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Exam 22: Performance Evaluation Using Variances From Standard Costs

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Question 81

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

A) True
B) False

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Question 82

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The standard factory overhead rate is $10 per direct labor hour $8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: -What is the amount of the fixed factory overhead volume variance?

A) $12,500 favorable
B) $10,000 unfavorable
C) $12,500 unfavorable
D) $10,000 favorable

E) All of the above
F) None of the above

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Question 83

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A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

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

Titus Company produced 8,900 units of a product that required 3.25 standard hours per unit. The standard fixed overhead cost per unit is $1.20 per hour at 29,000 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.

Standards are performance goals used to evaluate and control operations.

Match the following formulas or descriptions with the term a-e) it defines. -Standard variable overhead for actual units produced

Standard costs are divided into which of the following components?

The direct labor time variance is

Morocco Desk Co. purchases 6,000 feet of lumber at $6.00 per foot. The standard price for direct materials is $5.00. The entry to record the purchase and unfavorable direct materials price variance is

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

Match the following descriptions with the term a-e) it describes: -an example is the number of customer complaints

Calculate the total direct labor variance.

Hint: Determine units produced at normal capacity.)

Sally's Chocolate Company makes gourmet cupcakes which are sold by the dozen. Compute the standard cost for one dozen cupcakes, based on the following standards:

If the standard to produce a given amount of product is 600 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 unfavorable.

The amount of the fixed factory overhead volume variance is

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $2,200 unfavorable.

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

Accounting systems that use standards for product costs are called standard cost systems.