Exam 11: Standard Costs and Variance Analysis

(Appendix 11A)The sales price variance is calculated as (actual price - standard price)X actual volume sold.

Standard costs are developed using:

Which of the following variances is least likely to provide useful information for making decisions, if calculated as part of a comprehensive set of variances?

Explain how variances are closed at the end of a period. Also explain how materiality affects this procedure.

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 mix 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)Cryolite's standard cost for one kilogram of direct material is:

If we expect fixed costs to remain constant regardless of volumes, why would we calculate a fixed overhead spending variance?

Intentional worker damage is most likely to result in which type of variance?

List one similarity and one difference between price and efficiency variances for direct labour.

Brodie Co. uses a standard job cost system and a denominator volume of 25,000 direct labour hours for allocating overhead. The actual output was 12,000 units, which cost $185,700 for direct labour (23,000 hours), $27,525 for variable overhead, and $136,400 for fixed overhead. The standard variable overhead per unit is $2 (2 hours @ $1 per hour), and the standard fixed overhead per unit is $10 (2 hours @ $5 per hour). All variances are immaterial and are closed to Cost of Goods Sold at the end of the period. The entry to close the variable overhead variances includes a:

(Appendix 11A)Contribution margin sales volume variance can be further subdivided into

Which department is customarily responsible for an unfavourable material price variance?

An unfavourable price variance may occur because:

Favourable price variances occur because of:

The direct labour efficiency variance compares:

Variances are usually investigated when they are:

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: Direct materials $43,000 Direct labour 67,000 Variable overhead 30,000 Fixed overhead 25,000 Variances for the period are: Direct materials price $ 400 U Direct materials efficiency 500 F Direct labour price 600 F Direct labour efficiency 200 U Variable overhead spending 300 F Variable overhead efficiency 100 F Fixed overhead spending 500 F Fixed overhead production volume 1,000 U The budgeted fixed 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 material price variance for materials purchased was:

LST Corporation entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from LST. This reduces LST's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

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 direct materials price variance for March is: