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Exam 7: Standard Costing and Variance Analysis

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Question 51

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Expected standards generally yield favorable variances.

A) True
B) False

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Question 52

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Expected standards generally yield unfavorable variances.

A) True
B) False

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Question 53

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

A conversion variance combines labor and overhead variances.

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

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

Reichs Company The following information is for Reichs Company's September production: $\begin{array}{ll}\textbf { Standard: }\\\text { Material } & 4.0 \text { feet per unit } @ \$ 3.75 \text { per foot } \\\text { Labor } & 3.0 \text { hours per unit } @ \$ 8.25 \text { per hour }\end{array}$ $\begin{array}{ll}\textbf { Actual: }\\\text { Production } & 3,500 \text { units produced during the month } \\\text { Material } & 14,200 \text { feet used; } 14,700 \text { feet purchased @ } \$ 3.70\text { per foot } \\\text { Labor } & 10,400 \text { direct labor hours } \$ 8.35\text { per hour }\end{array}$ (Round all answers to the nearest dollar.) Refer to Reichs Company.What is the material price variance (calculated at point of purchase) ?

Hidalgo 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. Hidalgo Company's standard costs are as follows: Determine the following items:

The following information is available from the Fitzgerald Company: $\begin{array}{ll}\text { Actual OH } & \$ 15,000 \\\text { Fixed OH expenses, actual } & \$ 7,200 \\\text { Fixed OH expenses, budgeted } & \$ 7,000 \\\text { Actual hours } & 3,500 \\\text { Standard hours } & 3,800 \\\text { Variable OH rate per DLH } & \$ 2.50\end{array}$ Assuming that Fitzgerald uses a three-way analysis of overhead variances,what is the overhead spending variance?

Wimberly Company Wimberly Company has the following information available for March when 4,200 units were produced (round answers to the nearest dollar) . Refer to Wimberly Company.Assume that the company computes the material price variance on the basis of material issued to production.What is the total material variance?

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

Starr 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 21,700,which generated 4,200 units. Starr Company's standard costs are as follows: Determine the following items:

Fleetwood Company Fleetwood 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 Fleetwood produced 4,500 units: $\begin{array}{ll}\text { Standard: }\\\text { DLH per unit } & 2.50 \\\text { Variable overhead per DLH } & \$ 1.75 \\\text { Fixed overhead per DLH } & \$ 3.10 \\\text { Budgeted variable overhead } & \$ 21,875 \\\text { Budgeted fixed overhead } & \$ 38,750\\\\\text { Actual: }\\\text {Direct labor hours }&10,000\\\text { Variable overhead}&\$26,250\\\text { Fixed overhead}&\$38,000\\\end{array}$ Refer to Fleetwood Company.Using the one-variance approach,what is the total overhead variance?

The material price variance (computed at point of purchase) is

Management would generally expect unfavorable variances if standards were based on which of the following capacity measures? $\underline{\text{Ideal}} ~~~~~~~~\underline{\text{Practical}} ~~~~~~~~~~~\underline{\text{Expected annual}}$

Ritchie Company Ritchie Company uses a standard cost system for its production process.Ritchie Company applies overhead based on direct labor hours.The following information is available for July: Refer to Ritchie Company Using the two-variance approach,what is the controllable variance?

Which of the following statements regarding standard cost systems is true?

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.

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

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.