Exam 9: Standard Costing and Flexible Budgeting

Consider the following information: Actual direct labour hours \ 44,500 Standard direct labour hours 45,000 Total actual direct labour cost 315,950 Direct labour efficiency variance 3,400 The direct-labour rate variance is:

Cannington Company manufactures a product that has the following standard costs: Direct materials: 40 yards at \ 2.70 per yard \ 108 Direct labour: 8 hours at \ 18.00 per hour 144 Total \ 252 The following information pertains to July: Direct material purchased: 42,500 yards at $\$ 2.78$ per yard, or $\$ 118,150$ Direct material used: $36.000$ yards Direct labour: 7,500 hours at $\$ 18.30$ per hour, or $\$ 137.250$ Actual completed production: $1.050$ units Required: Calculate the direct-material price and quantity variances, and the direct-labour rate and efficiency variances. Indicate whether each variance is favourable or unfavourable.

A direct-material quantity variance can be caused by all of the following except:

Which variance is commonly associated with measuring the cost of under- or over-utilization of plant capacity?

Bargain Boys Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 14,800 Actual fixed overhead incurred: $791,000 Standard fixed overhead rate: $13 per hour Budgeted fixed overhead: $780,000 Planned level of machine-hour activity: 60,000 If Bargain Boys estimates four hours to manufacture a completed unit, the fixed-overhead volume variance would be:

Livesey Incorporated, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended: Actual units produced: 12,000 Actual variable overhead incurred: $77,700 Actual machine hours worked: 18,800 Standard variable overhead cost per machine hour: $4.50 If Livesey estimates 1.5 hours to manufacture a completed unit, the company's variable-overhead spending variance is:

Dance Company has a standard variable overhead rate of $4.50 per machine hour, and each unit produced has a standard time allowed of three hours. The company's static budget was based on 46,000 units. Actual results for the year follow: Actual units produced: 42,000 Actual machine hours worked: 120,000 Actual variable overhead incurred: $520,000 Dance's variable-overhead efficiency variance is:

The following information relates to Barrow Company for the period just ended: Standard variable overhead rate per hour \ 1 Standard fixed-overhead rate per hour \ 2 Planned monthly activity 40.000 machine hours Actual production completed 82,000 units Standard machine processing lime Two units per hour Actual variable overhead \ 37,000 Actual total overhead \ 121.000 Actual machine hours worked 40.500 Barrow's entire overhead is variable or fixed in nature. Required: A. Calculate the spending and efficiency variances for variable overhead. B. Calculate the budget and volume variances for fixed overhead.

Smollett Manufacturing Company has a standard variable overhead rate of $5 per machine hour, with each completed unit expected to take three machine hours to produce. A review of the company's accounting records found the following: Actual production: 19,500 units Variable-overhead efficiency variance: $9,000U Variable-overhead spending variance: $21,000F What was Smollett's actual variable overhead during the period?

Tetra Corporation produces glass shelves that are used in furniture. Each shelf requires 4.0 pounds of raw material at a cost of $3 per pound. Unfortunately, given the nature of the manufacturing process, one out of every four shelves is chipped, scratched, or broken at the beginning of production and has to be scrapped. On average, 25 good shelves are completed during each hour. Labourers who work on these units are paid $18 per hour. Required: A. Distinguish between perfection standards and practical standards. B. Who within an organization would be in the best position to assist in setting the: 1. direct-material price standard? 2. direct-material quantity standard? 3. direct-labour efficiency standard? 4. Calculate a practical direct-material and direct-labour standard for each good shelf produced.

A perfection standard:

A fixed-overhead volume variance would normally arise when:

Which of the following mathematical expressions is found in a typical flexible-budget formula for overhead?

Which of the following would not be considered if a company desires to establish a series of practical manufacturing standards?

Dahlia Company operates a manufacturing facility in the BC Interior. At the beginning of 2012, Dahlia established the following standards for direct materials and direct labour: Direct materials: $2.0$ pounds at $\$ 4.10$ Direct labor: $1.5$ hours at $\$ 7$ per hour During 2012, the following additional information was extracted from Dahlia's accounting records: Actual production: 32,000 completed units Direct materials purchased: 70,000 pounds at $\$ 3.82$ , or $\$ 267,400$ Direct materials consumed: 65,000 pounds Actual labor incurred: 51,000 hours at $\$ 6.30$ , or $\$ 321,300$ Direct-labor rate variance: $\$ 37,200$ favorable Direct-labor efficiency variance: $\$ 22,500$ unfavorable Required: Prepare journal entries to record the. A. Purchase of direct materials. B. Usage of direct materials. C. Incurrence of direct labour costs.

A direct-labour efficiency variance cannot be caused by:

Which of the following would be considered if a company desires to establish a series of practical manufacturing standards?

A production supervisor generally has significant influence over the:

Master Products has the following information for the year just ended: Budget Actual Sales in units 14,000 Sales \ 150,000 \ 147,000 Less: Variable expenses 90,000 82,600 Contribution margin 60,000 \ 64,400 Less: Fixed expenses 40,000 Operating income 25,000 \ 24,400 The company's sales-price variance is:

An activity-based flexible budget differs from a conventional flexible budget in that: