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Exam 7: Performance Evaluation Using Variances From Standard Costs

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Question 71

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Match the following terms with the best definition given.

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Budgeted variable factory overhead

(Actual quantity - Standard quantity) x Standard Price

Direct labor time variance

(Actual price - Standard price) x Actual quantity

Direct labor rate variance

(Actual rate per hour - Standard rate per hour) x Actual hours

Direct materials quantity variance

(Actual direct hours - Standard direct hours) x Standard Rate per Hour

Direct materials price variance

Standard variable overhead for actual units produced

Premises

Budgeted variable factory overhead

Direct labor time variance

Direct labor rate variance

Direct materials quantity variance

Direct materials price variance

Responses

(Actual quantity - Standard quantity) x Standard Price

(Actual price - Standard price) x Actual quantity

(Actual rate per hour - Standard rate per hour) x Actual hours

(Actual direct hours - Standard direct hours) x Standard Rate per Hour

Standard variable overhead for actual units produced

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Premises

Responses

Budgeted variable factory overhead

Direct labor time variance

Direct labor rate variance

Direct materials quantity variance

Direct materials price variance

Premises

Budgeted variable factory overhead

Direct labor time variance

Direct labor rate variance

Direct materials quantity variance

Direct materials price variance

Responses

Question 72

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Tippi Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 17,550 hours at an hourly rate of $15.20 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

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(a) Rate variance = ($15.00 - $15.20) x ...

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Question 73

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Standard costs are determined by multiplying expected price by expected quantity.

An unfavorable volume variance may be due to a failure of supervisors to maintain an even flow of work.

Calculate the Direct Materials Price variance using the above information:

Assuming that the Morocco Desk Co. purchases 6,000 feet of lumber at $6.00 per foot and the standard price for direct materials is $5.00, the entry to record the purchase and unfavorable direct materials price variance is:

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed a:

The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report.

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 and (2) the material entering production. Robin records standards and variances in the general ledger.

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 factory overhead volume variance is:

Though favorable volume variances are usually good news, if inventory levels are too high, additional production could be harmful.

Non-financial measures are often lined to the inputs or outputs of an activity or process.

Periodic comparisons between planned objectives and actual performance are reported in:

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

A negative fixed overhead volume variance can be caused due to the following except:

At the end of the fiscal year, the variances from standard are usually transferred to the finished goods account.

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: What is the amount of the factory overhead controllable variance?

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

Variances from standard costs are usually reported to: