Quiz 7: Standard Costing and Variance Analysis

Specifications for materials are compiled on a bill of materials.

Specifications for materials are compiled on a purchase requisition.

An operations flow document shows all processes necessary to manufacture one unit of a product.

A standard cost card is prepared after manufacturing standards have been developed for direct materials,direct labor,and factory overhead.

A standard cost card is prepared before developing manufacturing standards for direct materials,direct labor,and factory overhead.

The total variance can provide useful information about the source of cost differences.

The total variance does not provide useful information about the source of cost differences.

The formula for price/rate variance is (AP - SP)´ AQ.

The formula for price/rate variance is (AP - SP)´ SQ.

The price variance reflects the difference between the quantity of inputs used and the standard quantity allowed for the output of a period.

The price variance reflects the difference between the price paid for inputs and the standard price for those inputs.

The usage variance reflects the difference between the price paid for inputs and the standard price for those inputs.

The usage variance reflects the difference between the quantity of inputs used and the standard quantity allowed for the output of a period.

The formula for usage variance is (AQ - SQ)* SP.

The formula for usage variance is (AQ - SQ)* AP.

The point of purchase model calculates the materials price variance using the quantity of materials purchased.

The point of purchase model calculates the materials price variance using the quantity of materials used in production.

The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate variance.

The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor efficiency variance.

The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor efficiency variance.

The difference between the standard hours worked for a specific level of production and the actual hours worked is the labor rate variance.

A flexible budget is an effective tool for budgeting factory overhead.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead spending variance.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the variable overhead efficiency variance.

The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead efficiency variance.

The difference between budgeted variable overhead for actual hours and standard overhead is the variable overhead spending variance.

The difference between actual and budgeted fixed factory overhead is referred to as a fixed overhead spending variance.

The difference between actual and budgeted fixed factory overhead is referred to as a fixed overhead volume variance.

The difference between budgeted and applied fixed factory overhead is referred to as a fixed overhead volume variance.

A fixed overhead volume variance is a controllable variance.

A fixed overhead volume variance is a noncontrollable variance.

A one-variance approach calculates only a total overhead variance.

A budget variance is a controllable variance.

An overhead efficiency variance is related entirely to variable overhead.

Managers have no ability to control the budget variance.

Unfavorable variances are represented by debit balances in the overhead account.

Unfavorable variances are represented by credit balances in the overhead account.

Favorable variances are represented by credit balances in the overhead account.

Favorable variances are represented by debit balances in the overhead account.

Favorable variances are always desirable for production.

Expected standards are a valuable tool for motivation and control.

Practical standards are the most effective standards for controlling and motivating workers.

Ideal standards are an effective means of controlling variances and motivating workers.

Ideal standards do not allow for normal operating delays or human limitations.

Expected standards tend to yield unfavorable variances.

Expected standards tend to yield favorable variances.

Ideal standards generally yield favorable variances.

Ideal standards generally yield unfavorable variances.

Total quality management (TQM)and just-in-time (JIT)production systems are based on the premise of ideal production standards.

In a totally automated organization,using theoretical capacity will generally provide the lowest fixed overhead application rate.

In a totally automated organization,using theoretical capacity will generally provide the highest fixed overhead application rate.

A conversion variance combines labor and overhead variances.

The effect of substituting a non-standard mix of materials during the production process is referred to as a material mix variance.

The effect of substituting a non-standard mix of materials during the production process is referred to as a material yield variance.

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a labor mix variance.

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a labor yield variance.

When multiple labor categories are used,the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor mix variance.

When multiple labor categories are used,the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a labor yield variance.

As production becomes more automated,direct labor may be viewed more as a conversion cost than as a prime cost.

The difference between total actual cost incurred and total standard cost applied is referred to as _________________________.

The two components of total material/labor variance are ______________________________ and ___________________________________

The difference between what was paid for inputs and what should have been paid for inputs is referred to as a _________________________.

The difference between standard quantity allowed and quantity used for a unit of output is known as an ______________________________.

The difference between actual variable overhead and budgeted variable overhead based upon actual hours is referred to as the _______________________________________________________.

The difference between budgeted variable overhead for actual hours and standard overhead is the __________________________________________________.

The difference between actual and budgeted fixed factory overhead is referred to as a __________________________________________________.

The difference between budgeted and applied fixed factory overhead is referred to as a __________________________________________________.

Standards that provide for no human limitations or operating delays are referred to as ______________________________.

Standards that are attainable with reasonable effort are referred to as ___________________________________.

Standards that reflect what is expected to occur are referred to as ______________________________.

Standards that allow for waste and inefficiency are referred to as ______________________________.

When multiple materials are used,the effect of substituting a non-standard mix of materials during the production process is referred to as a ____________________ variance.

When multiple materials are used,the difference between the total quantity and the standard quantity of output when a nonstandard mix of materials is used is known as the _________________________ variance.

When multiple labor categories are used,the financial effect of using a different mix of workers in a production process is referred to as a _________________________ variance.

When multiple labor categories are used,the monetary impact of using a higher or lower number of hours than a standard allows is referred to as a ______________________________ variance.

A primary purpose of using a standard cost system is A)to make things easier for managers in the production facility. B)to provide a distinct measure of cost control. C)to minimize the cost per unit of production. D)b and c are correct.

The standard cost card contains quantities and costs for A)direct material only. B)direct labor only. C)direct material and direct labor only. D)direct material,direct labor,and overheaD.

Which of the following statements regarding standard cost systems is true? A)Favorable variances are not necessarily good variances. B)Managers will investigate all variances from standard. C)The production supervisor is generally responsible for material price variances. D)Standard costs cannot be used for planning purposes since costs normally change in the future.

In a standard cost system,Work in Process Inventory is ordinarily debited with A)actual costs of material and labor and a predetermined overhead cost for overhead. B)standard costs based on the level of input activity (such as direct labor hours worked). C)standard costs based on production output. D)actual costs of material,labor,and overheaD.

A standard cost system may be used in A)job order costing,but not process costing. B)process costing,but not job order costing. C)either job order costing or process costing. D)neither job order costing nor process costing.

Standard costs may be used for A)product costing. B)planning. C)controlling. D)all of the above.

A purpose of standard costing is to A)replace budgets and budgeting. B)simplify costing procedures. C)eliminate the need for actual costing for external reporting purposes. D)eliminate the need to account for year-end underapplied or overapplied manufacturing overheaD.

Standard costs A)are estimates of costs attainable only under the most ideal conditions. B)are difficult to use with a process costing system. C)can,if properly used,help motivate employees. D)require that significant unfavorable variances be investigated,but do not require that significant favorable variances be investigateD.

A bill of material does not include A)quantity of component inputs. B)price of component inputs. C)quality of component inputs. D)type of product output.

An operations flow document A)tracks the cost and quantity of material through an operation. B)tracks the network of control points from receipt of a customer's order through the delivery of the finished product. C)specifies tasks to make a unit and the times allowed for each task. D)charts the shortest path by which to arrange machines for completing products.

A total variance is best defined as the difference between total A)actual cost and total cost applied for the standard output of the period. B)standard cost and total cost applied to production. C)actual cost and total standard cost of the actual input of the period. D)actual cost and total cost applied for the actual output of the perioD.

The term "standard hours allowed" measures A)budgeted output at actual hours. B)budgeted output at standard hours. C)actual output at standard hours. D)actual output at actual hours.

A large labor efficiency variance is prorated to which of the following at year-end? A)no no no B)no yes yes C)yes no no D)yes yes yes

Which of the following factors should not be considered when deciding whether to investigate a variance? A)magnitude of the variance B)trend of the variances over time C)likelihood that an investigation will reduce or eliminate future occurrences of the variance D)whether the variance is favorable or unfavorable

At the end of a period,a significant material quantity variance should be A)closed to Cost of Goods Sold. B)allocated among Raw Material,Work in Process,Finished Goods,and Cost of Goods Sold. C)allocated among Work in Process,Finished Goods,and Cost of Goods Sold. D)carried forward as a balance sheet account to the next perioD.

When computing variances from standard costs,the difference between actual and standard price multiplied by actual quantity used yields a A)combined price-quantity variance. B)price variance. C)quantity variance. D)mix variance.

A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variance when A)material is purchased. B)material is issued to production. C)material is used in production. D)production is completeD.

The material price variance (computed at point of purchase)is A)the difference between the actual cost of material purchased and the standard cost of material purchased. B)the difference between the actual cost of material purchased and the standard cost of material used. C)primarily the responsibility of the production manager. D)both a and c.

The sum of the material price variance (calculated at point of purchase)and material quantity variance equals A)the total cost variance. B)the material mix variance. C)the material yield variance. D)no meaningful number.

A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if A)the mix of workers used in the production process was more experienced than the normal mix. B)the mix of workers used in the production process was less experienced than the normal mix. C)workers from another part of the plant were used due to an extra heavy production schedule. D)the purchasing agent acquired very high quality material that resulted in less spoilage.

If actual direct labor hours (DLHs)are less than standard direct labor hours allowed and overhead is applied on a DLH basis,a(n) A)favorable variable overhead spending variance exists. B)favorable variable overhead efficiency variance exists. C)favorable volume variance exists. D)unfavorable volume variance exists.

The total labor variance can be subdivided into all of the following except A)rate variance. B)yield variance. C)learning curve variance. D)mix variance.

The standard predominantly used in Western cultures for motivational purposes is a(n)____ standard. A)expected annual B)ideal C)practical D)theoretical

Which of the following standards can commonly be reached or slightly exceeded by workers in a motivated work environment? A)no no no B)no yes yes C)yes yes no D)no yes no

Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? A)yes no no B)no no no C)no yes yes D)yes yes no

Which of the following capacity levels has traditionally been used to compute the fixed overhead application rate? A)expected annual B)normal C)theoretical D)prior year

A company has a favorable variable overhead spending variance,an unfavorable variable overhead efficiency variance,and underapplied variable overhead at the end of a period.The journal entry to record these variances and close the variable overhead control account will show which of the following? A)debit credit credit B)credit debit credit C)debit credit debit D)credit debit debit

Bailey Corporation.incurred 2,300 direct labor hours to produce 600 units of product.Each unit should take 4 direct labor hours.Bailey Corporation applies variable overhead to production on a direct labor hour basis.The variable overhead efficiency variance A)will be unfavorable. B)will be favorable. C)will depend upon the capacity measure selected to assign overhead to production. D)is impossible to determine without additional information.

A variable overhead spending variance is caused by A)using more or fewer actual hours than the standard hours allowed for the production achieved. B)paying a higher/lower average actual overhead price per unit of the activity base than the standard price allowed per unit of the activity base. C)larger/smaller waste and shrinkage associated with the resources involved than expected. D)both b and c are causes.

Which of the following are considered controllable variances? A)yes yes yes B)no no yes C)no yes no D)yes yes no

A company may set predetermined overhead rates based on normal,expected annual,or theoretical capacity.At the end of a period,the fixed overhead spending variance would A)be the same regardless of the capacity level selected. B)be the largest if theoretical capacity had been selected. C)be the smallest if theoretical capacity had been selected. D)not occur if actual capacity were the same as the capacity level selecteD.

The variance least significant for purposes of controlling costs is the A)material quantity variance. B)variable overhead efficiency variance. C)fixed overhead spending variance. D)fixed overhead volume variance.

Fixed overhead costs are A)best controlled on a unit-by-unit basis of products produced. B)mostly incurred to provide the capacity to produce and are best controlled on a total basis at the time they are originally negotiated. C)constant on a per-unit basis at all different activity levels within the relevant range. D)best controlled as to spending during the production process.

The variancemost useful in evaluating plant utilization is the A)variable overhead spending variance. B)fixed overhead spending variance. C)variable overhead efficiency variance. D)fixed overhead volume variance.

A favorable fixed overhead volume variance occurs if A)there is a favorable labor efficiency variance. B)there is a favorable labor rate variance. C)production is less than planned. D)production is greater than planneD.

The fixed overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal the predetermined activity level for a given period,the volume variance will be A)zero. B)favorable. C)unfavorable. D)either favorable or unfavorable,depending on the budgeted overheaD.

Actual fixed overhead minus budgeted fixed overhead equals the A)fixed overhead volume variance. B)fixed overhead spending variance. C)noncontrollable variance. D)controllable variance.

Total actual overhead minus total budgeted overhead at the actual input production level equals the A)variable overhead spending variance. B)total overhead efficiency variance. C)total overhead spending variance. D)total overhead volume variance.

A favorable fixed overhead spending variance indicates that A)budgeted fixed overhead is less than actual fixed overhead. B)budgeted fixed overhead is greater than applied fixed overhead. C)applied fixed overhead is greater than budgeted fixed overhead. D)actual fixed overhead is less than budgeted fixed overheaD.

An unfavorable fixed overhead volume variance is most often caused by A)actual fixed overhead incurred exceeding budgeted fixed overhead. B)an over-application of fixed overhead to production. C)an increase in the level of the finished inventory. D)normal capacity exceeding actual production levels.

In a standard cost system,when production is greater than the estimated unit or denominator level of activity,there will be a(n) A)unfavorable capacity variance. B)favorable material and labor usage variance. C)favorable volume variance. D)unfavorable manufacturing overhead variance.

In analyzing manufacturing overhead variances,the volume variance is the difference between the A)amount shown in the flexible budget and the amount shown in the debit side of the overhead control account. B)predetermined overhead application rate and the flexible budget application rate times actual hours worked. C)budget allowance based on standard hours allowed for actual production for the period and the amount budgeted to be applied during the period. D)actual amount spent for overhead items during the period and the overhead amount applied to production during the perioD.

Variance analysis for overhead normally focuses on A)efficiency variances for machinery and indirect production costs. B)volume variances for fixed overhead costs. C)the controllable variance as a lump-sum amount. D)the difference between budgeted and applied variable overheaD.

The efficiency variance computed on a three-variance approach is A)equal to the efficiency variance computed on the four-variance approach. B)equal to the variable overhead spending variance plus the efficiency variance computed on the four-variance approach. C)computed as the difference between applied variable overhead and actual variable overhead. D)computed as actual variable overhead minus the flexible budget for variable overhead based on actual hours workeD.

The use of separate variable and fixed overhead rates is better than a combined rate because such a system A)is less expensive to operate and maintain. B)does not result in underapplied or overapplied overhead. C)is more effective in assigning overhead costs to products. D)is easier to develop.

Under the two-variance approach,the volume variance is computed by subtracting ____ based on standard input allowed for the production achieved from budgeted overhead. A)applied overhead B)actual overhead C)budgeted fixed overhead plus actual variable overhead D)budgeted variable overhead

The overhead variance calculated as total budgeted overhead at the actual input production level minus total budgeted overhead at the standard hours allowed for actual output is the A)efficiency variance. B)spending variance. C)volume variance. D)budget variance.

In a just-in-time inventory system, A)practical standards become ideal standards. B)ideal standards become expected standards. C)variances will not occur because of the zero-defects basis of JIT. D)standard costing cannot be useD.

A company using very tight (high)standards in a standard cost system should expect that A)no incentive bonus will be paid. B)most variances will be unfavorable. C)employees will be strongly motivated to attain the standards. D)costs will be controlled better than if lower standards were useD.

Patterson Company The following information is for Patterson Company's July production: (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material price variance (calculated at point of purchase)? A)$2,700 U B)$2,700 F C)$2,610 F D)$2,610 U

Patterson Company The following information is for Patterson Company's July production: (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the material quantity variance? A)$3,105 F B)$1,050 F C)$3,105 U D)$1,890 U

Patterson Company The following information is for Patterson Company's July production: (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the labor rate variance? A)$3,480 U B)$3,480 F C)$2,800 U D)$2,800 F

Patterson Company The following information is for Patterson Company's July production: (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the labor efficiency variance? A)$1,875 U B)$ 938 U C)$1,875 F D)$1,125 U

Brennan Company The following information is for Brennan Company's September production: (Round all answers to the nearest dollar. ) Refer to Brennan Company.What is the material price variance (calculated at point of purchase)? A)$ 735 F B)$ 735 U C)$ 710 F D)$ 710 U

Brennan Company The following information is for Brennan Company's September production: (Round all answers to the nearest dollar. ) Refer to Brennan Company.What is the material quantity variance? A)$ 740 F B)$ 750 F C)$ 750 U D)$2,625 U

Brennan Company The following information is for Brennan Company's September production: (Round all answers to the nearest dollar. ) Refer to Brennan Company.What is the labor rate variance? A)$1,040 U B)$1,040 F C)$1,420 U D)$1,420 F

Brennan Company The following information is for Brennan Company's September production: (Round all answers to the nearest dollar. ) Refer to Brennan Company.What is the labor efficiency variance? A)$825 F B)$825 U C)$835 F D)$835 U

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company.What is the labor rate variance? A)$875 F B)$865 F C)$865 U D)$875 U

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company.What is the labor efficiency variance? A)$2,050 F B)$2,050 U C)$2,040 U D)$2,040 F

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company.What is the material price variance (based on quantity purchased)? A)$3,075 U B)$2,938 U C)$2,938 F D)$3,075 F

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company.What is the material quantity variance? A)$2,250 F B)$2,250 U C)$225 F D)$2,475 U

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar). Refer to Wimberley Company.Assume that the company computes the material price variance on the basis of material issued to production.What is the total material variance? A)$2,850 U B)$2,850 F C)$5,188 U D)$5,188 F

Cibolo Company Cibolo Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Cibolo Company.What is the labor rate variance? A)$3,780 F B)$3,780 U C)$3,825 F D)$3,825 U

Cibolo Company Cibolo Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Cibolo Company.What is the labor efficiency variance? A)$ 2,955 F B)$ 2,955 U C)$ 3,000 U D)$ 3,000 F

Cibolo Company Cibolo Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Cibolo Company.What is the material price variance (based on quantity purchased)? A)$2,505 F B)$2,505 F C)$2,625 F D)$2,625 F

Cibolo Company Cibolo Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Cibolo Company.What is the material quantity variance? A)$ 510 F B)$ 525 U C)$ 525 F D)$3,675 U

Cibolo Company Cibolo Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar). Refer to Cibolo Company.Assume that the company computes the material price variance on the basis of material issued to production.What is the total material variance? A)$1,050 U B)$1,050 F C)$3,030 U D)$3,030 F

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Refer to Jenkins Manufacturing Company.What is the material price variance? A)$638 U B)$638 F C)$630 U D)$630 F

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Refer to Jenkins Manufacturing Company.What is the material quantity variance? A)$275 F B)$290 F C)$290 U D)$275 U

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Refer to Jenkins Manufacturing Company.What is the labor rate variance? A)$1,575 U B)$1,575 F C)$1,594 U D)$0

Jenkins Manufacturing The following information is available for Jenkins Manufacturing Company for the month of June when the company produced 2,100 units: Refer to Jenkins Manufacturing Company.What is the labor efficiency variance? A)$731 F B)$731 U C)$750 F D)none of the answers are correct

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the one-variance approach,what is the total overhead variance? A)$6,062 U B)$3,625 U C)$9,687 U D)$6,562 U

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the two-variance approach,what is the controllable variance? A)$5,813 U B)$5,813 F C)$4,375 U D)$4,375 F

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the two-variance approach,what is the noncontrollable variance? A)$3,125 F B)$3,875 U C)$3,875 F D)$6,062 U

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the three-variance approach,what is the spending variance? A)$ 4,375 U B)$ 3,625 F C)$ 8,000 U D)$15,750 U

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the three-variance approach,what is the efficiency variance? A)$9,937 F B)$2,187 F C)$2,187 U D)$2,937 F

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the three-variance approach,what is the volume variance? A)$3,125 F B)$3,875 F C)$3,875 U D)$6,062 U

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the four-variance approach,what is the variable overhead spending variance? A)$4,375 U B)$4,375 F C)$8,750 U D)$6,562 U

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the four-variance approach,what is the variable overhead efficiency variance? A)$2,187 U B)$9,937 F C)$2,187 F D)$2,937 F

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the four-variance approach,what is the fixed overhead spending variance? A)$7,000 U B)$3,125 F C)$ 750 U D)$ 750 F

Buckingham Company Buckingham Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for May when Buckingham produced 4,500 units: Refer to Buckingham Company.Using the four-variance approach,what is the volume variance? A)$3,125 F B)$3,875 F C)$6,063 U D)$3,875 U

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the one-variance approach,what is the total overhead variance? A)$ 275 U B)$ 1,000 U C)$ 4,325 U D)$ 5,325 U

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the two-variance approach,what is the controllable variance? A)$4,075 U B)$4,075 F C)$4,575 U D)$4,575 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the two-variance approach,what is the noncontrollable variance? A)$ 750 F B)$ 750 U C)$1,000 F D)$1,000 U

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the three-variance approach,what is the spending variance? A)$2,525 U B)$2,775 U C)$4,375 U D)$4,375 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the three-variance approach,what is the efficiency variance? A)$1,800 F B)$1,800 U C)$2,050 U D)$2,550 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the three-variance approach,what is the volume variance? A)$ 750 F B)$ 750 U C)$1,000 U D)$1,000 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the four-variance approach,what is the variable overhead spending variance? A)$2,525U B)$4,075 F C)$4,075 U D)$4,325 U

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the four-variance approach,what is the variable overhead efficiency variance? A)$ 250 U B)$ 250 F C)$1,800 U D)$1,800 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the four-variance approach,what is the fixed overhead spending variance? A)$ 250 U B)$ 250 F C)$1,000 U D)$2,250 F

Commodore Company Commodore Company uses a standard cost system for its production process and applies overhead based on direct labor hours.The following information is available for September when Commodore produced 5,000 units: Refer to Commodore Company.Using the four-variance approach,what is the volume variance? A)$ 750 F B)$ 750 U C)$1,000 F D)$1,000 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the four-variance approach,what is the variable overhead spending variance? A)$ 7,950 U B)$ 25 F C)$ 7,975 U D)$10,590 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the four-variance approach,what is the variable overhead efficiency variance? A)$9,570 F B)$9,570 U C)$2,200 F D)$2,200 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the four-variance approach,what is the fixed overhead spending variance? A)$15,900 U B)$6,330 U C)$6,930 U D)$935 F

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the four-variance approach,what is the volume variance? A)$6,930 U B)$13,260 U C)$0 D)$2,640 F

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the three-variance approach,what is the spending variance? A)$23,850 U B)$23,850 F C)$14,280 F D)$14,280 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the three-variance approach,what is the efficiency variance? A)$11,770 F B)$2,200 F C)$7,975 U D)$5,775 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the three-variance approach,what is the volume variance? A)$13,260 U B)$2,640 F C)$6,930 U D)$0

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the two-variance approach,what is the controllable variance? A)$21,650 U B)$16,480 U C)$5,775 U D)$12,080 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the two-variance approach,what is the noncontrollable variance? A)$26,040 F B)$0 C)$6,930 U D)$13,260 U

Pearce Company Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July: Refer to Pearce Company Using the one-variance approach,what is the total variance? A)$19,010 U B)$6,305 U C)$12,705 U D)$4,730 U

Actual fixed overhead is $33,300 (12,000 machine hours)and fixed overhead was estimated at $34,000 when the predetermined rate of $3.00 per machine hour was set.If 11,500 standard hours were allowed for actual production,applied fixed overhead is A)$33,300. B)$34,000. C)$34,500. D)not determinable without knowing the actual number of units produceD.

One unit requires 2 direct labor hours to produce.Standard variable overhead per unit is $1.25 and standard fixed overhead per unit is $1.75.If 330 units were produced this month,what total amount of overhead is applied to the units produced? A)$990 B)$1,980 C)$660 D)cannot be determined without knowing the actual hours worked

Pittsburg Company uses a standard cost accounting system.The following overhead costs and production data are available for September: The total applied manufacturing overhead for September should be A)$195,000. B)$197,000. C)$197,500. D)$199,500.

Harrah Manufacturing Company uses a standard cost system and prepared the following budget at normal capacity for October: Using the two-way analysis of overhead variances,what is the controllable variance for October? A)$ 3,000 F B)$ 5,000 F C)$ 9,000 F D)$10,500 U

The following information is available from the Ryan Company: Assuming that Ryan uses a three-way analysis of overhead variances,what is the overhead spending variance? A)$ 750 F B)$ 750 U C)$ 950 F D)$1,500 U

Teague Company uses a two-way analysis of overhead variances.Selected data for the March production activity are as follows: Assuming that budgeted fixed overhead costs are equal to actual fixed costs,the controllable variance for March is A)$2,000 F B)$4,000 U. C)$4,000 F D)$6,000 F

Marathon Manufacturing Company uses a standard cost system.Overhead cost information for January is as follows: What is the total overhead variance? A)$1,200 F B)$1,200 U C)$1,400 F D)$1,400 U

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The variable overhead spending variance for November was A)$15,000 U. B)$23,000 U. C)$38,000 F. D)$38,000 U.

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The variable overhead efficiency variance for November was A)$15,000 U. B)$23,000 U. C)$38,000 F. D)$38,000 U.

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The fixed overhead spending variance for November was A)$40,000 U. B)$40,000 F C)$60,000 F D)$60,000 U.

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: During November,90,000 units were scheduled for production,but only 80,000 units were actually produced.The following data relate to November: Actual machine hours used were 165,000. Actual overhead incurred totaled $1,378,000 ($518,000 variable plus $860,000 fixed). All inventories are carried at standard cost. Refer to Texas Metal Company.The fixed overhead volume variance for November was A)$60,000 U. B)$60,000 F C)$100,000 F D)$100,000 U.

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the total material price variance? A)$877 F B)$877 U C)$931 U D)$931 F

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the total material mix variance? A)$3,596 F B)$3,596 U C)$4,864 F D)$4,864 U

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the total material yield variance? A)$1,111 U B)$1,111 F C)$2,670 U D)$2,670 F

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the labor rate variance? A)$0 B)$1,083 U C)$2,583 U D)$1,083 F

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the labor mix variance? A)$1,083 U B)$2,588 U C)$1,083 F D)$2,588 F

Industrial Solutions Company Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below: Standard: Material A: 30.25 gallons @ $1.25 per gallon Material B: 24.75 gallons @ $2.00 per gallon Skilled Labor: 4 hours @ $12 per hour Unskilled Labor: 2 hours @ $ 7 per hour Actual: Material A: 10,716 gallons purchased and used @ $1.50 per gallon Material B: 17,484 gallons purchased and used @ $1.90 per gallon Skilled labor hours: 1,950 @ $11.90 per hour Unskilled labor hours: 1,300 @ $7.15 per hour During the current month Industrial Solutions Company manufactured 500 55-gallon drums. Round all answers to the nearest whole dollar. Refer to Industrial Solutions Company.What is the labor yield variance? A)$2,583 U B)$2,583 F C)$1,138 F D)$1,138 U

The sum of the material mix and material yield variances equals A)the material purchase price variance. B)the material quantity variance. C)the total material variance. D)none of the above.

The sum of the labor mix and labor yield variances equals A)the labor efficiency variance. B)the total labor variance. C)the labor rate variance. D)nothing because these two variances cannot be added since they use different costs.

List and discuss briefly the three standards of attainability.

Discuss briefly the type of information contained on (a)a bill of materials and (b)an operations flow document.

Define the following terms: standard cost system,total variance,material price variance,and labor efficiency variance.

Discuss how establishing standards benefits the following management functions: performance evaluation and decision making.

Discuss why standards may need to be changed after they have been in effect for some period of time.

Discuss how variable and fixed overhead application rates are calculated.

Why are fixed overhead variances considered noncontrollable?

Provide the correct term for each of the following definitions:

Distinguish between the four-variance,three-variance,two-variance,and one-variance approaches for computing factory overhead variances.

Explain the source of variable overhead spending and efficiency variances and how these variances are computed.

Explain the source of fixed overhead spending and volume variances and how these variances are computed.

Aldrich Company Aldrich Company has the following information available for the current year:

Aldrich Company Aldrich Company has the following information available for the current year:

Roberts Company Roberts Company has the following information available for the current year:

Roberts Company Roberts Company has the following information available for the current year:

Garfield Company Garfield Company applies overhead based on direct labor hours and has the following available for the current month:

Garfield Company Garfield Company applies overhead based on direct labor hours and has the following available for the current month:

Garfield Company Garfield Company applies overhead based on direct labor hours and has the following available for the current month:

Lincoln Company Lincoln Company applies overhead based on direct labor hours and has the following available for the current month:

Lincoln Company Lincoln Company applies overhead based on direct labor hours and has the following available for the current month:

Lincoln Company Lincoln Company applies overhead based on direct labor hours and has the following available for the current month:

Weslaco Company has made the following information available for its production facility for the current month.Fixed overhead was estimated at 19,000 machine hours for the production cycle.Actual machine hours for the period were 18,900,which generated 3,900 units.

Lubbock Company has made the following information available for its production facility for the current month.Fixed overhead was estimated at 22,000 machine hours for the production cycle.Actual machine hours for the period were 22,500;4,200 units were produced.

Berkshire Company The following information is available for Berkshire Company for the current year: Standard: Material X: 3.0 pounds per unit @ $4.20 per pound Material Y: 4.5 pounds per unit @ $3.30 per pound Class S labor: 3 hours per unit @ $10.50 per hour Class US labor: 7 hours per unit @ $8.00 per hour Actual: Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used) Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used) Class S labor: 3.8 hours per unit @ $10.60 per hour Class US labor: 5.7 hours per unit @ $7.80 per hour Berkshire Company produced a total of 45,750 units. Refer to Berkshire Company.Compute the material price,mix,and yield variances (round to the nearest dollar).

Berkshire Company The following information is available for Berkshire Company for the current year: Standard: Material X: 3.0 pounds per unit @ $4.20 per pound Material Y: 4.5 pounds per unit @ $3.30 per pound Class S labor: 3 hours per unit @ $10.50 per hour Class US labor: 7 hours per unit @ $8.00 per hour Actual: Material X: 3.6 pounds per unit @ $4.00 per pound (purchased and used) Material Y: 4.4 pounds per unit @ $3.25 per pound (purchased and used) Class S labor: 3.8 hours per unit @ $10.60 per hour Class US labor: 5.7 hours per unit @ $7.80 per hour Berkshire Company produced a total of 45,750 units. Refer to Berkshire Company.Compute the labor rate,mix,and yield variances (round to the nearest dollar).

Wisteria Corporation produces a product using the following standard proportions and costs of material:

Mansfield Company began business early in January using a standard costing for its single product.With standard capacity set at 10,000 standard productive hours per month,the following standard cost sheet was set up for one unit of product:

A firm producing one product has a budgeted overhead of $100,000,of which $20,000 is variable.The budgeted direct labor is 10,000 hours. Required: Fill in the blanks.

Pests Away Company manufactures a product effective in controlling beetles.The company uses a standard cost system and a flexible budget.Standard cost of a gallon is as follows:

Trump Corporation operates a factory.One of its departments has three kinds of employees on its direct labor payroll,classified as pay grades A,B,and C.The employees work in 10-person crews in the following proportions: The work crews cannot work short-handed.To keep a unit operating when one of the regular crew members is absent,the head of the department first tries to reassign one of the department's other workers from indirect labor operations. If no one in the department is able to step in,plant management will pull maintenance department workers off their regular work,if possible,and assign them temporarily to the department.These maintenance workers are all classified as Grade D employees,with a standard wage rate of $10 an hour. The following data relate to the operations of the department during the month of May: Required: Compute labor rate,mix,and yield variances.

Adams Corporation manufactures a certain product by mixing three kinds of materials in large batches.The blend master has the responsibility for maintaining the quality of the product,and this often requires altering the proportions of the various ingredients.Standard costs are used to provide material control information.The standard material inputs per batch are: