Exam 11: Reporting and Analyzing Stockholders Equity

The use of an inexperienced worker instead of an experienced employee can result in a favorable labor price variance but probably an unfavorable quantity variance.

The overhead controllable variance relates primarily to fixed overhead costs.

The formula for the materials price variance is

Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour.During January, 2,000 products are produced using 6,300 direct labor hours.Monster's actual payroll during January was $98,280. What is the labor quantity variance?

Using standard costs

The following information was taken from the annual manufacturing overhead cost budget of Fergie Manufacturing. Variable manufacturing overhead costs \ 92,400 Fixed manufacturing overhead costs \ 55,440 Normal production level in labor hours 30,800 Normal production level in units 5,775 Standard labor hours per unit 4 During the year, 5,600 units were produced, 18,340 hours were worked, and the actual manufacturing overhead was $151,200.Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs.Overhead is applied on the basis of direct labor hours.Fergie's total overhead variance is

The per-unit standards for direct labor are 1.5 direct labor hours at $15 per hour.If in producing 2,400 units, the actual direct labor cost was $46,000 for 3,000 direct labor hours worked, the total direct labor variance is

The balanced scorecard

Dillon has a standard of 1.5 pounds of materials per unit, at $6 per pound.In producing 2,000 units, Dillon used 3,100 pounds of materials at a total cost of $18,135.Dillon's materials price variance is

The total standard cost to produce one unit of product is shown

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

The standard rate of pay is $20 per direct labor hour.If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is

Once set, normal standards should not be changed during the year.

It is possible that a company's financial statements may report inventories at

If 10,000 pounds of direct materials are purchased for $9,300 on account and the standard cost is $.90 per pound, the journal entry to record the purchase is a. Raw Materials Inventory 9,300 Accounts Payable 9,300 b. Work In Process Inventory 9,300 Accounts Payable 9,000 Materials Quantity Variance 300 c. Raw Materials Inventory 9,300 Accounts Payable 9,000 Materials Price Variance 300 d. Raw Materials Inventory 9,000 Materials Price Variance 300 Accounts Pavable 9,300

Hofburg's standard quantities for 1 unit of product include 2 pounds of materials and 1.5 labor hours.The standard rates are $2 per pound and $7 per hour.The standard overhead rate is $8 per direct labor hour.The total standard cost of Hofburg's product is

The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500.If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $12 per direct labor hour, what was the actual rate of pay for direct labor?

An unfavorable materials quantity variance would occur if

Standard cost is the industry average cost for a particular item.

All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound.During December, All Urban purchased 4,200 pounds of material for $14,112 and used the material to produce 500 products.What was the materials price variance for December?