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Exam 23: Performance Evaluation Using Variances From Standard Costs

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Question 51

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If a company records inventory purchases at standard cost and also records purchase price variances, prepare the journal entry for a purchase of widgets that were bought at $7.45 per unit and have a standard cost of $7.15. The total amount owed to the vendor for this purchase is $33,525.

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Question 52

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A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation.

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Question 53

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The formula to compute direct labor rate variance is to calculate the difference between

Japan 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 19,250 hours at an hourly rate of $14.90 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?

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.

Favorable volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

The variance from standard for factory overhead resulting from incurring a total amount of factory overhead cost that is greater or less than the amount budgeted for the level of operations achieved is termed controllable variance.

Standard and actual costs for direct labor for the manufacture of 1,000 units of product were as follows: Determine the (a) time variance, (b) rate variance, and (c) total direct labor cost variance.

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

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows: Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.

Volume variance measures fixed factory overhead.

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 relate to direct labor costs for the current period: What is the direct labor rate variance?

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

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.

Calculate the Direct Materials Quantity variance using the above information:

Standards that represent levels of operation that can be attained with reasonable effort are called:

Prepare an income statement for the year ended December 31, 2012, through gross profit for Aframe Company using the following information. Assume Aframe Company sold 8,600 units at $125 per unit. (Note: Normal production is 9,000 units)

The following data relate to direct labor costs for February: What is the direct labor time variance?

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: The amount of the direct materials quantity variance is: