Exam 25: Standard Costs and Balanced Scorecard

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 5600 units were produced 18340 hours were worked and the actual manufacturing overhead was $151200. Actual fixed manufacturing overhead costs equaled budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. - Fergie's volume overhead variance is

The total variance is $35000. The total materials variance is $14000. The total labor variance is twice the total overhead variance. What is the total overhead variance?

Unfavorable materials price and quantity variances are generally the responsibility of the Price Quantity A) Purchasing department Purchasing Department B) Purchasing department Production Department C) Production department Production Department D) Production Department Purchasing Department

Shipp Inc. manufactures a product requiring two pounds of direct material. During 2016 Shipp purchases 24000 pounds of material for $99200 when the standard price per pound is $4. During 2016 Shipp uses 22000 pounds to make 12000 products. The standard direct material cost per unit of finished product is

The difference between actual hours times the actual pay rate and actual hours times the standard pay rate is the labor _________________ variance.

Seven Manufacturing Corporation uses both standards and budgets. The company estimates that production for the year will be 100000 units of Product Fast. To produce these units of Product Fast the company expects to spend $600000 for materials and $800000 for labor. Instructions Compute the estimates for (a) a standard cost and (b) a budgeted cost.

A favorable variance

Fulmar Manufacturing Co. is the manufacturer of miniature models especially of automobiles with historical interest. The company is developing new standard costs. Patrick Webb suggests that the new standards for materials should not include any waste for liquid plastics that spill out of the molds. "After all" he says "we're trying to be a world class company. When we build in waste we tell the workers it's okay to waste some." Sharon Berry another manager disagrees. "If we don't allow for some normal human error" she says "we'll have a mighty unhappy work force. Also I think that these kinds of perfection standards exploit the workers. I certainly wouldn't want to be held up to perfection every day-what could I do but fail?" The argument continued. Finally the standards were prepared. All standards were prepared according to normal expected performance except that for materials an ideal standard was used. Sharon still maintaining the unfairness of the system refused to hold her workers accountable for materials quantity variances. Required: 1. Are ideal standards unethical? Explain briefly. 2. Is it unethical for Sharon to refuse to support the standards? Explain.

A two-variance approach to analyzing overhead variances requires the calculation of the overhead _________________ variance and the overhead ________________ variance.

Labor data for making one pound of finished product in Curling Co. are as follows: (1) Price-hourly wage rate $11.00 payroll taxes $1.80 and fringe benefits $1.20. (2) Quantity-actual production time 1.1 hours rest periods and clean up 0.25 hours and setup and downtime 0.15 hours. Instructions Compute the following. (a) Standard direct labor rate per hour. (b) Standard direct labor hours per pound. (c) Standard cost per pound.

The most rigorous of all standards is the

Presented below is a flexible manufacturing budget for Ganem Manufacturing which manufactures fine timepieces: The company applies the overhead on the basis of direct labor hours at $7.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5400 timepieces with 2700 actual hours of direct labor. Normal capacity is 3200 hours. Actual overhead was $20200. Instructions (a) Compute the controllable and volume overhead variances. (b) Prepare the entries for manufacturing overhead during the period and the entry to recognize the overhead variances at the end of the period.

Using standard costs

Which one of the following statements is true?

Jet Industries purchased 6000 units of raw material on account for $17600 when the standard cost was $18000. Later in the month Jet Industries issued 5600 units of raw materials for production when the standard units were 5800. Instructions Journalize the transactions for Jet Industries to account for this activity.

The investigation of a materials quantity variance usually begins in the

The total overhead variance is the difference between the

Variance analysis facilitates the principle of "management by exception."

The standard direct materials quantity does not include allowances for

In using variance reports management looks for