Question 1

Sweet Dreams manufactures candy.Its records revealed the following data:   Number of urits produced 4,000 Standard direct labor hours per unit 2 Standard variable overhead rate $2.50 per hour  Standard fixed overhead rate $5.00 per hour  Budgeted fixed overhead costs $40,800 Actual variable overhead costs $16,800 Actual fixed overhead costs $40,400 Actual labor hours 8,000 direct labor hours  Total actual overhead $57,200\begin{array} { l l } 	ext { Number of urits produced } & 4,000 \	ext { Standard direct labor hours per unit } & 2 \	ext { Standard variable overhead rate } & \$ 2.50 	ext { per hour } \	ext { Standard fixed overhead rate } & \$ 5.00 	ext { per hour } \	ext { Budgeted fixed overhead costs } & \$ 40,800 \	ext { Actual variable overhead costs } & \$ 16,800 \	ext { Actual fixed overhead costs } & \$ 40,400 \	ext { Actual labor hours } & 8,000 	ext { direct labor hours } \	ext { Total actual overhead } & \$ 57,200\end{array} Number of urits produced  Standard direct labor hours per unit  Standard variable overhead rate  Standard fixed overhead rate  Budgeted fixed overhead costs  Actual variable overhead costs  Actual fixed overhead costs  Actual labor hours  Total actual overhead ​4,0002$2.50 per hour $5.00 per hour $40,800$16,800$40,4008,000 direct labor hours $57,200​  
The total variable overhead variance is

Accepted Answer

A)   $3,200 (U) .
B)   $3,200 (F) .
C)   $3,600 (F) .
D)   $0. E) All of the above
F) None of the above

Question 2

A direct labor rate variance would occur in which of the following situations?

Accepted Answer

A)   When a production employee takes an unplanned break
B)   When a production employee spends more time producing one product than was expected
C)   When a low-paid production employee performs a task higher than his or her assigned level
D)   When a production employee incurs overtime hours at the same hourly rate as regular payE) A) and D)
F) None of the above

Question 3

The primary difference between a fixed (static) budget and a flexible budget is that a fixed budget

Accepted Answer

A)   cannot be changed after the period begins, whereas a flexible budget can be changed after the period begins.
B)   is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales.
C)   is a plan for a single level of production, whereas a flexible budget is several plans (one for each of several production levels) .
D)   includes only fixed costs, whereas a flexible budget includes only variable costs.E) A) and D)
F) A) and B)

Question 4

Powerhorse,Inc.,manufactures steel hitches for horse trailers.The company's direct labor rates have been set by the terms of the current labor contract.Direct labor rate standards have been assigned for each job classification.In July 20xx,a young apprentice was being trained during regular working hours to become a machine operator on one of the turret lathes.A timekeeper determined that the apprentice had spent a total of 48 hours as a novice machine operator in July.Standard time for the same work output is 34 hours.The apprentice earned $6.80 per hour in July.The standard direct labor rate for machine operators working on turret lathes is $9.50 per hour.
a. From the data provided, determine the direct labor efficiency variance and the direct labor rate variance that resulted from the temporary substitution of the apprentice for the regular machine operator. (Note that, according to the labor contract, the apprentice is not entitled to the same rate as a regular machine operator during the training period.)
b. Did the company benefit financially from the situation? Why or why not? (Show calculations.)

Accepted Answer

a.Direct labor effic...

Question 5

Underfoot Products uses standard costing.The following information about overhead was generated during May:   Standard variable overhead rate $2 per machine howr  Standard fixed overhead rate $1 per machine hour  Actual variable overhead costs $390,000 Actual Eixed dverhead costs $175,000 Budgeted fixed overhead costs $190,000 Standard machine hours per urit produced 10 Good urits produced 18,000 Actual machine hours 200,000\begin{array} { l l } 	ext { Standard variable overhead rate } & \$ 2 	ext { per machine howr } \	ext { Standard fixed overhead rate } & \$ 1 	ext { per machine hour } \	ext { Actual variable overhead costs } & \$ 390,000 \	ext { Actual Eixed dverhead costs } & \$ 175,000 \	ext { Budgeted fixed overhead costs } & \$ 190,000 \	ext { Standard machine hours per urit produced } & 10 \	ext { Good urits produced } & 18,000 \	ext { Actual machine hours } & 200,000\end{array} Standard variable overhead rate  Standard fixed overhead rate  Actual variable overhead costs  Actual Eixed dverhead costs  Budgeted fixed overhead costs  Standard machine hours per urit produced  Good urits produced  Actual machine hours ​$2 per machine howr $1 per machine hour $390,000$175,000$190,0001018,000200,000​  
Compute the fixed overhead variance.

Accepted Answer

A)   $5,000 (F) 
B)   $5,000 (U) 
C)   $10,000 (U) 
D)   $10,000 (F)  E) A) and C)
F) A) and B)

Question 6

The formula used to compute budgeted total cost at any level of activity is presented in the

Accepted Answer

A)   flexible budget.
B)   performance report.
C)   static budget.
D)   cash flow forecast.E) A) and B)
F) A) and C)

Question 7

Ewing Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year.   Direct materials quantity standard 3 pounds per product  Direct labor time standard 5 hours per product  Direct materials price standard $10 per pound  Direct labor rate standard $9 per hour  Standard variable overhead rate $5 per labor hour  Standard fixed overhead rate $10 per labor hour \begin{array}{lr} 	ext { Direct materials quantity standard } & 3 	ext { pounds per product } \	ext { Direct labor time standard } & 5 	ext { hours per product } \	ext { Direct materials price standard } & \$ 10 	ext { per pound } \	ext { Direct labor rate standard } & \$ 9 	ext { per hour } \	ext { Standard variable overhead rate } & \$ 5 	ext { per labor hour } \	ext { Standard fixed overhead rate } & \$ 10 	ext { per labor hour }\end{array} Direct materials quantity standard  Direct labor time standard  Direct materials price standard  Direct labor rate standard  Standard variable overhead rate  Standard fixed overhead rate ​3 pounds per product 5 hours per product $10 per pound $9 per hour $5 per labor hour $10 per labor hour ​  
The standard unit cost for overhead is

Accepted Answer

A)   $15.
B)   $25.
C)   $50.
D)   $75. E) All of the above
F) A) and B)

Question 8

If actual capacity used exceeds expected capacity,the fixed overhead volume variance is favorable.

Accepted Answer

A) True 
 B)False

Question 9

The direct materials price standard is determined by averaging costs of current purchases.

Accepted Answer

A) True 
 B)False

Question 10

Standard costs are useful for all but which of the following?

Accepted Answer

A)   Determining actual costs
B)   Preparing budgets and forecasts
C)   Evaluating the performance of workers and management
D)   Helping to develop appropriate selling pricesE) B) and D)
F) B) and C)

Question 11

The fixed overhead volume variance measures the use of existing facilities and capacity.

Accepted Answer

A) True 
 B)False

Question 12

A flexible budget is most useful

Accepted Answer

A)   for budgeting and planning purposes.
B)   when actual output equals budgeted output.
C)   as a cost control tool to help evaluate performance.
D)   when a product's cost structure includes variable costs only.E) A) and B)
F) B) and C)

Question 13

The Lennon Company uses a standard costing system and a flexible budget.At a normal level of activity of 15,000 units and 45,000 standard direct labor hours,the standard direct labor cost would be $270,000.During June,44,050 hours were worked to produce 14,000 units at an actual direct labor cost of $352,000.The direct labor efficiency variance in June was

Accepted Answer

A)   $20,300 (U) .
B)   $12,300 (U) .
C)   $12,300 (F) .
D)   $15,300 (U) .E) A) and B)
F) A) and C)

Question 14

The direct materials price variance is the difference between the actual price and the standard price,multiplied by the standard quantity.

Accepted Answer

A) True 
 B)False

Question 15

In standard costing,

Accepted Answer

A)   the standards are developed only for overhead costs.
B)   the standards are developed primarily from past costs.
C)   comparisons with actual costs usually are not performed.
D)   debit and credit entries to inventory accounts are made at standard costs.E) A) and C)
F) B) and C)

Question 16

The overhead variance is equal to the difference between

Accepted Answer

A)   fixed overhead costs and flexible overhead costs.
B)   estimated overhead rate and applied overhead rate.
C)   actual overhead costs and variable overhead costs.
D)   actual overhead costs and standard overhead costs.E) C) and D)
F) A) and B)

Question 17

If standard costing is not economically feasible for a company,predetermined overhead rates should not be used.

Accepted Answer

A) True 
 B)False

Question 18

The direct labor rate variance is the difference between actual hours worked and standard hours allowed for good units produced,multiplied by the standard labor rate.

Accepted Answer

A) True 
 B)False

Question 19

The direct materials standards for the main product of Duchess Company are 8 grams of direct materials per product at a cost of $3 per gram.During April,974 grams of direct materials were used to produce 120 products at a direct materials cost of $2,900.The direct materials quantity variance for April was

Accepted Answer

A)   $72 (U) .
B)   $92 (U) .
C)   $42 (U) .
D)   $112 (F) .E) None of the above
F) A) and B)

Question 20

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

Accepted Answer

A) True 
 B)False

Exam 23: Standard Costing and Variance Analysis

The fixed overhead volume variance measures the use of existing facilities and capacity.

Correct Answer
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A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

Correct Answer
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The primary difference between a fixed (static) budget and a flexible budget is that a fixed budget

Correct Answer
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A flexible budget is most useful

Correct Answer
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The direct materials price standard is determined by averaging costs of current purchases.

Correct Answer
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Standard costs are useful for all but which of the following?

Correct Answer
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The direct labor rate variance is the difference between actual hours worked and standard hours allowed for good units produced,multiplied by the standard labor rate.

Correct Answer
verified

Correct Answer
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The direct materials price variance is the difference between the actual price and the standard price,multiplied by the standard quantity.

Correct Answer
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In standard costing,

Correct Answer
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If actual capacity used exceeds expected capacity,the fixed overhead volume variance is favorable.

Correct Answer
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The overhead variance is equal to the difference between

Correct Answer
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A direct labor rate variance would occur in which of the following situations?

Correct Answer
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The formula used to compute budgeted total cost at any level of activity is presented in the

Correct Answer
verified

Correct Answer
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a.Direct labor effic...
View Answer

If standard costing is not economically feasible for a company,predetermined overhead rates should not be used.

Correct Answer
verified

Exam 23: Standard Costing and Variance Analysis

The fixed overhead volume variance measures the use of existing facilities and capacity.

Correct AnswerverifiedShow Answer

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

Correct AnswerverifiedShow Answer

The primary difference between a fixed (static) budget and a flexible budget is that a fixed budget

Correct AnswerverifiedShow Answer

A flexible budget is most useful

Correct AnswerverifiedShow Answer

The direct materials price standard is determined by averaging costs of current purchases.

Correct AnswerverifiedShow Answer

Standard costs are useful for all but which of the following?

Correct AnswerverifiedShow Answer

The direct labor rate variance is the difference between actual hours worked and standard hours allowed for good units produced,multiplied by the standard labor rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The direct materials price variance is the difference between the actual price and the standard price,multiplied by the standard quantity.

Correct AnswerverifiedShow Answer

In standard costing,

Correct AnswerverifiedShow Answer

If actual capacity used exceeds expected capacity,the fixed overhead volume variance is favorable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The overhead variance is equal to the difference between

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A direct labor rate variance would occur in which of the following situations?

Correct AnswerverifiedShow Answer

The formula used to compute budgeted total cost at any level of activity is presented in the

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Direct labor effic...View AnswerShow Answer

If standard costing is not economically feasible for a company,predetermined overhead rates should not be used.

Correct AnswerverifiedShow Answer

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a.Direct labor effic...
View Answer

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