Exam 11: Relevant Costs for Decision Making

The actual direct labour rate for May in dollars per hour was:

The Fletcher Company uses standard costing.The following data are available for October: The standard quantity of material allowed for October production is:

In which of the following situations would the use of a standard cost system to control labour costs not necessarily yield useful results?

A favourable material price variance coupled with an unfavourable material usage variance would most likely result from:

Paul Co.is a business using a normal costing system and applying overhead cost based on direct labour-hours.For April,total fixed overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labour-hours for the month.The following data are available for April's activity: What amount of total fixed overhead cost would have been applied to production for the month of April?

Nova Corporation produces a single product and uses a standard cost system to help control costs.Overhead is applied to production on the basis of machine-hours.According to the company's flexible budget,the following overhead costs should be incurred at an activity level of 18,000 machine-hours (the denominator activity level chosen for the current year):

Determine the materials quantity variance:

Ideal standards,while requiring managers to work to ensure that employees accept them,can be very useful in forecasting and planning.

Flick Company uses a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour-hours.The company's total budgeted variable and fixed manufacturing overhead costs at the denominator level of activity are $20,000 for variable overhead and $30,000 for fixed overhead.The predetermined overhead rate,including both fixed and variable components,is $2.50 per direct labour-hour.The standards call for two direct labour-hours per unit of output produced.Last year,the company produced 11,500 units of product and worked 22,000 direct labour-hours.Actual costs were $22,500 for variable overhead and $31,000 for fixed overhead. Required: a.What is the denominator level of activity? b.What were the standard hours allowed for the output last year? c.What was the variable overhead spending variance? d.What was the variable overhead efficiency variance? e.What was the fixed overhead budget variance? f.What was the fixed overhead volume variance?

The static budget is a good tool for assessing whether variable costs are under control.

The labour rate variance is:

The following overhead data are for a department in a large company.

Determine the labour rate variance

Which of the following is not correct?

To measure controllable production inefficiencies,which of the following is the best basis for a company to use in establishing the standard hours allowed for the output of one unit of product?

The fixed overhead volume variance is due to:

Which of the following statements is not true about the use of a standard cost system?

The direct labour rate variance for March is:

The following overhead data are for a department in a large company.

The labour efficiency variance is: