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Exam 10: Standard Costs and Overhead Analysis

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Question 51

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Patridge Company uses a standard cost system in which it applies manufacturing overhead to units of product on the basis of direct labour hours.The information below is taken from the company's flexible budget for manufacturing overhead: $\begin{array} { l r r r } \text { Percent of Capacity } & 70 \% & 80 \% & 90 \% \\\text { Direct Labour Hours } & 21,000 & 24,000 & 27,000 \\\text { Variable Overhead } & \$ 42,000 & \$ 48,000 & \$ 54,000 \\\text { Fixed Overhead } & \$ 108,000 & \$ 108,000 & \$ 108,000 \\\text { Total Overhead } & \$ 150,000 & \$ 156,000 & \$ 162,000\end{array}$ During the year,the company operated at exactly 80% of capacity,but it applied manufacturing overhead to products based on the 90% level.What was the company's fixed overhead volume variance for the year?

A) $6,000 favourable.
B) $6,000 unfavourable.
C) $12,000 favourable.
D) $12,000 unfavourable.

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

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Question 52

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King Company estimated that it would operate its manufacturing facilities at 800,000 direct labour hours for the year, which served as the denominator activity in the predetermined overhead rate. The total budgeted manufacturing overhead for the year was $2,000,000, of which $1,600,000 was variable and $400,000 was fixed. The standard variable overhead rate was $2 per direct labour hour. The standard direct labour time was 3 direct labour hours per unit. The actual results for the year are presented below: -What was the variable overhead spending variance for the year?

A) $2,000 favourable.
B) $10,000 unfavourable.
C) $82,000 unfavourable.
D) $110,000 unfavourable.

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

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Question 53

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(Appendix 10B) The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip: There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000. Used 12,000 board metres to produce 2,100 Mips. Used 1,700 hours of direct labour time at a total cost of $20,060. -(Appendix 10B) To record the use of direct materials in production,the general ledger would include what entry to the Materials Quantity Variance account?

Henley Company uses a standard cost system that applies manufacturing overhead to units of product on the basis of direct labour hours.For the month of January,the fixed manufacturing overhead volume variance was $2,220 favourable.The company uses a fixed manufacturing overhead rate of $1.85 per direct labour hour.What were the standard direct labour hours allowed for the month's output in January?

(Appendix 10B) The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip: There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000. Used 12,000 board metres to produce 2,100 Mips. Used 1,700 hours of direct labour time at a total cost of $20,060. -(Appendix 10B) To record the incurrence of direct labour costs and its use in production,the general ledger would include what entry to the Labour Efficiency Variance account?

The Albright Company uses standard costing and has established the following standards for its single product: During November, the company made 4,000 units and incurred the following costs: The company applies variable manufacturing overhead to products on the basis of direct labour hours. -What was the total variable overhead variance for November?

If the denominator activity (in hours)used to compute the predetermined overhead rate is equal to the actual activity (in hours)for the period,then there is no volume variance.

The economic impact of the inability to reach a target denominator level of activity would best be measured by which of the following?

The Ferris Company applies manufacturing overhead costs to products on the basis of direct labour hours. The standard cost card shows that 3 direct labour hours are required per unit of product. For August, the company budgeted to work 90,000 direct labour hours and to incur the following total manufacturing overhead costs: During August, the company completed 28,000 units of product, worked 86,000 direct labour hours, and incurred the following total manufacturing overhead costs: The denominator activity used for the predetermined overhead rate was 90,000 direct labour hours. -For August,what was the variable overhead efficiency variance?

The Dillon Company makes and sells a single product and uses a flexible budget for overhead to plan and control overhead costs. Overhead costs are applied on the basis of direct labour hours. The standard cost card shows that 5 direct labour hours are required per unit. The Dillon Company had the following budgeted and actual data for March: -What was the variable overhead spending variance for March?

Jessep Corporation has a standard cost system in which manufacturing overhead is applied to units of product on the basis of direct labour hours. The company has provided the following data concerning its fixed manufacturing overhead costs in March: -What was the fixed overhead budget variance?

A manufacturer of playground equipment has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: Required: a) What was the materials price variance for the month? b) What was the materials quantity variance for the month?

The standard direct labour rate should NOT include fringe benefits.

A decrease in denominator level of activity will lead to which of the following?

(Appendix 10B) Which of the following entries would correctly record the charging of direct labour costs to Work in Process given an unfavourable labour efficiency variance and a favourable labour rate variance?

A furniture manufacturer has a standard costing system based on machine hours (MHs) as the measure of activity. Data from the company's flexible budget for manufacturing overhead are given below: The following data pertain to operations for the most recent period: -What was the fixed overhead budget variance for the period,rounded to the nearest dollar?

Hart Company's labour standards call for 500 direct labour hours to produce 250 units of product.During October,the company worked 625 direct labour hours and produced 300 units.What were the standard hours allowed for October?

Web Company uses a standard cost system that applies manufacturing overhead to units of product on the basis of machine hours.During February,the company used a denominator activity of 80,000 machine hours in computing its predetermined overhead rate.However,only 75,000 standard machine hours were allowed for the month's actual production.If the fixed overhead volume variance for February was $6,400 unfavourable,what was the total budgeted fixed overhead cost for the month?

The Claus Company makes and sells a single product and uses standard costing. During January, the company actually used 8,700 direct labour hours (DLHs) and produced 3,000 units of product. The standard cost card for one unit of product includes the following: Variable Factory Overhead: 3.0 DLHs @ $4.00 per DLH. Fixed Factory Overhead: 3.0 DLHs. @ $3.50 per DLH. For January, the company incurred $22,000 of actual fixed overhead costs and recorded an $875 favourable volume variance. -What was the budgeted fixed factory overhead cost for January?