Exam 10: Standard Costs for Control: Direct Material and Direct Labour

Cultco Company Ltd has set the following direct material standards per unit of product: 2.5 kg @ $3.00 per kg; $7.50 per unit. During April, actual direct material purchased and used amounted to 8000 kg at a cost of $3.10 per kg. Actual production amounted to 3000 units. Determine the total material variance.

Which of the following statements is false?

Which of the following statements is/are true?

A material price variance is shown by

The following data relates to QA firm: Cost standards: Actual results: 7800 units were produced. Calculate the direct material price variance, based on the quantity of materials purchased.

A standard cost is

Which of the following statements is false?

Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units. During June, actual production amounted to 420 units. All direct material was purchased and used this month. Actual cost amounted to: Determine the direct labour rate variance for June production.

Twister Pty Ltd has set direct labour standards of 3 hours per unit and $5 per hour. During the month 2900 hours at a total cost of $17 400 were used to produce 1000 units. Determine the direct labour efficiency variance.

I Wear Optometry determined the following variances had occurred during the month of September: The company made 1600 pairs of eyeglasses during the month using 2000 direct labour hours. The standard wage rate per hour is $14.50. What is the number of standard hours allowed for one pair of eyeglasses?

A material price variance of $5000 (unfavourable) for a period has been calculated. The actual unit price was $9.00. The actual quantity of material used was 6000. The standard quantity of materials was 5000. Calculate the standard unit price for a unit of raw materials for the period (round where necessary).

Variances are used for control purposes by highlighting problem areas, such as using too many materials, so that corrective action can be taken.

Which of the following statements regarding allowances for spoilage and/or inefficiency is not correct?

Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units. During June, actual production amounted to 420 units. All direct material was purchased and used this month. Actual cost amounted to: Determine the direct material price for June production.

Product costs can be used in both financial and management accounting.

A material quantity variance is shown by

For a particular period a firm worked a larger number of overtime hours than planned in order to complete a larger than usual number of job orders. The jobs were all completed within the standard time allowed for each job. Assuming only the facts given, what variance(s) would result from these facts?

Interaction of materials and labour variances For the quarter just ended, BoSan Pty Ltd reported the following variances in one of its manufacturing departments: The sum of the favourable variances above exceeded the unfavourable materials price variance by a considerable amount. The quality of the output from the department was the same as usual. Practically all of the raw material used in this quarter was purchased in this quarter. Is there any connection between these variances? If so, explain.

When developing a perfection standard for direct labour, a manager should include which of the following? I Labour on-costs Ii Occasional inefficiencies and machine breakdowns Iii A minimal acceptable idle time

When a variance is identified as insignificant, managers need to find out the cause of the variance.