Exam 10: Standard Costs and Variances

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: The direct materials purchases variance is computed when the materials are purchased. What is the materials price variance for the month?

Sperazza Corporation produces large commercial doors for warehouses and other facilities.In the most recent month, the company budgeted production of 4, 900 doors.Actual production was 5, 300 doors.According to standards, each door requires 6.4 machine-hours.The actual machine-hours for the month were 34, 340 machine-hours.The standard supplies cost is $3.10 per machine-hour.The actual supplies cost for the month was $99, 331.Supplies cost is an element of variable manufacturing overhead.The variable overhead efficiency variance for supplies cost is:

Epley Corporation makes a product with the following standard costs: In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The materials price variance for July is:

Pardoe, Inc. , manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours.The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company: • The company produced 3, 000 units during the month. • A total of 8, 000 pounds of material were purchased at a cost of $23, 000. • There was no beginning inventory of materials on hand to start the month;at the end of the month, 2, 000 pounds of material remained in the warehouse. • During March, 1, 600 direct labor-hours were worked at a rate of $6.50 per hour. • Variable manufacturing overhead costs during March totaled $1, 800. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for March is:

The standards for product K17 call for 5.0 meters of a raw material that costs $19.10 per meter.Last month, 2, 700 meters of the raw material were purchased for $51, 435.The actual output of the month was 460 units of product K17.A total of 2, 500 meters of the raw material were used to produce this output. The direct materials purchases variance is computed when the materials are purchased. Required: a.What is the materials price variance for the month? b.What is the materials quantity variance for the month?

Galla Corporation makes a product with the following standard costs: The company budgeted for production of 2, 400 units in June, but actual production was 2, 500 units.The company used 19, 850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21, 700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for June is:

A favorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

Pardoe, Inc. , manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours.The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company: • The company produced 3, 000 units during the month. • A total of 8, 000 pounds of material were purchased at a cost of $23, 000. • There was no beginning inventory of materials on hand to start the month;at the end of the month, 2, 000 pounds of material remained in the warehouse. • During March, 1, 600 direct labor-hours were worked at a rate of $6.50 per hour. • Variable manufacturing overhead costs during March totaled $1, 800. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for March is:

Jurczyk Corporation makes a product that has the following direct labor standards: In December the company's budgeted production was 4, 600 units, but the actual production was 4, 400 units.The company used 1, 330 direct labor-hours to produce this output.The actual direct labor cost was $14, 364. The labor rate variance for December is:

The standard labor rate per hour defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits.

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost.Jackson has established the following standards for one unit of product. During May, Jackson purchased 125, 000 pounds of direct material at a total cost of $475, 000.The total factory wages for May were $364, 000, 90 percent of which were for direct labor.Jackson manufactured 22, 000 units of product during May using 108, 000 pounds of direct material and 28, 000 direct labor-hours. The price variance for the direct material acquired by Jackson Industries during May is:

Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours.The quantity standard is 0.6 hours per unit.The variable overhead rate standard is $5.00 per hour.In September the company produced 1, 600 units using 950 direct labor-hours.The actual variable overhead rate was $5.10 per hour. The variable overhead efficiency variance for September is:

Deschamp Corporation's variable overhead is applied on the basis of direct labor-hours.The company has established the following variable overhead standards for product O28H: The following data pertain to the most recent month's operations during which 2, 160 units of product O28H were made: Required: a.What was the variable overhead rate variance for the month? b.What was the variable overhead efficiency variance for the month?

Biery Corporation makes a product with the following standard costs: The company produced 4, 100 units in April using 5, 380 liters of direct material and 2, 610 direct labor-hours.During the month, the company purchased 6, 000 liters of the direct material at $5.80 per liter.The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for April is:

Tout Corporation makes a product that has the following direct labor standards: The company budgeted for production of 6, 400 units in October, but actual production was 6, 500 units.The company used 610 direct labor-hours to produce this output.The actual direct labor rate was $21.80 per hour. The labor rate variance for October is:

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: • Direct materials: 4 gallons at $8 per gallon • Direct labor: 1 hour at $16 per hour During July, the company made 6, 000 units of product and incurred the following costs: • Direct materials purchased: 26, 800 gallons at $8.20 per gallon • Direct materials used: 25, 200 gallons • Direct labor used: 5, 600 hours at $15.30 per hour The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July was:

Blaster, Inc. , manufactures portable radios.Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.45 per unit.During May, the company purchased 12, 000 units of the part for a total of $18, 000.Also during May, the company manufactured 3, 000 radios, using 10, 000 units of part XBEZ52.The direct materials purchases variance is computed when the materials are purchased. During May, the materials quantity variance for part XBEZ52 was:

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost.Jackson has established the following standards for one unit of product. During May, Jackson purchased 125, 000 pounds of direct material at a total cost of $475, 000.The total factory wages for May were $364, 000, 90 percent of which were for direct labor.Jackson manufactured 22, 000 units of product during May using 108, 000 pounds of direct material and 28, 000 direct labor-hours. The labor efficiency variance for May is:

Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $22.00 per hour.In April the company produced 6, 900 units using 5, 250 direct labor-hours.The actual direct labor cost was $113, 925. The labor efficiency variance for April is:

The Maxwell Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours.The following data are available for July: • Actual variable manufacturing overhead cost incurred: $22, 620 • Actual machine-hours worked: 1, 600 hours • Variable overhead rate variance: $3, 420 Unfavorable • Total variable overhead spending variance: $4, 620 Unfavorable The variable overhead efficiency variance for July is: