Exam 29: Controlling Manufacturing Costs: Standard Costs

The purchasing department can determine the standard quantity per unit of each type of raw material required to manufacture a product.

A budget performance report compares actual costs for a period with the budgeted costs for that period.

A material usage variance is calculated as:

The salary of the factory supervisor is a good example of

Better Blankets,Inc.makes a SnuggieBlank using flannel material and trim binding.They have instituted a successful JIT system and thus no longer have to stock inventory prior to their production need.The Standard Cost Card for The SnuggieBlank model is shown. The company reported the following results concerning January results: The material price variance for Flannel used in January is:

Weaver Corporation has a three-year contract with a security firm that sets hourly wage rates for the firm at $10 per hour.At 7,000 units of output,factory security costs were $14,000.With an expected increase in production next year to a level of 10,000 units,the anticipated security costs are expected to remain the same.The security costs are an example of fixed factory costs.

Better Blankets,Inc.makes a SnuggieBlank using flannel material and trim binding.They have instituted a successful JIT system and thus no longer have to stock inventory prior to their production need.The Standard Cost Card for The SnuggieBlank model is shown. The company reported the following results concerning January results: The material quantity variance for Trim used in January is:

Reelmates manufactures fishing poles.In a recent month,the company budgeted production of 2,000 poles.Actual production was 2,200.According to the standard cost card,each pole requires 3 feet of fiberglass rod at a cost of $9 per foot.Reelmates used 6,500 feet of rod at a net cost of $65,000 for the period. The material usage variance was:

A price variance for an item is the difference between its actual price and its standard price multiplied by the standard quantity.

The manufacturing cost budget will include both variable and fixed manufacturing costs.

The cost of utilities consumed in the factory is a good example of

Budgeting for manufacturing overhead is the simplest of total product costs to compute as its cost behavior is fixed.

As the level of activity increases,the total fixed costs for the period

The price variance for an item is the difference between its actual price and its standard price,multiplied by the ____________________ quantity.

Regression analysis is a more sophisticated technique than the high-low method,and often leads to higher confidence in the projected costs.

A fixed budget is one that shows only one level of activity.

Petersen Company produces a single product with the following production and average cost data: The best estimate of the monthly fixed cost is:

As the level of activity increases,the fixed cost per unit of activity

A flexible budget that is prepared based on the actual activity level achieved in a period provides a more precise measure of efficiency and control when evaluating actual costs.

Efficiency and cost control can be evaluated by comparing actual overhead costs with the budget for the actual level of operations with the