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Exam 10: Standard Costs and Variances

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Question 51

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The standard labor rate per hour should not include any employment taxes.

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B) False

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Question 52

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Cleland Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $56,250 and budgeted activity of 12,500 hours. During the year, the company completed the following transactions:a. Purchased 29,400 gallons of raw material at a price of $5.20 per gallon.b. Used 25,520 gallons of the raw material to produce 18,300 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 8,850 hours at an average cost of $19.60 per hour.d. Applied fixed overhead to the 18,300 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $41,650. Of this total, -$3,350 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $45,000 related to depreciation of manufacturing equipment.e. Transferred 18,300 units from work in process to finished goods.f. Sold for cash 20,600 units to customers at a price of $26.70 per unit.g. Completed and transferred the standard cost associated with the 20,600 units sold from finished goods to cost of goods sold.h. Paid $55,000 of selling and administrative expenses.i. Closed all standard cost variances to cost of goods sold. Required:1. Compute all direct materials, direct labor, and fixed overhead variances for the year.2. Record the above transactions in the worksheet that appears below. Because of the width of the worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one very wide worksheet. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net). 3. Determine the ending balance (e.g., 12/31 balance) in each account.

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1. Materials price variance = Actual qua...

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Question 53

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Devoto Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for June: The raw materials price variance for the month is closest to:

BressmanIncorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for May: The variable overhead efficiency variance for the month is closest to:

Herriot Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $598,500 and budgeted activity of 31,500 hours. During the year, the company applied fixed overhead to the 37,500 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $609,000. Of this total, $549,000 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $60,000 related to depreciation of manufacturing equipment. Required:Completely record the transactions involving fixed overhead, including any variances, in the worksheet that appears below. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).

Bulluck Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The variable overhead rate variance for July is:

The Haney Corporation has a standard costing system. Variable manufacturing overhead is applied on the basis of direct labor-hours. The following data are available for January:Actual variable manufacturing overhead: $25,500Actual direct labor-hours worked: 5,800Variable overhead rate variance: $600 FavorableVariable overhead efficiency variance: $2,475 UnfavorableThe standard hours allowed for January production is:

Wangerin Corporation applies overhead to products based on machine-hours. The denominator level of activity is 8,900 machine-hours. The budgeted fixed manufacturing overhead costs are $328,410. In April, the actual fixed manufacturing overhead costs were $334,640 and the standard machine-hours allowed for the actual output were 9,200 machine-hours. Required: a. Compute the budget variance for April. b. Compute the volume variance for April.

Decena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. Information concerning the direct labor standards for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor variances for the year: Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When recording the direct labor costs, the Cash account will increase (decrease) by:

Dews Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The fixed manufacturing overhead standards for the company's only product specify 0.90 hours per unit at $20.50 per hour. The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $369,000 and budgeted activity of 18,000 hours. During the year, 14,100 units were started and completed. Actual fixed overhead costs for the year were $386,200.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

Grub Chemical Corporation has developed cost standards for the production of its new chocolate, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO: Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows: What is ChocO's variable overhead efficiency variance?

Chhom Corporation makes a product whose direct labor standards are 0.4 hours per unit and $19.00 per hour. In November the company produced 1,800 units using 760 direct labor-hours. The actual direct labor cost was $13,300.The labor rate variance for November is:

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for January is:

Fluegge Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for December: The raw materials price variance for the month is closest to:

Dalgleish Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $358,750 and budgeted activity of 17,500 hours. During the year, 32,900 units were started and completed. Actual fixed overhead costs for the year were $347,350.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

Kropf Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for September: Required:a. Compute the materials price variance for September.b. Compute the materials quantity variance for September.c. Compute the labor rate variance for September.d. Compute the labor efficiency variance for September.e. Compute the variable overhead rate variance for September.f. Compute the variable overhead efficiency variance for September.

Phann Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $90,000 and budgeted activity of 7,500 hours.During the year, the company completed the following transactions:a. Purchased 59,000 kilos of raw material at a price of $9.20 per kilo.b. Used 51,340 kilos of the raw material to produce 18,300 units of work in process.c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 8,850 hours at an average cost of $23.70 per hour.d. Applied fixed overhead to the 18,300 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $79,400. Of this total, $22,400 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $57,000 related to depreciation of manufacturing equipment.e. Completed and transferred 18,300 units from work in process to finished goods.Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When recording the direct labor costs in transaction (c) above, the Work in Process inventory account will increase (decrease) by:

The following data for November have been provided by Hunn Corporation, a producer of precision drills for oil exploration: Required:Compute the variable overhead rate variances for indirect labor and for power for November. Indicate whether each of the variances is favorable (F) or unfavorable (U).

Bumgardner Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for April: The direct materials purchases variance is computed when the materials are purchased.The raw materials quantity variance for the month is closest to:

Bondi Corporation makes automotive engines. For the most recent month, budgeted production was 1,500 engines. The standard power cost is $3.10 per machine-hour. The company's standards indicate that each engine requires 9.3 machine-hours. Actual production was 1,800 engines. Actual machine-hours were 15,860 machine-hours. Actual power cost totaled $51,593.Required:Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.