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Exam 8: Evaluating Variances From Standard Costs

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Question 81

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Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of material is $7.60. During the month, 8,500 chairs were manufactured, using 40,000 yards at a cost of $7.50. Determine: (a) price variance (b) quantity variance (c) total cost variance.

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(a) Price variance = ($7.50 - ...

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Question 82

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Titus Company produced 8,900 units of a product that required 3.25 standard hours per unit. The standard fixed overhead cost per unit is $1.20 per hour at 29,000 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.

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The fixed factory overhead vol...

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Question 83

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Using the following information, prepare a factory overhead flexible budget for Andover Company where the total factory overhead cost is $75,500 at normal capacity (100%). Include capacity at 75%, 90%, 100%, and 110%. Total variable cost is $6.25 per unit and total fixed costs are $38,000. The information is for month ended August 31.  (Hint: Determine units produced at normal capacity.)

Nonfinancial performance output measures are used to improve the input measures.

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

While setting standards,  managers should never allow for spoilage or machine breakdowns in their calculations.

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

The principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the total factory overhead cost variance is

The following data is given for the Harry Company: Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor time variance is

If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 500 hours at $17, the time variance was $1,700 unfavorable.

A favorable cost variance occurs when the actual cost is less than the budgeted cost at actual volumes.

Define ideal and currently attainable standards.  Which type of standard should be used and why?

It is correct to rely exclusively on past cost data when establishing standards.

Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour. What is the direct labor time variance?

Robin Company purchased and used 500 pounds of direct materials to produce a product with a 520 pound standard direct materials requirement. The standard materials price is $1.90 per pound. The actual materials price was $2.00 per pound. Prepare the journal entries to record: (1) the purchase of the materials (2) the material entering production.

Standard and actual costs for direct labor for the manufacture of 300 units of product were as follows: Actual costs: 125 hours @ $54.00 Standard costs: 131 hours @ $53.00 Determine the direct labor: (a) time variance (b) rate variance (c) total cost variance.

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the fixed factory overhead volume variance is

The Finishing Department of Pinnacle Manufacturing Co. prepared the following factory overhead cost budget for October of the current year, during which it expected to operate at a 100% capacity of 10,000 machine hours. During October, the plant was operated for 9,000 machine hours and the factory overhead costs incurred were as follows: indirect factory wages, $16,400; power and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000; depreciation of plant and equipment, $8,800; insurance and property taxes, $3,200. Prepare a factory overhead cost variance report for October. (The budgeted amounts for actual amount produced should be based on 9,000 machine hours).

Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials price variance?