Exam 10: Standard Costing and Variance Analysis

Gina Production Company uses a standard costing system.The following information pertains to the current year: The overhead rate is based on an activity level of 10,000 hours.Standard cost data for 5,000 units is as follows: What is the fixed overhead volume variance for Gina Production Company?

Bortello Corporation produces high-quality leather boots.The company has a standard cost system and has set the following standards for materials and labor: During the year Bortello produced 125 boots.Actual leather purchased was 1,700 strips, at $16 per strip.There were no beginning or ending inventories of leather.Actual direct labor was 1,500 hours at $15 per hour. - Calculate the labor rate variance and the labor efficiency variance, respectively.

An unfavorable variable overhead spending variance may be caused by

Which of the following is true if the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed? ​

Crawford Company's standard fixed overhead cost is $6.00 per direct labor hour based on budgeted fixed costs of $600,000.The standard allows 1 direct labor hours per unit.During 2011, Crawford produced 110,000 units of product, incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. - What is the activity level on which Crawford based its fixed overhead rate?

Highland Company's standard cost is $250,000.The allowable deviation is ±10%.Its actual costs for six months are ​ ​ The actual cost which is lower than the lower control limit is

Currently attainable standards can be achieved under efficient operating conditions.

Standard costs are developed for direct materials, direct labor, and variable overhead only.

___________________ can provide an initial guideline for setting standards, but should be used with caution because they can perpetuate existing inefficiencies.

Which of the following is used to compute the labor rate variance?

During June, Propene Company produced 20,000 chainsaw blades.The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $4 per pound.The actual purchase price was $5 per pound.Propene determined that it had a favorable materials usage variance of $2,000 for June.What is the journal entry to record the issuance and usage of materials?

An unfavorable usage variance would occur when the actual usage of inputs is greater than the standard usage.

Which of the following is true regarding standard cost systems in manufacturing environments that emphasize continuous improvement and just-in-time manufacturing and purchasing?

Managers develop price standards when they determine what amount should be paid for the quantity of input to be used.

Ideal standards can be achieved only if everything operates perfectly, meaning that they do not allow for any machine breakdowns, slack, etc.

Responsibility for the variable overhead spending variance is usually assigned to

The standard unit cost is developed before the standard costs for direct materials, direct labor, and overhead can be set.

_________________ are capacity costs acquired in advance of usage.

The variable overhead spending variance is conceptually identical to the price variances of materials and labor.

The variable overhead variance is affected by input price changes only.