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

Price standards specify amounts and quantity standards specify prices.

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 direct labor rate variance is

The factors where actual performance differs from planned are called: .

Somalian Corporation uses a standard costing system. Information for the month of May is as follows: Actual manufacturing overhead costs ($26,000 is fixed) $80,000 Direct labor: Actual hours worked 12,000 hrs. Standard hours allowed for actual production 10,000 hrs. Average actual labor cost per hour $18 The factory overhead rate is based on a normal volume of 12,000 direct labor hours. Standard cost data at 12,000 direct labor hours were as follows: Variable factory overhead $48,000 Fixed factory overhead 24,000 Total factory overhead $72,000 What is the fixed overhead spending variance for Somalian?

The variance shows the difference between actual output and expected output for a given amount of input.

Figure 9-1 Bender 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: 210 pounds at $3.00 per pound $630 Actual: 240 pounds at $2.85 per pound $684 Direct labor: Standard: 400 hours at $15.00 per hour 6,000 Actual: 368 hours at $16.50 per hour 6,072 -Refer to Figure 9-1. What is the material usage variance for Bender Corporation?

Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00 Actual purchase price per lb. $16.50 Quantity purchased 3,100 lbs. Quantity used 2,950 lbs. Standard quantity allowed for actual output 3,000 lbs. Actual output 1,000 units Malkovich Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?

The direct materials usage variance is the sum of the actual quantities and the standard quantities of units.

Standard costing is used in process industries because it's more difficult to utilize.

Compare and contrast mix and yield variances.

An unfavorable variable overhead spending variance may be caused by

Figure 9-3 Alumni Manufacturing Company has the following information pertaining to a normal monthly activity of 10,000 units: Standard factory overhead rates are based on a normal monthly volume of one standard direct hour per unit. Standard factory overhead rates per direct labor hour are: -Refer to Figure 9-3. What is the fixed overhead volume variance for Alumni?

The following information is provided about three materials utilized in the production of a product: Material Standard Mix Standard Unit Price Standard Cost X 1,250 units $3.00 per unit $3,750 Y 750 units 5.00 per unit $3,750 Z 500 units 4.00 per unit $2,000 Yield 2,250 units During May, the following actual production information was provided: Material Actual Mix X 10,000 units Y 5,000 units Z 2,500 units Yield 15,000 units Calculate the Material mix variance.

Croissant Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows 1 direct labor hour per unit. During 2016, Croissant produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is the standard activity level on which Croissant based its fixed overhead rate?

the direct materials mix variance is the difference in the standard cost of actual inputs and the standard costs of inputs that should have been used.

The standard cost sheet shows costs needed to make many units of output.

Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the opposite for a favorable variance.

The direct materials price variance is the difference between actual and standard pricing.

Which of the following factors would cause an unfavorable material quantity variance?

The three-variance method requires dividing costs into fixed and variable amounts.