Exam 12: Activity Analysis: Costing and Management

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 total number of units of Roff produced during August was

The materials price variance should be computed when materials are purchased

Managers should only concentrate on meeting a standard

An unfavourable material quantity variance indicates that

Management by exception can blind management from what else is going on in the business. Discuss

List the 'pros' and 'cons' of using ideal standards. Do you think they are a good idea?

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 direct labour rate per hour was

Standards are set for units; budgets are expressed in total pounds

Ideal standards should be used for forecasting and planning

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 quantity variance for March 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 spending variance for the month

An unfavourable direct labour efficiency variance could be caused by

The Wright Company has a standard costing system. The following data are available for September: Actual quantity of direct materials purchased 25,000 pounds Standard price of direct materials £2 per pound Material price variance £2,500 unfavourable The actual price per pound of direct materials purchased in September is

If variable manufacturing overhead is applied on the basis of direct labour-hours and the variable overhead spending variance is favourable, then the

Analyse the problems illustrated by the scenario painted in "Management Accounting in action" on page 478 in Chapter 12. Are they mainly people or system problems?

A favourable material price variance coupled with an unfavourable material usage variance would most likely result from

An unfavourable material quantity variance indicates that the actual usage of material exceeds the standard material allowed for output

The material price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production

If managers are insensitive and use variances as a club morale will suffer

Variable manufacturing overhead is applied to products on the basis of standard direct labour-hours. If the direct labour efficiency variance is unfavourable, the variable overhead efficiency variable will be