Exam 10: Standard Costs and Overhead Analysis

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 labour rate variance for November?

Direct labour hour is often assumed as the sole cost driver in analyzing the total variable overhead cost variance into spending and efficiency variances. Required: a)Will direct labour cost ever be a better cost driver of variable overhead costs than direct labour hour? Explain b)How is the standard variable overhead rate different from the standard labour rate in variance analysis? Explain.

From a standpoint of cost control,the most effective time to recognize material price variances is when the materials are placed into production.

During March,Younger Company's direct material costs for product T were as follows: Actual unit purchase price Standard quantity allowed for actual Production Quantity purchased and used for actual Production Standard unit price \ 6.50 per metre 2,100 metres 2,300 metres \ 6.25 per metre What was Younger's material quantity variance for March?

The fixed overhead budget variance is NOT controllable by managers because fixed costs are NOT controllable.

The Fletcher Company uses standard costing.The following data are available for October: Actual quantity of direct materials used 23,500 kilograms Standard price of direct materials \ 2 per kilogram Materials quantity variance \ 1,000 favourable What was the standard quantity of material allowed for October production?

The fixed overhead volume variance is due to which of the following?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: Required: a) What is the materials price variance for the month? b) What is the materials quantity variance for the month?

An outdoor barbecue grill manufacturer has a standard costing system based on direct labour hours (DLHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

(Appendix 10A)Pictou Company uses two raw materials,X and Y,in the manufacture of its only product: Gizmo.Both materials are very close substitutes.The standard proportions for the manufacture of a unit of Gizmo are 6 units of X and 4 units of Y.The unit standard prices of X and Y are $16 and $20,respectively.During the month of August,the company used 3,000 units of X and 1,800 units of Y to produce 460 units of Gizmo. Required: a)Calculate the following variances for raw materials X and Y: (i)Quantity variances. (ii)Mix variances. (iii)Yield variances b)Suppose you are made aware that the assistant production manager recommended the departure from the standard mix.Should the assistant manager be commended? Explain

The fixed portion of the predetermined overhead rate is used for product costing purposes and has no significance in terms of cost control.

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 total variance for variable overhead for January?

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March: -What was the fixed overhead volume variance for March?

A manufacturer of playground equipment has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -How much fixed overhead was applied to products during the period,rounded to the nearest dollar?

(Appendix 10B)The Lahn Company produces and sells a single product.Standards have been established for the product as follows: Actual cost and usage figures for the past month follow: Required: Prepare journal entries to record: a) The purchase of raw materials. b) The usage of raw materials in production. c) The incurrence of direct labour cost.

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 labour efficiency variance for November?

Which department is usually held responsible for an unfavourable materials quantity variance?

The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: -What was the actual direct labour rate for May in dollars per hour?

A manufacturer of playground equipment has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -What was the predetermined fixed overhead rate,rounded to the nearest cent?

Flick Company uses a standard cost system. 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?