purchased 25,000 kg. of material at $6 per kg., and used it all. The standard amount allowed for the output achieved is 22,500 kg, and the standard price is $6.50 per kg. The company also incurred 37,500 direct labour hours for $450,000. The standard hourly price was $11 per hour, and 39,000 hours were allowed at standard. Assuming all variances are immaterial, answer the following questions: The entry to record the direct material efficiency variance will include a;

When a large variance is investigated:

Welch Company budgeted the following cost standards for the current year: Direct materials = 1.40 kilograms per unit @ $1.50 per kilogram Direct labour = 0.75 hours per unit @ $6 per hour Actual production and costs were as follows: Units produced = 2,800 Direct materials used = 4,500 kg. Direct materials purchased = 5,000 kg. @ a cost of $5,850 Direct labour incurred = 2,000 hours at a cost of $13,000 The material efficiency variance was:

Hogle Mfg. Co. uses a standard costing system. The standard time to produce one unit is 4 hours, and normal production is 3,000 units monthly. Overhead costs were estimated to be $135,000. The standard variable overhead rate is $5 per machine hour. During April the following results were recorded: Units produced 3,100 Units sold 2,800 Machine hours required 12,800 Actual overhead costs $136,000 The variable overhead efficiency variance was:

During the middle of the fiscal year, AWR Corporation unexpectedly revised its estimate of a plant asset's life from 5 years to 7 years. That revision is most likely to lead to:

(Appendix 11A)All of the following are profit related variances except:

Paris Perfumery sells two perfumes, L'Amour and Plaisir. The expected sales mix is one bottle of L'Amour to five bottles of Plaisir. Planned sales and variable costs for last period were as follows: L'Amour Plaisir Total Sales (10,000 units)$600,000 (50,000 units)$400,000 $1,000,000 Variable costs 200,000 230,000 430,000 Contribution Margin $400,000 $170,000 $ 570,000 During the period there was an economic downturn. Sales of L'Amour dropped off, so Paris reduced its price. Actual sales were as follows: L'Amour Plaisir Total Sales (7,500 @ $45)$337,500 (36,000 @ $8)$288,000 $625,500 Variable costs 165,000 153,000 318,000 Contribution Margin $172,500 $135,000 $307,500 (Appendix 11A)The contribution margin sales quantity variance was:

Hyteck, Inc. is a capital intensive firm. Indirect costs make up nearly 70% of the product costs. The company has no direct material costs because customers provide the direct materials used for each job. To plan and control such costs, the firm employs flexible budgets and standard costs. Overhead rates, based on direct labour hours, are derived from the master budget. Master Actual Budget Results Units produced 2,000 1,820 Direct labour hours 10,000 9,200 Fixed overhead $100,000 $98,000 Variable overhead $160,000 $150,000 Direct labour $100,000 $90,000 The budget variance for variable overhead was:

Welch Company budgeted the following cost standards for the current year: Direct materials = 1.40 kilograms per unit @ $1.50 per kilogram Direct labour = 0.75 hours per unit @ $6 per hour Actual production and costs were as follows: Units produced = 2,800 Direct materials used = 4,500 kg. Direct materials purchased = 5,000 kg. @ a cost of $5,850 Direct labour incurred = 2,000 hours at a cost of $13,000 The labour price variance was:

The expected costs per unit of input are called:

The difference between actual capacity used and budgeted capacity is called:

White, Inc. produces a chemical product whose primary component is purchased on credit and any discounts are always taken. The following material and labour elements make up the costs of the product: Purchase price for material $30 per litre Freight and handling $130 per 100 litres Each container of the chemical product contains 5.7 quarts of material. During the process 5% of the material is lost due to waste. Each container of product also requires 1.2 hours of labour. Each day 2 hours are taken for set-up, cleaning, and breaks. Also, the wage rate is $15 per hour and fringes/payroll taxes are 20% of wages. Clients can take a 3% discount if they pay invoices within 10 days; otherwise, the entire invoice amount is due within 30 days. 1 litre equals 4 quarts. The standard quantity of material per finished unit is: