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Exam 11: Standard Costs and Variances

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Question 111

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Quinton's Salon cuts men's hair. Labor standards for each cut are as follows: The following data relates to the haircuts during the month of October: What is the labor efficiency variance for the month of October?

A) $4 favorable
B) $4 unfavorable
C) $100 favorable
D) $100 unfavorable

E) All of the above
F) A) and B)

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Question 112

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Which of the following situations would lead to a favorable direct materials price variance?

A) The purchasing manager was able to negotiate a lower purchase price for raw materials.
B) A vendor shipped a greater quantity of raw materials than ordered.
C) The purchasing manager paid a premium price for a higher quality of raw materials.
D) Raw materials waste was substantially reduced in the factory.

E) All of the above
F) None of the above

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Question 113

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Standard Products Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units. Direct Materials Direct Labor Standard quantity/unit 6.00 lbs. 2.5 hrs. Standard price/lb. or hr. $8.10/lb. $8.00/hr. Actual quantity/unit 6.25 lbs. 2.8 hrs. Actual price/lb. or hr. $8.00/lb. $7.50/hr Price variance $562.50 F $1,260.00 F Quantity/Efficiency variance $1,822.50 U $2,160.00 U Static budget volume 800 units Actual volume 900 units Actual overhead cost $11,000 Standard variable overhead cost $5/unit Standard fixed overhead cost $5,600 Overhead flexible budget variance $900 U Production volume variance $700 F Journalize the allocation of overhead costs to Work in Process Inventory and closing manufacturing overhead costs to overhead variances.

A sales volume variance will occur when the number of units actually sold differs from the volume originally planned for in the master budget.

The total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

Dire Corporation uses the following standard costs for a single unit of product: Actual data for the month showed overhead costs of $425,000 for 22,500 units produced. What is the difference between actual overhead costs and standard overhead costs allocated to products?

The production volume variance is favorable whenever expected output is greater than actual output.

Rzepka Corporation manufactures jeweled cell phone cases. The following materials standards have been established for the jewels used to decorate the cell phone cases. The following data relates to the production of the cell phone cases during June: What is the materials price variance for jewels in June?

Standard Products Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units. Direct Materials Direct Labor Standard quantity/unit 6.00 lbs. 2.5 hrs. Standard price/lb. or hr. $8.10/lb. $8.00/hr. Actual quantity/unit 6.25 lbs. 2.8 hrs. Actual price/lb. or hr. $8.00/lb. $7.50/hr Price variance $562.50 F $1,260.00 F Quantity/Efficiency variance $1,822.50 U $2,160.00 U Static budget volume 800 units Actual volume 900 units Actual overhead cost $11,000 Standard variable overhead cost $5/unit Standard fixed overhead cost $5,600 Overhead flexible budget variance $900 U Production volume variance $700 F Journalize the purchase and usage of direct materials including the related variances.

Litchfield Industries gathered the following information for the month ended June 31: The static budget volume is 5,500 units: Overhead flexible budget: Actual production was 12,000 units. Actual overhead costs were $28,000 for variable costs and $37,000 for fixed costs. Actual machine hours worked were 16,000 hours. What is the standard variable overhead rate per machine hour?

On the line in front of each variance, enter the letters of the items needed to compute that variance. You will enter more than one item on each line. A. Standard overhead allocated to production B. Flexible budget overhead for actual number of outputs C. Actual variable overhead cost D. Fixed overhead costs ______ Overhead flexible budget variance ______ Production volume variance

Madden Corporation manufactures t-shirts, which is its only product. The standards for t-shirts are as follows: During the month of January, the company produced 1,250 t-shirts. Related production data for the month follows: What is the direct labor rate variance for the month?

Historic Restoration Company budgeted 2.5 hours of direct labor per unit at $14.75 per hour to produce 600 replica door knobs. The 600 knobs were completed using 1,200 hours of direct labor at $14.00 per hour. What is the direct labor rate variance?

Newtowne Bakery bakes fresh pies that are very popular with the local residents. For July, Newtowne Bakery budgeted 750 direct labor hours to produce 500 pies. In July, Newtowne Bakery actually produced 520 pies and actually used 800 direct labor hours. The standard hours allowed during July would have been closest to

Razzle Baking Company gathered the following actual results for the current month: Budgeted production and standard costs were: What is the direct materials quantity variance?

If the actual number of units manufactured is less than the number of units anticipated to be manufactured, then the fixed overhead volume variance will always be unfavorable.

A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.

The Perry Corporation recorded the following budgeted and actual information relating to fixed overhead costs for its Z-Line of products: What is Perry's fixed manufacturing overhead budget variance?

Belle Auto Detailing reported the following results for the past week: What is Belle's direct labor efficiency variance?

Howard Industries' actual direct labor cost was $67,000 during the current period. Howard reported an unfavorable direct labor rate variance of $1,800 and a favorable direct labor efficiency variance of $2,900. What was the standard direct labor cost for actual output during the period?