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Exam 10: Standard Costs and Variances

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Question 141

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Jakeman 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 $351,000 and budgeted activity of 27,000 hours.During the year, the company completed the following transactions:Purchased 76,600 gallons of raw material at a price of $7.90 per gallon.Used 70,960 gallons of the raw material to produce 20,900 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 18,710 hours at an average cost of $19.40 per hour.Applied fixed overhead to the 20,900 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 $334,600. Of this total, $252,600 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $82,000 related to depreciation of manufacturing equipment.Completed and transferred 20,900 units from work in process to finished goods.Sold (for cash) 17,700 units to customers at a price of $74.30 per unit.Transferred the standard cost associated with the 17,700 units sold from finished goods to cost of goods sold.Paid $93,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.The company calculated the following variances for the year: To answer the following questions, it would be advisable to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. When the company closes its standard cost variances, the Cost of Goods Sold will increase (decrease) by:

A) ($90,070)
B) $154,489
C) $90,070
D) ($154,489)

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

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Question 142

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Puvo, Incorporated, manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company:The company produced 5,400 units during the month.A total of 11,600 pounds of material were purchased at a cost of $32,480.There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,320 pounds of material remained in the warehouse.During March, 3,440 direct labor-hours were worked at a rate of $18.50 per hour.Variable manufacturing overhead costs during March totaled $8,972.The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for March is:

A) $7,080 Favorable
B) $17,380 Favorable
C) $17,380 Unfavorable
D) $7,080 Unfavorable

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

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Question 143

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Kropf 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 September: Required:a. Compute the materials price variance for September.b. Compute the materials quantity variance for September.c. Compute the labor rate variance for September.d. Compute the labor efficiency variance for September.e. Compute the variable overhead rate variance for September.f. Compute the variable overhead efficiency variance for September.

If demand is insufficient to keep everyone busy and workers are not laid off, an unfavorable (U) variable overhead efficiency variance often will be a result unless managers build excessive inventories.

Termeer 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 August: The variable overhead efficiency variance for the month is closest to:

Bulluck Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July. 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 materials quantity variance for July is:

Scogin 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 standard cost card for the company's only product is as follows: During the year, the company purchased 76,500 pounds of raw material at a price of $8.70 per pound and used 71,880 pounds of the raw material to produce 19,400 units of work in process.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 raw materials used in production, the Work in Process inventory account will increase (decrease) by:

Fluegge 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 December: The raw materials quantity variance for the month is closest to:

Alberts 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. 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 $240,000 and budgeted activity of 20,000 hours.During the year, the company applied fixed overhead to the 15,200 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 $223,700. Of this total, $147,700 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $76,000 related to depreciation of manufacturing equipment.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 the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

Pippin 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 June: The labor rate variance for the month is closest to:

Lacrue 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 actual output for the period was 3,700 units.The total standard cost per unit is closest to:

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 UnfavorableThe variable overhead efficiency variance for July is:

Catherman Corporation 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.During the year, the company produced and sold 32,400 units at a price of $42.30 per unit. Its standard cost per unit produced is $36.90 and its selling and administrative expenses totaled $102,000. The company does not have any variable manufacturing overhead costs and 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:

Pleiss Corporation applies manufacturing overhead to products on the basis of standard machine-hours. The company's standard variable manufacturing overhead rate is $2.40 per machine-hour. The actual variable manufacturing overhead cost for the month was $5,240. The original budget for the month was based on 2,100 machine-hours. The company actually worked 2,270 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 2,280 machine-hours. What was the variable overhead efficiency variance for the month?

Dibert Incorporated has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for February: The labor efficiency variance for the month is closest to:

Grub Chemical Corporation has developed cost standards for the production of its new chocolate, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO: Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows: What is ChocO's materials (milk chocolate) quantity variance?

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 materials quantity variance for January is:

Casivant Corporation makes a product that uses a material with the following direct material standards: The company produced 7,300 units in November using 28,710 pounds of the material. During the month, the company purchased 30,800 pounds of the direct material at a total cost of $117,040. The direct materials purchases variance is computed when the materials are purchased.The materials quantity variance for November is:

Sousa 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 standards for direct materials for the company's only product specify 2.8 kilos per unit at $7.50 per kilo or $21.00 per unit. During the year, the company purchased 82,100 kilos of raw material at a price of $7.40 per kilo and used 78,020 kilos of the raw material to produce 27,900 units of work in process.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 the raw materials used in production are recorded, which of the following entries will be made?

Mcphail Incorporated has a standard cost system. The standards for direct materials for one of its products specify 6.6 grams of a particular input per unit of output at a standard cost of $7.40 per gram. The company has reported the following actual results for the product for September: Required: a. Compute the materials price variance for this input for September. b. Compute the materials quantity variance for this input for September.