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Exam 7: Performance Evaluation Using Variances From Standard Costs

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Question 81

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The following information is for the standard and actual costs for the Happy Corporation: Standard Costs: Budgeted units of production - 16,000 [80% or normal capacity] Standard labor hours per unit - 4 Standard labor rate - $26 per hour Standard material per unit - 8 lbs. Standard material cost - $12 per pound Standard variable overhead rate - $15 per labor hour Budgeted fixed overhead - $640,000 Fixed overhead rate is based on budgeted labor hours at 80% or normal capacity. Actual Cost: Actual production - 16,500 units Actual material purchased and used - 130,000 pounds Actual total material cost - $1,600,000 Actual labor - 65,000 hours Actual total labor costs - $1,700,000 Actual variable overhead - $1,000,000 Actual fixed overhead - $640,000 Determine: a the direct materials quantity variance, price variance, and total cost variance; b the direct labor time variance, rate variance, and total cost variance; and c the factory overhead volume variance, controllable variance, and total factory overhead cost variance.Note: If following text formulas, do not round interim calculations.

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a
b Direct labor: ...

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Question 82

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The variable factory overhead controllable variance is

A) $8,981.75 favorable
B) $7,280.75 unfavorable
C) $8,981.75 unfavorable
D) $7,280.75 favorable

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

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Question 83

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Standard costs are a useful management tool that can be used solely as a statistical device apart from the ledger or they can be incorporated in the accounts.

Calculate the direct materials quantity variance.

If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 500 hours at $17, the time variance was $1,700 unfavorable.

Standards are performance goals used to evaluate and control operations.

A negative fixed overhead volume variance can be caused due to the following except

The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report.

The following information relates to manufacturing overhead for the Chapman Company: Standards: Total fixed factory overhead - $450,000 Estimated production - 25,000 units 100% of normal capacity Overhead rates are based on machine hours Standard hours allowed per unit produced - 2 Fixed overhead rate - $9.00 per machine hour Variable overhead rate - $3.50 per hour Actual: Fixed factory overhead - $450,000 Production - 24,000 units Variable overhead - $170,000 Compute a the fixed factory overhead volume variance, b the variable factory overhead controllable variance, and c the total factory overhead cost variance.

Standard costs should always be revised when they differ from actual costs.

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are The amount of direct materials price variance is

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the

Volume variance measures the use of fixed factory overhead resources.

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Nonfinancial performance output measures are used to improve the input measures.

Standards are set for only direct labor and direct materials.

The fixed factory overhead controllable variance is

An unfavorable fixed factory overhead volume variance may be due to a failure of supervisors to maintain an even flow of work.

The total factory overhead cost variance is

Using the following information, prepare a factory overhead flexible budget for Andover Company where the total factory overhead cost is $75,500 at normal capacity 100%.Include capacity at 75%, 90%, 100%, and 110%.Total variable cost is $6.25 per unit and total fixed costs are $38,000.The information is for month ended August