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Exam 10: Standard Costs and Variances

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Question 221

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Obenshain Corporation manufactures one product. The company uses a standard cost system in which inventories are recorded at their standard costs. The standard cost card for the company's only product is as follows: During the year, direct labor workers (who were paid in cash) worked 12,880 hours at an average cost of $20.00 per hour on 17,600 units. These units were started and completed during the year. Required:Completely record the direct labor costs, along with any direct labor variances, in the below worksheet. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).

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Labor rate variance = Actual hours × (Ac...

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Question 222

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A manufacturing company that has only one product has established the following standards for its variable manufacturing overhead. The company bases its variable manufacturing overhead standards on direct labor-hours. The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

A) $10,821 Unfavorable
B) $255 Unfavorable
C) $10,821 Favorable
D) $255 Favorable

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

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Question 223

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Lakatos Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials:a. Purchased 151,800 kilos of raw material at a price of $9.70 per kilo.b. Used 140,870 kilos of the raw material to produce 38,100 units of work in process.The company calculated the following direct materials variances for the year: Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When recording the raw materials purchases in transaction (a) above, the Raw Materials inventory account will increase (decrease) by:

The Maxit Corporation has a standard costing system in which variable manufacturing overhead is assigned to production on the basis of standard machine-hours. The following data are available for July:Actual variable manufacturing overhead cost incurred: $11,310Actual machine-hours worked: 1,600 hoursVariable overhead rate variance: $1,710 UnfavorableTotal variable overhead spending variance: $2,310 Unfavorable The standard number of machine-hours allowed for July production is closest to:

Robins Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $360,000 and budgeted activity of 20,000 hours.During the year, the company completed the following transactions:Purchased 134,700 pounds of raw material at a price of $9.10 per pound.Used 122,080 pounds of the raw material to produce 32,100 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 26,680 hours at an average cost of $17.20 per hour.Applied fixed overhead to the 32,100 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $378,400. Of this total, $297,400 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $81,000 related to depreciation of manufacturing equipment.Completed and transferred 32,100 units from work in process to finished goods.Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When applying fixed manufacturing overhead to production in transaction (d) above, the Work in Process inventory account will increase (decrease) by:

When more hours of labor time are necessary to complete a job than the standard allows, the labor efficiency variance is unfavorable.

Lusher Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $94,325 and budgeted activity of 17,150 hours. During the year, the company completed the following transactions:Purchased 44,350 kilos of raw material at a price of $5.50 per kilo.Used 39,500 kilos of the raw material to produce 26,400 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 19,680 hours at an average cost of $23.20 per hour.Applied fixed overhead to the 26,400 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $115,250. Of this total, $40,250 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to depreciation of manufacturing equipment.Transferred 26,400 units from work in process to finished goods.Sold for cash 29,200 units to customers at a price of $33.60 per unit.Completed and transferred the standard cost associated with the 29,200 units sold from finished goods to cost of goods sold.Paid $171,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.Required:1. Record the above transactions in the worksheet that appears below. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net). 2. Determine the ending balance (e.g., 12/31 balance) in each account.3. Prepare an income statement for the year.

Pickell Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Required: a. Determine the variable overhead rate variance for the year. b. Determine the variable overhead efficiency variance for the year. c. Determine the fixed overhead budget variance for the year. d. Determine the fixed overhead volume variance for the year. e. Determine whether overhead was underapplied or overapplied for the year and by how much.

Hermansen Corporation produces large commercial doors for warehouses and other facilities. In the most recent month, the company budgeted production of 5,100 doors. Actual production was 5,400 doors. According to standards, each door requires 3.8 machine-hours. The actual machine-hours for the month were 20,880 machine-hours. The standard supplies cost is $7.90 per machine-hour. The actual supplies cost for the month was $152,063. Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is:

The Fime Corporation uses a standard costing system. The following data have been assembled for December: The standard hours allowed for December's production is:

Woodhead Incorporated manufactures one product. It does not maintain any beginning or ending inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. Its standard cost per unit produced is $37.45. During the year, the company produced and sold 24,400 units at a price of $47.40 per unit and its selling and administrative expenses totaled $92,000. The company does not have any variable manufacturing overhead costs. It recorded the following variances during the year: The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will be closest to:

Lusher Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $134,750 and budgeted activity of 24,500 hours.During the year, the company completed the following transactions:Purchased 60,100 kilos of raw material at a price of $5.50 per kilo.Used 55,250 kilos of the raw material to produce 36,900 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 27,030 hours at an average cost of $23.20 per hour.Applied fixed overhead to the 36,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $115,250. Of this total, $40,250 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to depreciation of manufacturing equipment.Transferred 36,900 units from work in process to finished goods.Sold for cash 39,700 units to customers at a price of $33.60 per unit.Completed and transferred the standard cost associated with the 39,700 units sold from finished goods to cost of goods sold.Paid $171,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.Required:1. Record the above transactions in the worksheet that appears below. Because of the width of the worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one very wide worksheet. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net). 2. Determine the ending balance (e.g., 12/31 balance) in each account.3. Prepare an income statement for the year.

Fortes Incorporated has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. The company has reported the following actual results for the product for April: Required:a. Compute the materials price variance for April.b. Compute the materials quantity variance for April.c. Compute the labor rate variance for April.d. Compute the labor efficiency variance for April.e. Compute the variable overhead rate variance for April.f. Compute the variable overhead efficiency variance for April.

Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April: The company's materials price variance for April was $3,000 Favorable. Its materials quantity variance for April was $5,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?

Leonesio Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,100 units in August, but actual production was 3,200 units. The company used 27,600 kilos of direct material to produce this output. The company purchased 29,000 kilos of the direct material at a total cost of $118,900. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for August is:

Milar Corporation makes a product with the following standard costs: In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756.The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.The labor rate variance for January is:

Klacic Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance. e. Compute the variable overhead efficiency variance. f. Compute the variable overhead rate variance.

Amirault Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $4.00 per machine-hours. During the month, the actual total variable manufacturing overhead was $18,040 and the actual level of activity for the period was 4,100 machine-hours. What was the variable overhead rate variance for the month?

Rhudy Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. The direct labor standards for the company's only product specify 0.60 hours per unit at $20.00 per hour. During the year, the company started and completed 20,700 units. Direct labor employees worked 12,120 hours at an average cost of $18.90 per hour.Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When recording the direct labor costs, the Work in Process inventory account will increase (decrease) by:

The following data have been provided by Moretta Corporation, a company that produces forklift trucks: Supplies cost is an element of variable manufacturing overhead. The variable overhead efficiency variance for supplies cost is: