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Exam 22: Performance Evaluation Using Variances From Standard Costs

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Question 61

True/False

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Standards are more widely used for nonmanufacturing activities than for manufacturing activities.

A) True
B) False

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Question 62

Multiple Choice

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The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as follows: Standard Costs Direct labor 7,500 hours @ $11.80 Actual Costs Direct labor 7,400 hours @ $11.40 The direct labor time variance is

A) $1,180 favorable
B) $1,140 unfavorable
C) $1,180 unfavorable
D) $1,140 favorable

E) A) and B)
F) C) and D)

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Question 63

Multiple Choice

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The amount of the variable factory overhead controllable variance is

The following information is for the standard and actual costs for the Happy Corporation: Standard Costs: Budgeted units of production - 16,000 [80% or normal) capacity] Standard labor hours per unit - 4 Standard labor rate - $26 per hour Standard material per unit - 8 lbs. Standard material cost - $12 per pound Standard variable overhead rate - $15 per labor hour Budgeted fixed overhead - $640,000 Fixed overhead rate is based on budgeted labor hours at 80% or normal) capacity. Actual Cost: Actual production - 16,500 units Actual material purchased and used - 130,000 pounds Actual total material cost - $1,600,000 Actual labor - 65,000 hours Actual total labor costs - $1,700,000 Actual variable overhead - $1,000,000 Actual fixed overhead - $640,000 Determine: a) the direct materials quantity variance, price variance, and total cost variance; b) the direct labor time variance, rate variance, and total cost variance; and c) the factory overhead volume variance, controllable variance, and total factory overhead cost variance. Note: If following text formulas, do not round interim calculations.)

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Variances from standard costs are reported to

Standard and actual costs for direct labor for the manufacture of 1,000 units of product were as follows: Actual costs 950 hours at $37 Standard costs 975 hours at $36 Determine the direct labor a) time variance, b) rate variance, and c) total direct labor cost variance.

Changes in technology, machinery, or production methods may make past cost data irrelevant when setting standards.

Hint: Determine units produced at normal capacity.)

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?

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a

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.

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The fixed factory overhead volume variance is

Calculate the direct labor time variance.

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Actual costs 1,550 lbs. at $9.10 Standard costs 1,600 lbs. at $9.00 Determine the direct materials a) quantity variance, b) price variance, and c) total cost variance.

The unfavorable volume variance may be due to all of the following factors except

Normally, standard costs should be revised when labor rates change to incorporate new union contracts.

Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

The labor rate variance is

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?