Exam 3: Standard Costs and Variances

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?

The standard price per unit for direct materials should not include the cost of delivering the materials.

The following data have been provided by Mathews Corporation: Lubricants and supplies are both elements of variable manufacturing overhead. -The variable overhead rate variance for lubricants is closest to:

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:

Gilder Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. 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 June 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 rate variance for the month?

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 following data have been provided by Petri Corporation: Indirect labor and power are both elements of variable manufacturing overhead. -The variable overhead rate variance for power is closest to:

Suski Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the variable overhead rate variance for the month?

Canevari Corporation makes a product that uses a material with the following standards: The company budgeted for production of 1,300 units in April, but actual production was 1,200 units. The company used 3,750 kilos of direct material to produce this output. The company purchased 4,100 kilos of the direct material at a total cost of $8,610. The direct materials purchases variance is computed when the materials are purchased. -The materials quantity variance for April is:

The standards for product F88W specify 3.4 direct labor-hours per unit at $13.00 per direct labor-hour. Last month 800 units of product F88W were produced using 2,500 direct labor-hours at a total direct labor wage cost of $30,500. Required: a. What was the labor rate variance for the month? b. What was the labor efficiency variance for the month?

Longview Hospital performs blood tests in its laboratory. The following standards have been set for each blood test performed: During May, the laboratory performed 1,500 blood tests. On May 1 there were no direct materials (plates) on hand; after a plate is used for a blood test it is discarded. Variable overhead is assigned to blood tests on the basis of standard direct labor-hours. The following events occurred during May: • 3,600 plates were purchased for $9,540 • 3,200 plates were used for blood tests • 340 actual direct labor-hours were worked at a cost of $5,550 The direct materials purchases variance is computed when the materials are purchased. -The labor efficiency variance for May is:

During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

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:

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 labor rate variance for July is:

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:

An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates.

Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance.

Vath Corporation, which makes landing gears, has provided the following data for a recent month: Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable. Show your work!

Poor quality materials could have an unfavorable effect on which of the following variances?