Exam 24: Standard Cost Systems

Standard cost system-overhead variances Assume the following data for John Company's August operations. (a)Compute the amount of overhead applied to Work in Process during August.$_______________ (b)Compute the total manufacturing overhead budgeted based on hours worked during August.$_______________ (c)Compute the overhead spending variance for August.Indicate whether favorable (F)or unfavorable (U).$_______________ (d)Compute the overhead volume variance for August.Indicate whether favorable (F)or unfavorable (U).$_______________

In a standard cost system,actual costs are charged to work in process as they are incurred.

It is possible for the overhead volume variance to be favorable and the overhead spending variance to be unfavorable.

There is an unfavorable labor efficiency variance when:

In evaluating cost variances,the accounting department determines whether variances are favorable or unfavorable.

A large unanticipated reduction in the property taxes on a company's factory would,all other things equal,most likely cause:

A materials price variance is arrived at by taking standard quantity times actual price,less standard price.

EJB Company used a "normal" production level of 10,000 units to determine the standard per-unit cost of manufacturing overhead.Which of the following is not true?

The materials price variance is calculated by multiplying the difference between actual unit price and standard unit price,by the standard units purchased.

The Victor Corporation has been incurring favorable overhead volume variances in each of the last several months.These persistent favorable variances indicate:

A standard cost is predetermined,that is,determined before actual costs of the current period have been computed.

Standard cost system-materials and labor variances The Hemlock Corporation produces a single product.The company has developed the following standards for labor and materials: During the past month,the company purchased 3,500 pounds of direct materials at a total cost of $4,550.All of this material was used in the production of 1,300 units of output.Direct labor cost totaled $40,300 for the month.The following variances have been computed: Compute the following.If the result is a variance indicate whether it is favorable or unfavorable.If necessary,round your answers. (a)The standard price of materials ________________. (b)The standard quantity of materials allowed per unit of output _________. (c)The actual direct labor cost per hour for the month _____________. (d)The labor rate variance _____________________.

In establishing standard costs for labor,management must look at all of the following except:

If fewer units are produced than had been estimated when standard unit costs were determined,there would normally be:

An unfavorable labor rate variance could most likely result from all of the following except:

An unfavorable overhead volume variance results from:

Standard cost system-disposition of variances The cost of goods sold at standard cost for Field Company for 2015 amounted to $425,000 and was 60% of net sales.As of the end of 2015,the total of balances remaining in cost variance accounts was a net unfavorable cost variance of $8,000,which is not considered material. (a)What is the amount shown in Field 's 2015 income statement for cost of goods sold? $_______________ (b)What is the amount reported in Field 's 2015 income statement for gross profit on sales? $_______________ (If required,round your answer to nearest whole dollar value.)

An unfavorable volume variance in a factory is generally:

Controlling the materials price variance is usually the responsibility of:

The Delux Company purchased and used 2,900 yards of material in its manufacturing process.The actual cost of the materials was $2.20 per yard.Standard materials and costs were 2,700 yards at $2.00 per yard. Required: (a)Compute the materials quantity variance. (b)Compute the materials price variance. (c)Compute the total material variance.