Exam 10: Standard Costs and Overhead Analysis

The Alpha Company produces toys for national distribution. Standards for a particular toy are: Materials: 12 grams per unit at $0.56 per gram. Labour: 2 hours per unit at $2.75 per hour. During the month of December, the company produced 1,000 units. Information for the month follows: Materials: 14,000 grams were purchased and used at a total cost of $7,140. Labour: 2,500 hours worked at a total cost of $8,000. -What was the materials quantity variance?

Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: The company had no beginning inventories of any kind on January 1. Variable manufacturing overhead is applied to production on the basis of direct labour hours. The results of the company's operations during January are as follows: -What was the materials price variance for January?

The Tate Company uses a standard costing system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs). The company recorded the following costs and activity for September: -What was the amount of fixed overhead cost contained in the company's flexible budget for manufacturing overhead for September?

The Litton Company has established standards as follows: Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials price variance?

Standards can be either theoretical ("impossible dream")or practical (attainable all the time or only part of the time).Theoretically either can be used as the framework for the budgeting process. Required: a)What is the major distinction,if any,between a standard amount and a budgeted amount? b)Which standard,theoretical or practical,provides the better benchmark for evaluating subsequent performance in a budgeting system? Explain.

The Albright Company uses standard costing and has established the following standards for its single product: During November, the company made 4,000 units and incurred the following costs: The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials quantity variance for November?

A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company uses machine hours as its measure of activity. The following data pertain to operations for the last month: -What was the variable overhead spending variance for the month?

Dodge Company produces a single product.The company has set the following standards for materials and labour: During the past month, the company purchased 7,000 kilograms of direct materials at a cost of $26,250. All of this material was used in the production of 1,300 units of product. Direct labour cost totalled $55,125 for the month. The following variances have been computed: Required: a) For direct materials, compute the standard price per kilogram, the standard quantity allowed for materials in total for the month's production, and the standard quantity per unit of product. b) For direct labour, compute the actual direct labour cost per hour for the month and the labour rate variance

The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following: Variable Factory Overhead: 3.0 DLHs @ $4.00 per DLH. Fixed Factory Overhead: 3.0 DLHs. @ $3.50 per DLH. For January, the company incurred $22,000 of actual fixed overhead costs and recorded an $875 favourable volume variance. -What was the denominator level of activity in direct labour hours (DLHs)used by Claus in setting the predetermined overhead rate for January?

The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following: -What is the standard variable overhead rate per direct labour hour?

The Tate Company uses a standard costing system in which manufacturing overhead is applied to units of product on the basis of direct labour hours (DLHs). The company recorded the following costs and activity for September: -What was the amount of fixed manufacturing overhead cost applied to work in process during September?

(Appendix 10B)What does a credit balance in a direct labour efficiency variance account indicate?

The Litton Company has established standards as follows: Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials quantity variance?

All cost variances should be considered exceptions that require the attention of management.

(Appendix 10B) The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip: There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000. Used 12,000 board metres to produce 2,100 Mips. Used 1,700 hours of direct labour time at a total cost of $20,060. -(Appendix 10B)To record the incurrence of direct labour cost and its use in production,the general ledger would include what entry to the Labour Rate Variance account?

The Albright Company uses standard costing and has established the following standards for its single product: During November, the company made 4,000 units and incurred the following costs: The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the materials price variance for November?

Jaune Company uses a standard cost system that applies manufacturing overhead to units of product on the basis of direct labour hours (DLHs).The following data pertain to last month's operations: Budgeted Fixed Overhead Costs \ 5,000 Actual Fixed Overhead Costs \ 5,500 Standard Hours Allowed for Output 2,400 Predetermined Overhead Rate ( \2 variable +\ 3 fixed) \ 5 per DLH What was the fixed overhead budget variance?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: -What was the variable overhead spending variance for the month?

The Litton Company has established standards as follows: Actual production figures for the past year are given below. The company records the materials price variance when materials are purchased. The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the variable overhead efficiency variance?

You have just been hired as the controller of the Eastern Division of Global Manufacturing.Performance records for last year are incomplete,with only the following data available: Variable Overhead Rate \ 3,00 per direct labour hour Budgeted Fixed Overhead \ 84,800 Total Actual Overhead Cost \ 262,500 Fixed Overhead Budget Variance \ 7,200 unfavourable Variable Overhead Efficiency Variance \ 15,000 unfavourable Actual Direct Labour Hours Worked 55,000 direct labour hours Denominator Activity Level 53,000 direct labour hours Standard Hours per Unit 2 direct labour hours Required: Answer each of the questions below and provide a summary of the overhead variances to explain the total over-applied or under-applied overhead. It may be helpful to prepare the variance analysis diagrams for both the variable and fixed overhead variances. Budgeted fixed overhead rate, actual fixed overhead, actual variable overhead, variable overhead spending variance, variable overhead applied, standard hours allowed, actual units produced, fixed overhead applied, fixed overhead volume variance, and the amount of over or under-applied overhead.