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Exam 7: Standard Costing and Variance Analysis

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Question 61

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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.

E) None of the above
F) All of the above

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Question 62

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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.

E) B) and C)
F) A) and D)

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Question 63

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

Expected standards tend to yield favorable variances.

Specifications for materials are compiled on a bill of materials.

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: Direct material-5 pieces@$2.00             $\$ 10.00$ Direct labor (variable)-1 sph@$3.00             300 Manufacturing overhead: Fixed-1 sph@$3.00          $\$ 3.00$ Variable-1 spha @$2.00     $2.00$                     5.00 Fixed costs are incurred evenly throughout the year.The following unfavorable variances from standard costs were recorded during the first month of operations:

Material price	$ 0
Material usage	4,000
Labor rate	800
Labor efficiency	300
Overhead volume	6,000
Overhead budget (2 variance analysis)	1,000

Required: Determine the following:(a)fixed overhead budgeted for a year; (b)the number of units completed during January assuming no work in process at January 31; (c)debits made to the Work in Process account for direct material,direct labor,and manufacturing overhead; (d)number of pieces of material issued during January; (e)total of direct labor payroll recorded for January; (f)total of manufacturing overhead recorded in January.

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

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.

The sum of the labor mix and labor yield variances equals

In a just-in-time inventory system,

If actual direct labor hours (DLHs) are less than standard direct labor hours allowed and overhead is applied on a DLH basis,a(n)

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?

Wimberley Company Wimberley Company has the following information available for December when 3,500 units were produced (round answers to the nearest dollar) . $\begin{array}{ll}\text { Standards: } & 3.5 \text { pounds } \\\text { Material } & \text { per unit @ } \\& \$ 4.50 \text { per } \\& \text { pound } \\& 5.0 \text { hours } \\\text { Labor } & \text { per unit @ } \\& \$ 10.25 \text { per } \\& \text { hour }\end{array}$ $\begin{array}{ll}\text { Actual: } & \\\text { Material purchased } & 12,300 \\& \text { pounds } @ \\& \$ 4.25 \\\text { Material used } & 11,750 \\& \text { pounds } \\17,300 \text { direct1abor hours @ } &\end{array}$ $\$ 10.20 \text { per hour }$ Refer to Wimberley Company.What is the labor rate variance?

The variancemost useful in evaluating plant utilization is the

Texas Metal Company Texas Metal Company has developed standard overhead costs based on a monthly capacity of 180,000 machine hours as follows: $\begin{array}{l}\text { Standard cost par unit: }\\\begin{array} { l l l } \text { Variable partion } & 2 \text { hours @ } \$ 3 = & \$ 6 \\\text { Fixed portion } & 2 \text { hours@ } \$ 5 = &\underline{ \$1 0}\end{array}\end{array}$                                                                                                               $\underline{\$ 16}$ 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

When computing variances from standard costs,the difference between actual and standard price multiplied by actual quantity used yields a

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.

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

Brennan Company The following information is for Brennan Company's September production: $\begin{array}{l}\text { Standards: }\\\begin{array}{ll}\text { Material } & 4.0 \text { feet per unit@ } \$ 4.20 \text { per foot } \\\text { Labor } &3.0 \text { hours per unit@ } \$ 7.50 \text { per hour }\end{array}\end{array}$ $\begin{array}{l}\text { Actual: }\\\begin{array}{ll}\text { Production } & 3,500 \text { units produced during the month } \\\text { Material } & 14,200 \text { feet used; } 14,700 \text { feet purchased @ } \$ 3.70 \text { per foo } \\\text { Labor } & 10,400 \text { direct labor hours@ } \$ 8.35 \text { per hour }\end{array}\end{array}$ (Round all answers to the nearest dollar. ) Refer to Brennan Company.What is the labor rate variance?

Patterson Company The following information is for Patterson Company's July production: $\begin{array}{l}\text { Standards: }\\\begin{array}{ll}\text { Material } & 3.0 \text { feet per unit@ } \$ 4.20 \text { per foot } \\\text { Labor } & 2.5 \text { hours per unit@ } \$ 7.50 \text { per hour }\end{array}\end{array}$ $\begin{array}{l}\text { Actual: }\\\begin{array}{ll}\text { Production } & 2,750 \text { units produced during the month } \\\text { Material } & 8,700 \text { feet used; } 9,000 \text { feet purchased @ } \$ 4.50 \text { per foo } \\\text { Labor } & 7,000 \text { direct labor hours@ } \$ 7.90 \text { per hour }\end{array}\end{array}$ (Round all answers to the nearest dollar. ) Refer to Patterson Company.What is the labor rate variance?