Exam 11: Standard Costs and Variance Analysis

During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: Direct materials \ 43,000 Direct labour 67,000 Variable overhead 30,000 Fixed overhead 25,000 Variances for the period are: Direct materials price 400 Direct materials efficiency 500 Direct labour price 600 Direct labour efficiency 200 Variable overhead spending 300 Variable overhead efficiency 100 Fixed overhead spending 500 Fixed overhead production volume 1,000 The variable overhead allocated was:

The fixed overhead spending variance measures:

The direct materials price variance compares:

When a large variance is investigated:

If a variance analysis shows that operations are better than expected, managers should:

Standard costing allows management to: I. Measure performance II. Identify inefficiencies III. Control costs

A contract with a new supplier may cause an unfavourable materials price variance.

The cost categories that are measured and monitored in a given organization depend, in part, on the costs that managers consider important.

The standard cost of direct materials is computed as the standard price per unit of input times the standard quantity per unit of input.

Intentional worker damage is most likely to result in which type of variance?

Variance analysis involves the steps listed below. In which order should the steps be performed? 1) Calculate variances 2) Choose variances for further investigation 3) Draw conclusions and take action 4) Identify reasons for variances

Variance analysis includes which of the following processes? I. Calculating variances II. Analyzing the reasons variances occurred III. Predicting variances in future periods

Dem Mfg. has gathered the following data in preparing to record their direct labour payroll costs for the week: Actual hours morked 18,500 Standard hours allowed 20,000 Total direct labour variance \ 8,300 Direct labour price variance \ 3,700 The actual direct labour costs were:

Standard costs are used to:

Which of the following is a possible cause of an unfavourable materials efficiency variance?

Calculating variances is a necessary, but not sufficient, step for completing a variance analysis.

Pardee, Inc. completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following: Efficiency variance \ 4,500 Unfavourable Standard price \ 10 per unit Actual units purchased 9,000 Inventory decrease 1,000 units Budget variance \ 900 Favourable The standard cost of the direct materials used was:

Dem Mfg. has gathered the following data in preparing to record their direct labour payroll costs for the week: Actual hours morked 18,500 Standard hours allowed 20,000 Total direct labour variance \ 8,300 Direct labour price variance \ 3,700 The actual direct labour price was:

Everett, Inc. budgeted $1,488,000 for total overhead. The standard variable overhead rate was $2 per direct labour hour, or $6 per unit, based on an anticipated activity level of 600,000 direct labour hours. During the year 220,000 units were produced. Fixed overhead costs incurred were $300,000. The variable overhead budget variance was $19,800 unfavourable, and the actual variable overhead rate was $2.10 per direct labour hour. The variable overhead efficiency variance was:

Expected costs per unit of input are called: