Exam 25: Budgetary Control and Responsibility Accounting

The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?

Budgeted overhead for Mengotti Company at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed. The overhead volume variance is

A managerial accountant 1) does not participate in the standard setting process. 2) provides knowledge of cost behaviors in the standard setting process. 3) provides input of historical costs to the standard setting process.

Variance reports are

Dains Company planned to produce 20,000 units of product and work at the 60,000 direct labor hours level of activity for 2011. Manufacturing overhead at this level of activity and the predetermined overhead rate are as follows: At the end of 2011, 21,000 units were actually produced and 61,500 direct labor hours were actually worked. Total actual manufacturing overhead costs were $488,000. Instructions Using a two-variance analysis of manufacturing overhead, calculate the following variances and indicate whether they are favorable or unfavorable: (a) Overhead controllable variance. (b) Overhead volume variance.

The overhead volume variance relates only to fixed overhead costs.

The following information was taken from the annual manufacturing overhead cost budget of Flint Company: During the year, 15,000 units were produced, 32,000 hours were worked, and the actual manufacturing overhead costs were $190,000. The actual fixed manufacturing overhead costs did not deviate from the budgeted fixed manufacturing overhead costs. Overhead is applied on the basis of direct labor hours. Instructions (a) Compute the total, fixed, and variable predetermined manufacturing overhead rates. (b) Compute the total, controllable, and volume overhead variances.

The direct labor quantity standard is sometimes called the direct labor

Standards may be useful in setting selling prices for finished goods.

In October, Falk Inc. reports 42,000 actual direct labor hours, and it incurs $192,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Falk's predetermined overhead rate is $5.00 per direct labor hour. Instructions Compute the total manufacturing overhead variance.

Labor data for making one pound of finished product in Ortiz Company are as follows: (1) Price-hourly wage rate $10.00, payroll taxes $0.80, 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.

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

What is a standard cost?

Debit balances in variance accounts represent

Labor efficiency is measured by the

The difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours is the

All of the following are advantages of standard costs except they

Most companies that use standards set them at

An overhead volume variance is calculated as the difference between normal capacity hours and standard hours allowed

In using variance reports, top management normally looks carefully at every variance.