Exam 12: Activity Analysis: Costing and Management

The standard cost card for one unit of a certain finished product shows the following: Standard Quantity or Hours Standard Price or Rate Direct materials 10 pounds £? per pound Direct labour 2.5 hours £16 per hour Variable manufacturing overhead 1.5 hours £10 per hour If the total standard variable cost for one unit of finished product is £85, then the standard price per pound for direct materials is

The following standards for variable manufacturing overhead have been established for a company that makes only one product:Standard hours per unit of output $\quad$$\quad$ 7.0 hours Standard variable overhead rate $\quad$$\quad$ £ 11.35 per hour The following data pertain to operations for the last month: Actual hours 7,500 hours Actual total variable overhead cost £87,000 Actual output 1,000 units - What is the variable overhead efficiency variance for the month

The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in response to the demands of the production manager due to a mistake in production scheduling. The materials were shipped by airfreight at a rate higher than ordinarily charged for shipment by truck, resulting in an unfavourable materials price variance. The lower quality material proved to be unsuitable on the production line and resulted in excessive waste. In this situation, who should be held responsible for the materials price and quantity variances. Materials Price Variance Materials Quantiy Variance A. Purchasing Agent Purchasing Agent B. Production Manager Production Manager C. Production Manager Purchasing Agent D. Purchasing Agent Production Manager

Which department should usually be held responsible for an unfavourable materials price variance

The general model for calculating a quantity variance is

List who is responsible for each of the variances listed below. Where there might be more than one person state each. Comment on any interaction between the variances. 1 Unfavourable material quantity 2 Unfavourable material price 3 Unfavourable labour rate 4 Unfavourable labour efficiency

The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August: Actual cost of direct material purchased and used: £65,560 Material price variance: £5,960 unfavourable Total materials variance: £22,360 unfavourable Standard cost per pound of material: £4 Standard cost per direct labour hour: £5 Actual direct labour hours: 6,500 hours Labour efficiency variance: £3,500 favourable Standard number of direct labour hours per unit of Roff: 2 hours Total labour variance: £400 unfavourable - The labour rate variance was

In general, the purchasing agent is responsible for the material price variance

Managers should exercise considerable care in their use of a standard costing system

In some cases a favourable variance can be as bad or worse as an unfavourable variance

Standard Costing is not worth bothering with as there are too many problems and it is so costly in management time etc. Discuss.

The Cox Company uses standard costing. The following data is available for April: Actual quantity of direct materials used 12,200 gallons Standard price of direct materials £4 per gallon Material quantity variance £2,000 unfavourable The standard quantity of material allowed for April production is

The following labour standards have been established for a particular product: Standard labour hours per unit of output 9.0 hours Standard labour rate £15.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 8,100 hours Actual total labour cost £119,880 Actual output 800 units What is the labour rate variance for the month

The Geurtz Company uses standard costing. The company makes and sells a single product called a Roff. The following data are for the month of August: Actual cost of direct material purchased and used: £65,560 Material price variance: £5,960 unfavourable Total materials variance: £22,360 unfavourable Standard cost per pound of material: £4 Standard cost per direct labour hour: £5 Actual direct labour hours: 6,500 hours Labour efficiency variance: £3,500 favourable Standard number of direct labour hours per unit of Roff: 2 hours Total labour variance: £400 unfavourable - The actual material cost per pound was

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: standard Hours or Quantity standard price or Rate Direct materials 3.0 pounds £0.75 per pound Direct labour 0.4 hours £12.00 per hour Variable manufacturing overhead 0.4 hours £9.00 per hour During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of direct labour hours. The following events occurred during March: 8,600 pounds of sand were purchased at a cost of £7,310. 7,200 pounds of sand were used for core tests. 840 actual direct labour hours were worked at a cost of £8,610. Actual variable manufacturing overhead incurred was £3,200. - The materials price variance for March is

The following labour standards have been established for a particular product: Standard labour hours per unit of output 8.10 hours Standard labour rate £14.40 per hour The following data pertain to operations concerning the product for the last month:Actual hours worked $\quad 8,700$ hours Actual total labour cost $£ 129,195$ Actual output $\quad$ $\quad$ $\quad$ 1,000 units - What is the labour rate variance for the month?

Palo Corp. manufactures one product with a standard direct labour cost of 2 hours at £6.00 per hour. During March, 500 units were produced using 1,050 hours at £6.10 per hour. The unfavourable direct labour efficiency variance is

Generally speaking, it is the responsibility of the production department to see that material usage is kept in line with standards

Home Company manufactures tables with vinyl tops. The standard material cost for the vinyl used per Type-R table is £7.80 based on six square feet of vinyl at a cost of £1.30 per square foot. A production run of 1,000 tables in January resulted in usage of 6,400 square feet of vinyl at a cost of £1.20 per square foot, a total cost of £7,680. The quantity variance resulting from the above production run was

The Swenson Company has a standard costing system. The following data are available for June: Actual quantity of direct materials purchased 35,000 pounds Standard price of direct materials £4 per pound Material price variance £7,000 unfavourable Material quantity variance £4,200 tavourable The actual price per pound of direct materials purchased in June is