Question 1

The following standards for variable manufacturing overhead have been established for a company that makes only one product:  The following data pertain to operations for the last month:  What is the variable overhead efficiency variance for the month?

Accepted Answer

SH = 600 units F1F1F1S1F1F1F10 2.7 hours per unit = 1,620 hours
Variable overhead efficiency variance = (AH - SH)SR
= (2,400 hours - 1,620 hours)$13.05 per hour
= (780 hours)$13.05 per hour = $10,179 U

Question 2

The following materials standards have been established for a particular product:   The following data pertain to operations concerning the product for the last month:  What is the materials price variance for the month?

Accepted Answer

AQ F1F1F1S1F1F1F10 AP = $63,200
Materials price variance = AQ (AP - SP)= AQ F1F1F1S1F1F1F10 AP - AQ F1F1F1S1F1F1F10 SP
Materials price variance = $63,200 - (3,200 feet F1F1F1S1F1F1F10 $19.25 per foot)
= $63,200 - $61,600 = $1,600 U

Question 3

The standard cost card for a product shows that the product should use 4 kilograms of material B per finished unit and that the standard price of material B is $4.50 per kilogram.During April,when the budgeted production level was 1,000 units,1,040 units were actually made.A total of 4,100 kilograms of material B were used in production and the inventories of material B were reduced by 300 kilograms during April.The total cost of material B purchased during April was $14,400.The material variances for material B during April were:

Accepted Answer

Beginning balance of raw materials + Purchases of raw materials = Materials used in production + Ending balance of raw materials
Purchases of raw materials = Materials used in production + Ending balance of raw materials - Beginning balance of raw materials
Purchases of raw materials = Materials used in production + (Ending balance of raw materials - Beginning balance of raw materials)= 4,100 kilograms + (-300 kilograms)= 3,800 kilograms
Materials price variance = AQ (AP - SP)
= $14,400 - (3,800 kilograms F1F1F1S1F1F1F10 $4.50 per kilogram)
= $14,400 - $17,100 = $2,700 F
Materials quantity variance = (AQ - SQ)SP = AQ F1F1F1S1F1F1F10 SP- SQ F1F1F1S1F1F1F10 SP
= $18,450 - (1,040 units F1F1F1S1F1F1F10 4 kilograms per unit)F1F1F1S1F1F1F10 $4.50 per kilogram
= $18,450 - $18,720 = $270 F

Question 4

The Wright Company has a standard costing system.The following data are available for September:  The actual price per pound of direct materials purchased in September is:

Accepted Answer

Materials price variance = AQ (AP - SP)
25,000 pounds (AP - $2 per pound)= $2,500 U
25,000 pounds F1F1F1S1F1F1F10 AP - $50,000 = $2,500 U
25,000 pounds F1F1F1S1F1F1F10 AP - $50,000 = $2,500
25,000 pounds F1F1F1S1F1F1F10 AP = $52,500
AP = $52,500 F1F1F1S1F1F1F10 25,000 pounds
AP = $2.10 per pound

Question 5

The following materials standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the materials quantity variance for the month?

Accepted Answer

SQ = 7.3 pounds per unit F1F1F1S1F1F1F10 1,000 units = 7,300 pounds
Materials quantity variance = (AQ - SQ)SP
= (5,900 pounds - 7,300 pounds)$14.45 per pound
= (-1,400 pounds)$14.45 per pound = $20,230 F

Question 6

The Reedy Company uses a standard costing system.The following data are available for November:  The actual direct labor rate for November is:

Accepted Answer

Labor rate variance = AH(AR - SR)
5,800 hours (AR - $9 per hour)= -$1,160
5,800 hours F1F1F1S1F1F1F10 AR - $52,200 = -$1,160
5,800 hours F1F1F1S1F1F1F10 AR = $51,040
AR = $51,040 F1F1F1S1F1F1F10 5,800 hours
AR = $8.80 per hour

Question 7

Ruston Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below:  The original budget was based on 4,500 machine-hours.The company actually worked 4,590 machine-hours during the month and the standard hours allowed for the actual output were 4,700 machine-hours.What was the overall variable overhead efficiency variance for the month?

Accepted Answer

SR = $35,550 F1F1F1S1F1F1F10 4,500 hours = $7.90 per hour
Variable overhead efficiency variance = (AH - SH)SR
= (4,590 hours - 4,700 hours)$7.90 per hour
= (-110 hours)$7.90 per hour = $869 F

Question 8

The Porter Company has a standard cost system.In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000;the materials quantity variance was $1,875 Unfavorable;and the standard quantity of materials allowed for July production was 21,750 pounds.The materials price variance for July was:

Accepted Answer

Materials price variance = (AQ F1F1F1S1F1F1F10 AP)- (AQ F1F1F1S1F1F1F10 SP)
= $53,000 - (22,500 pounds F1F1F1S1F1F1F10 $2.50 per pound)= $53,000 - $56,250 = $3,250 F

Question 9

The Cox Company uses standard costing.The following data are available for April:  The standard quantity of material allowed for April production is:

Accepted Answer

Materials quantity variance = (AQ - SQ)SP
(12,200 gallons - SQ)$4 per gallon = $2,000 U
($48,800 - SQ)F1F1F1S1F1F1F10 $4 per gallon = $2,000 U
SQ F1F1F1S1F1F1F10 $4 per gallon = $46,800
SQ = $46,800 F1F1F1S1F1F1F10 $4 per gallon
SQ = 11,700 gallons

Question 10

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

Accepted Answer

Labor efficiency variance = (AH - SH)SR
Variable overhead efficiency variance = (AH - SH)SR
If the labor efficiency variance is unfavorable,AH > SH.If AH > SH,the variable overhead efficiency variance must also be unfavorable.

Question 11

Lafountaine Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).The company's cost formula for variable manufacturing overhead is $4.70 per MH.During the month,the actual total variable manufacturing overhead was $20,210 and the actual level of activity for the period was 4,700 MHs.What was the variable overhead rate variance for the month?

Accepted Answer

Variable overhead rate variance = AH (AR - SR)= AH F1F1F1S1F1F1F10 AR - AH F1F1F1S1F1F1F10 SR
= $20,210 - (4,700 hours F1F1F1S1F1F1F10 $4.70 per hour)
= $20,210 - $22,090 = $1,880 F

Question 12

The following labor standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the labor rate variance for the month?

Accepted Answer

AH F1F1F1S1F1F1F10 AR = $94,340
Labor rate variance = AH (AR - SR)= AH F1F1F1S1F1F1F10 AR - AH F1F1F1S1F1F1F10 SR
= $94,340 - (5,300 hours F1F1F1S1F1F1F10 $17.55 per hour)= $1,325 U

Question 13

Which of the following statements concerning ideal standards is incorrect?

Accepted Answer

Practical standards provide better forecasts of cash flows for cash budgeting than practical standards.

Question 14

The following standards for variable manufacturing overhead have been established for a company that makes only one product:  The following data pertain to operations for the last month:  What is the variable overhead rate variance for the month?

Accepted Answer

Variable overhead rate variance = AH (AR - SR)= AH F1F1F1S1F1F1F10 AR - AH F1F1F1S1F1F1F10 SR
= $45,375 - (3,300 hours F1F1F1S1F1F1F10 $13.45 per hour)
= $45,375 - $44,385 = $990 U

Question 15

The following labor standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the labor efficiency variance for the month?

Accepted Answer

SH = 1,500 units F1F1F1S1F1F1F10 4 hours per unit = 6,000 hours
Labor efficiency variance = (AH - SH)SR
= (7,100 hours - 6,000 hours)$12.30 per hour
= (1,100 hours)$12.30 per hour = $13,530 U

Question 16

Borden Enterprises uses standard costing.For the month of April,the company reported the following data: 
$\bullet$ Standard direct labor rate: $10 per hour
$\bullet$ Standard hours allowed for actual production: 8,000 hours
$\bullet$ Actual direct labor rate: $9.50 per hour
$\bullet$ Labor efficiency variance: $4,800 Favorable
The labor rate variance for April is:

Accepted Answer

Labor efficiency variance = (AH - SH)SR
= (AH - 8,000 hours)$10 per hour = -$4,800
AH $\times$ $10 per hour - $80,000 = -$4,800
AH $\times$ $10 per hour = $75,200
AH = $75,200 $\div$ $10 per hour
AH = 7,520
Labor rate variance = AH(AR - SR)
= 7,520 hours ($9.50 per hour - $10.00 per hour)
= 7,520 hours (-$0.50 per hour)= $3,760 F

Question 17

Last month 75,000 pounds of direct material were purchased and 71,000 pounds were used.If the actual purchase price per pound was $0.50 more than the standard purchase price per pound,then the materials price variance was:

Accepted Answer

Materials price variance = (AQ F1F1F1S1F1F1F10 AP)- (AQ F1F1F1S1F1F1F10 SP)= AQ (AP - SP)
= 75,000 pounds F1F1F1S1F1F1F10 $0.50 per pound = $37,500 U

Question 18

Millonzi Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).The company has provided the following data for the most recent month:  What was the variable overhead rate variance for the month?

Accepted Answer

Variable overhead rate variance = AH (AR - SR)= AH F1F1F1S1F1F1F10 AR - AH F1F1F1S1F1F1F10 SR
= $42,400 - (5,300 hours F1F1F1S1F1F1F10 $8.50 per hour)
= $42,400 - $45,050 = $2,650 F

Question 19

Dowen Corporation applies manufacturing overhead to products on the basis of standard machine-hours.For the most recent month,the company based its budget on 4,400 machine-hours.Budgeted and actual overhead costs for the month appear below:  The company actually worked 4,460 machine-hours during the month.The standard hours allowed for the actual output were 4,310 machine-hours for the month.What was the overall variable overhead efficiency variance for the month?

Accepted Answer

Variable overhead = $21,560 + $28,160 = $49,720
SR = $49,720 F1F1F1S1F1F1F10 4,400 hours = $11.30 per hour
Variable overhead efficiency variance = (AH - SH)SR
= (4,460 hours - 4,310 hours)$11.30 per hour
= (150 hours)$11.30 per hour = $1,695 U

Question 20

Furson Corporation makes a single product.In a recent period 6,500 units were made and there was an unfavorable labor efficiency variance of $26,000.Direct labor workers were paid $8 per hour and total wages were $182,000.The labor rate variance was zero.The standard labor-hours per unit of output is closest to:

Accepted Answer

AH = $182,000 F1F1F1S1F1F1F10 $8 per hour = 22,750 hours
Labor rate variance = AH(AR - SR)
$0 = 22,750 hours ($8 per hour - SR)
SR = $8 per hour
Labor efficiency variance = (AH - SH)SR
$26,000 = (22,750 hours - 6,500 units F1F1F1S1F1F1F10 Standard hours per unit)$8 per hour
(22,750 hours - 6,500 units F1F1F1S1F1F1F10 Standard hours per unit)= $26,000 F1F1F1S1F1F1F10 $8 per hour
(22,750 hours - 6,500 units F1F1F1S1F1F1F10 Standard hours per unit)= 3,250 hours
6,500 units F1F1F1S1F1F1F10 Standard hours per unit = 19,500 hours
Standard hours per unit = 19,500 hours F1F1F1S1F1F1F10 6,500 units
Standard hours per unit = 3 hours per unit

Quiz 9: Standard Costs and Variances

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead efficiency variance for the month?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials price variance for the month?

The Wright Company has a standard costing system.The following data are available for September: The actual price per pound of direct materials purchased in September is:

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials quantity variance for the month?

The Reedy Company uses a standard costing system.The following data are available for November: The actual direct labor rate for November is:

The Cox Company uses standard costing.The following data are available for April: The standard quantity of material allowed for April production is:

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

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor rate variance for the month?

Which of the following statements concerning ideal standards is incorrect?

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

The following labor standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the labor efficiency variance for the month?

Last month 75,000 pounds of direct material were purchased and 71,000 pounds were used.If the actual purchase price per pound was $0.50 more than the standard purchase price per pound,then the materials price variance was:

Millonzi Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) .The company has provided the following data for the most recent month: What was the variable overhead rate variance for the month?