Exam 23: Performance Evaluation Using Variances From Standard Costs

The following information is for the standard and actual costs for the Happy Corporation. Standard Costs: Budgeted units of production - 16,000 (80% of capacity) Standard labor hours per unit - 4 Standard labor rate - $26 per hour Standard material per unit - 8 lbs. Standard material cost - $ 12 per pound Standard variable overhead rate - $15 per labor hour Budgeted fixed overhead - $640,000 Fixed overhead rate is based on budgeted labor hours at 80% capacity. Actual Cost: Actual production - 16,500 units Actual material purchased and used - 130,000 pounds Actual total material cost - $1,600,000 Actual labor - 65,000 hours Actual total labor costs - $1,700,000 Actual variable overhead - $1,000,000 Actual fixed overhead - $640,000 Actual variable overhead - $1,000,000 Determine: (a) the quantity variance, price variance, and total direct materials cost variance; (b) the time variance, rate variance, and total direct labor cost variance; and (c) the volume variance, controllable variance, and total factory overhead cost variance.

Cost systems using detailed estimates of each element of manufacturing cost entering into the finished product are called budgeted cost systems.

Standards are performance goals used to evaluate and control operations.

Standard costs are divided into which of the following components?

Which of the following conditions normally would not indicate that standard costs should be revised?

A negative fixed overhead volume variance can be caused due to the following except:

The Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour. Compute the labor time variance.

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The factory overhead controllable variance is:

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material quantity variance is:

Compute the standard cost for one hat, based on the following standards for each hat:

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $1,000 unfavorable.

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

The formula to compute direct labor time variance is to calculate the difference between

The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% production capacity. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units. Compute the factory overhead controllable variance.

The following data is given for the Taylor Company: Overhead is applied on standard labor hours. Compute the direct labor rate and time variances for Taylor Company.

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

Calculate the variable factory overhead controllable variance using the above information:

The following data relate to direct labor costs for February: What is the direct labor rate variance?

The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% production capacity. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units. Compute the factory overhead volume variance.

The standard cost is how much a product should cost to manufacture.