Exam 9: Standard Costs and Variances

The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept. Direct materials: 2 gallons at $4 per gallon Direct labor: 0.5 hours at $8 per hour During September, the company made 6,000 Lepts and incurred the following costs: Direct materials purchased: 13,400 gallons at $4.10 per gallon Direct materials used: 12,600 gallons Direct labor used: 2,800 hours at $7.65 per hour -The materials price variance for September was:

Sande Corporation makes a product with the following standard costs: In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502. 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 November is:

The Litton Company has established standards as follows: Direct material: 3 pounds per unit $4 per pound = $12 per unit Direct labor: 2 hours per unit $8 per hour = $16 per unit Variable manufacturing overhead: 2 hours per unit $5 per hour = $10 per unit Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. The company applies variable manufacturing overhead to products on the basis of standard direct labor-hours. -The variable overhead efficiency variance is:

The general model for calculating a price variance is:

Stelluti Corporation's variable overhead is applied on the basis of direct labor-hours.The standard cost card for product H67F specifies 7.8 direct labor-hours per unit of H67F.The standard variable overhead rate is $6.50 per direct labor-hour.During the most recent month,400 units of product H67F were made and 2,900 direct labor-hours were worked. The actual variable overhead incurred was $20,155. Required: a.What was the variable overhead rate variance for the month? b.What was the variable overhead efficiency variance for the month?

The Richie Company uses a standard costing system in which variable manufacturing overhead is assigned to production on the basis of the number of machine setups. Data for the month of October include the following: • Variable manufacturing overhead cost incurred: $42,750 • Total variable manufacturing overhead variance: $5,430 favorable • Standard machine setups allowed for actual production: 2,920 setups • Actual machine setups incurred: 2,850 setups -The standard variable overhead rate per machine setup is:

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

Blomdahl Corporation makes a product with the following standard costs: The company reported the following results concerning this product in October. The materials price variance is recognized when materials are purchased.Variable overhead is applied on the basis of direct labor-hours. Required: a.Compute the materials quantity variance. b.Compute the materials price variance. c.Compute the labor efficiency variance. d.Compute the direct labor rate variance. e.Compute the variable overhead efficiency variance. f.Compute the variable overhead rate variance.

Fraize Corporation makes a product that uses a material with the quantity standard of 9.5 kilos per unit of output and the price standard of $4.00 per kilo. In July the company produced 7,000 units using 68,850 kilos of the direct material. During the month the company purchased 73,600 kilos of the direct material at $3.70 per kilo. The direct materials purchases variance is computed when the materials are purchased. -The materials quantity variance for July is:

Borden Enterprises uses standard costing.For the month of April,the company reported the following data: $\bullet$ Standard direct labor rate: $10 per hour $\bullet$ Standard hours allowed for actual production: 8,000 hours $\bullet$ Actual direct labor rate: $9.50 per hour $\bullet$ Labor efficiency variance: $4,800 Favorable The labor rate variance for April is:

Caquias Corporation makes a product with the following standard costs: The company reported the following results concerning this product in August. 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 August is:

Standard costs greatly increase the complexity of the bookkeeping process.

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March: • 8,600 pounds of sand were purchased at a cost of $7,310. • 7,200 pounds of sand were used for core tests. • 840 actual direct labor-hours were worked at a cost of $8,610. • Actual variable manufacturing overhead incurred was $3,200. -The materials quantity variance for March is:

Fabiano Corporation makes a product whose direct labor standards are 0.5 hours per unit and $23.00 per hour. In February the company produced 3,300 units using 1,640 direct labor-hours. The actual direct labor cost was $38,540. -The labor efficiency variance for February is:

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on machine-hours. The following data pertain to operations for the last month: -What is the variable overhead efficiency variance for the month?

The Thompson Company uses standard costing and has established the following direct material and direct labor standards for each unit of Lept. Direct materials: 2 gallons at $4 per gallon Direct labor: 0.5 hours at $8 per hour During September, the company made 6,000 Lepts and incurred the following costs: Direct materials purchased: 13,400 gallons at $4.10 per gallon Direct materials used: 12,600 gallons Direct labor used: 2,800 hours at $7.65 per hour -The labor efficiency variance for September was:

Gentile Corporation makes a product with the following standard costs: The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor-hours. During the month, the company purchased 40,400 kilos of the direct material at $4.70 per kilo. The actual direct labor rate was $13.70 per hour and the actual variable overhead rate was $2.70 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 May is:

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor efficiency variance for the month?

Davidson Corporation makes a product that has the following direct labor standards: In September the company produced 4,900 units using 2,210 direct labor-hours. The actual direct labor rate was $22.40 per hour. -The labor efficiency variance for September is:

Ruston Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below: The original budget was based on 4,500 machine-hours.The company actually worked 4,590 machine-hours during the month and the standard hours allowed for the actual output were 4,700 machine-hours.What was the overall variable overhead efficiency variance for the month?