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Exam 7: Performance Evaluation Using Variances From Standard Costs

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Question 61

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The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: The amount of the factory overhead controllable variance is:

A) $2,000 unfavorable
B) $3,000 favorable
C) $0
D) $3,000 unfavorable

E) All of the above
F) A) and B)

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Question 62

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The following data relate to direct labor costs for the current period: What is the direct labor time variance?

A) $36,000 unfavorable
B) $35,000 unfavorable
C) $23,000 favorable
D) $22,000 favorable

E) C) and D)
F) None of the above

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Question 63

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The unfavorable volume variance may be due to all of the following factors except:

The formula to compute direct material quantity variance is to calculate the difference between

Robin Company purchased and used 520 pounds of direct materials to produce a product with a 510 pound standard direct materials requirement. The standard materials price is $2.10 per pound. The actual materials price was $2.00 per pound. Prepare the journal entries to record (1) the purchase of the materials and (2) the material entering production. Robin records standards and variances in the general ledger.

Favorable volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

Greyson Company produced 8,300 units of their product that required 4.25 standard hours per unit. Determine the standard fixed overhead cost per unit at 27,000 hours, which is 100% of normal capacity, if the favorable fixed factory overhead volume variance is $14,895.

Principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

The following data is given for the Zoyza Company: Overhead is applied on standard labor hours. The factory overhead volume variance is:

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

It is correct to rely exclusively on past cost data when establishing standards.

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed a:

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material quantity variance.

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

Since the controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

In most businesses, cost standards are established principally by accountants.

If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed a:

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material quantity variance is:

Standards that represent levels of operation that can be attained with reasonable effort are called:

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material price variance.