Exam 7: Standard Costing and Variance Analysis

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Refer to Pearce Company Using the three-variance approach,what is the volume variance?

The standard predominantly used in Western cultures for motivational purposes is a(n)____ standard.

A standard cost card is prepared after manufacturing standards have been developed for direct materials,direct labor,and factory overhead.

The use of separate variable and fixed overhead rates is better than a combined rate because such a system

Weslaco Company has made the following information available for its production facility for the current month.Fixed overhead was estimated at 19,000 machine hours for the production cycle.Actual machine hours for the period were 18,900,which generated 3,900 units.

Material purchased (80,000 pieces)	$314,000
Material quantity variance	$6,400 U
Machine hours used (18,900 hours)
VOH spending variance	$50 U
Actual fixed overhead	$60,000
Actual labor cost	$40,120
Actual labor hours	5,900

Weslaco Company's standard costs are as follows: Directmaterind                          20 pieces@$4 per piece Directiaberi                               $1.5$ horssed @$ 6 per hour Variable overhead (applied on a mechine hour basis)   4.8hours @ $\$ 2.50$ per hour Fixed overhead (applied on a machine hour basis)       $4.8$ hours@ $\$ 3$ per hour Determine the following items: a. material purchase price variance b. standard quantity allowed for material c. total standard cost of material allowed d. actual quantity of material used. e. labor rate variance f. standard hours allowe for labor g. total standard cost of labor allowed h. labor efficiency variance i. actual variable overhead incured j. standard machine hours allowed. k. variable overhead efficiency variance l. budgeted fixed overhead m. applied fixed overhead n. fixed overhead spending variance o. volume variance p. total overhead variance

List and discuss briefly the three standards of attainability.

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

Refer to Commodore Company.Using the four-variance approach,what is the variable overhead spending variance?

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

Refer to Commodore Company.Using the four-variance approach,what is the variable overhead efficiency variance?

Standard costs

Ideal standards generally yield favorable variances.

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Refer to Pearce Company Using the four-variance approach,what is the variable overhead efficiency variance?

The variance least significant for purposes of controlling costs is the

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Staudard: Material                 2 pounds per unit @$5.80 per pound Labor                    3 direct labor hours per unit @ $\$ 10.00$ per hour Actual: Material              4,250 pounds purchased and used@$5.65 per poume Labor              $\quad 6,300$ direction hours at $\$ 9.75$ per hour Refer to Jenkins Manufacturing Company.What is the labor rate variance?

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

Refer to Commodore Company.Using the two-variance approach,what is the noncontrollable variance?

The difference between what was paid for inputs and what should have been paid for inputs is referred to as a _________________________.

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units:

Standard:
DLH per unit	3.00
Variable overhead per DLH	$1.80
Fixed overhead per DLH	$3.25
Budgeted variable overhead	$27,250
Budgeted fixed overhead	$49,500

Actual:
Direct labor hours	16,000
Variable overhead	$31,325
Fixed overhead	$49,750

Refer to Commodore Company.Using the two-variance approach,what is the controllable variance?

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance

Adams Corporation manufactures a certain product by mixing three kinds of materials in large batches.The blend master has the responsibility for maintaining the quality of the product,and this often requires altering the proportions of the various ingredients.Standard costs are used to provide material control information.The standard material inputs per batch are:

	Quantity (pounds)	Price (per pound)	Standard Cost of Material
Material A	420	$0.06	$25.20
Material B	70	0.12	8.40
Material C	10	0.25	2.50
Total batch	500		$36.10

The finished product is packed in 50-pound boxes;the standard material cost of each box is,therefore,$3.61. During January,the following materials were put in process: Material A 181,000 Ibs Material B 33,000 Material C Total 220,000 Ibs Inventories in process totaled 5,000 pounds at the beginning of the month and 8,000 pounds at the end of the month.It is assumed that these inventories consisted of materials in their standard proportions.Finished output during January amounted to 4,100 boxes. Required:Compute the total material quantity variance for the month and break it down into mix and yield components.

The sum of the material price variance (calculated at point of purchase)and material quantity variance equals

Variance analysis for overhead normally focuses on