Exam 9: Standard Costing: a Functional-Based Control Approach

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. Direct materials: 10 pounds × $3 per pound Direct labor: 2.5 hours × $8 per hour Variable manufacturing overhead: 2.5 hours × $2 per hour The following activity occurred during the month of June: Materials purchased: 125,000 pounds at $2.60 per pound Materials used: 110,000 pounds Units produced: 10,000 units Direct labor: 24,000 hours at $7.50 per hour Actual variable manufacturing overhead: $51,000 The company records materials price variances at the time of purchase. The variable manufacturing overhead efficiency variance is

Colina Production Company uses a standard costing system. The following information pertains to 2016. Direct labor hours is the driver used to assign overhead costs to products. Actual production 5,500 units Actual factory overhead costs ($16,500 is fixed) $40,125 Actual direct labor costs (11,250 hours) $131,625 Standard direct labor for 5,500 units: Standard hours allowed 11,000 hours Labor rate $12.00 The factory overhead rate is based on an activity level of 10,000 direct labor hours. Standard cost data for 5,000 units is as follows: Variable factory overhead $22,500 Fixed factory overhead 13,500 Total factory overhead $36,000 What is the variable overhead efficiency variance for Colina Production Company?

Croissant Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour per unit. During 2016, Crawford produced 110,000 units of product, (within the relevant range of activity) incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is Croissant's fixed overhead spending variance for 2016?

In computing efficiency variances, managers compute the standard quantity of materials used and the standard hours allowed.

The document that shows the amount and cost of direct materials, direct labor, and overhead to make a unit of output is called the standard __________ .

Price standards are the responsibility of

Formidable Company collected the following information: Standard costs per unit: Variable overhead 4 machine hours @ $6 per machine hour Fixed overhead 4 machine hours @ $10 per machine hour Actual output 20,000 units Denominator (normal capacity) output 21,000 units Actual machine hours 79,000 machine hours Actual variable overhead cost $540,000 Actual fixed overhead cost $810,000 Using the two variance method, what is the total variance?

A variable overhead efficiency variance could be caused by

Artigas Enterprises uses two materials in the production of its product. The materials, L and M, have the following standards: Material Standard Mix Standard Unit Price Standard Cost L 1,750 units $0.50 per unit $ 875 M 750 units 1.50 per unit $1,125 Yield 2,000 units During January, the following actual production information was provided: Material Actual Mix L 15,000 units M 10,000 units Yield 18,000 units What is the materials yield variance?

Formidable Company collected the following information: Standard costs per unit: Variable overhead 4 machine hours @ $6 per machine hour Fixed overhead 4 machine hours @ $10 per machine hour Actual output 20,000 units Denominator (normal capacity) output 21,000 units Actual machine hours 79,000 machine hours Actual variable overhead cost $540,000 Actual fixed overhead cost $800,000 Using the three variance method, what is the budget variance?

The Stronghold Corporation uses two materials and two types of labor to manufacture a product. The following are their standards: Yield 5,000 units Labor Type Standard Mix Standard Unit Price Standard Cost Grinding 300 hours $8.00 per unit $2,400 Polishing 150 hours 6.00 per unit $ 900 Yield 6,000 units During the month of November, the following actual production information was provided: Material Actual Mix P P 30,000 units Q Q 20,000 units Yield 30,000 units Labor Type Actual Mix Grinding 4,500 hours Polishing 2,500 hours Yield 30,000 units Required calculations: a. Material mix variance b. Material yield variance c. Labor mix variance d. Labor yield variance

Developing standards for input prices and quantities allows for a more detailed understanding of flexible budget variances.

Which of the following people is most likely responsible for an unfavorable variable overhead efficiency variance?

Standard costs are the amount that should be spent to produce a product or service.

How are standards developed? What is the difference between ideal and currently attainable standards?

Harrangue Company's standard variable overhead rate is $6 per direct labor hour, and each unit requires 2 standard direct labor hours. During March, Harry recorded 6,000 actual direct labor hours, $37,000 actual variable overhead costs, and 2,900 units of product manufactured. What is the variable overhead efficiency variance for March for Harrangue?

United Carborundum Company manufactures 100-pound bags of chemicals that have the following unit standard costs for direct materials and direct labor: Direct materials (100 lbs. @ $1.00 per lb.) $100.00 Direct labor (0.5 hours at $24 per hour) 12.00 Total standard direct cost per 100 lb. bag $112.00 The following activities were recorded for October: • 1,000 bags were manufactured. • 95,000 lbs. of materials costing $76,000 were purchased. • 102,500 lbs. of materials were used. • $12,000 was paid for 475 hours of direct labor. There were no beginning or ending work-in-process inventories. Required: a. Compute the direct materials variances. b. Compute the direct labor variances. c. Give possible reasons for the occurrence of each of the preceding variances.

Stammer Company uses three materials in the production of their product. The materials, A, B, and C, have the following standards: Material Standard Mix Standard Unit Price Standard Cost A 5,000 units $2.00 per unit $10,000 B 3,000 units 4.00 per unit $12,000 C 2,000 units 3.00 per unit $ 6,000 Yield 9,000 units During April, the following actual production information was provided: Material Actual Mix A 40,000 units B 20,000 units C 10,000 units Yield 60,000 units Required: Calculate the materials usage, mix, and yield variances.

Formidable Company collected the following information: Standard costs per unit: Variable overhead 4 machine hours @ $6 per machine hour Fixed overhead 4 machine hours @ $10 per machine hour Actual output 20,000 units Denominator (normal capacity) output 21,000 units Actual machine hours 79,000 machine hours Actual variable overhead cost $540,000 Actual fixed overhead cost $810,000 Using the two variance method, what is the volume variance?

Figure 9-2 Bodacious Corporation produced 100 units of Product AA. The total standard and actual costs for materials and direct labor for the 100 units of Product AA are as follows: Materials: Standard Actual Standard: 200 pounds at $3.00 per pound $600 Actual: 220 pounds at $2.85 per pound $627 Direct labor: Standard: 400 hours at $15.00 per hour 6,000 Actual: 368 hours at $16.50 per hour 6,072 -As a general rule, an investigation of a variance should be undertaken only if the