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Exam 23: Evaluating Variances From Standard Costs

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Question 81

True/False

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Because accountants have financial expertise, they are the only ones that are able to set standard costs for the production area.

A) True
B) False

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Question 82

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The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: ​ -The fixed factory overhead volume variance is

A) $12,000 unfavorable
B) $12,000 favorable
C) $14,000 unfavorable
D) $26,000 unfavorable

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

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Question 83

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Since the variable factory overhead controllable variance measures the efficiency of using variable overhead resources, if budgeted variable overhead exceeds actual results, the variance is favorable.

​ *Actual hours are equal to standard hours for units produced.​ -An unfavorable fixed overhead volume variance can be due to all of the following except

Variances from standard costs are usually not included in reports to stockholders.

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: ​ -The following data are given for Bahia Company: Overhead is applied on standard labor hours.The fixed factory overhead volume variance is

Favorable fixed factory overhead volume variances are never harmful, since achieving them encourages managers to run the factory above normal capacity.

The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 -The direct materials quantity variance is

Ajay Company records standard costs and variances in its accounts. Journalize the entry to record the purchase of 6,000 widgets at $8.00 per unit, assuming widgets have a standard cost of $8.15 per unit.

The principle of exceptions allows managers to focus on correcting variances between

Standard costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs?

Match each of the following formulas and phrases with the term (a-e) it describes. -(Actual Rate per Hour - Standard Rate per Hour) × Actual Hours

Standards are set for only direct labor and direct materials.

Aquatic Corp.'s standard material requirement to produce one Model 2000 is 15 pounds of material at $110 per pound. Last month, Aquatic purchased 170,000 pounds of material at a total cost of $17,850,000. It used 162,000 pounds to produce 10,000 units of Model 2000.​ Determine the direct materials price variance and direct materials quantity variance, and indicate whether each variance is favorable or unfavorable.

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual direct materials used are 800 units at $12, the direct materials price variance is $800 unfavorable.

Lucy Corporation purchased and used 129,000 board feet of lumber in production at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard materials quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units.​ -The direct materials quantity variance is

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: ​ -The following data are given for Bahia Company: Overhead is applied on standard labor hours.The variable factory overhead controllable variance is

Rosser Company records standard costs and variances in its accounts. Rosser Company produces a container that requires 4 yards of material per unit. The standard price of one yard of material is $4.50. During the month, 9,500 chairs were manufactured using 37,300 yards of material.​ Journalize the entry to record the direct materials used in production.

Match each of the following phrases with the term (a-e) it describes. -Summarizes actual costs, standard costs, and the differences for units produced

Jaxson Corporation has the following data related to direct labor costs for September: actual costs for 10,200 hours at $15.75 per hour and standard costs for 10,800 hours at $15.50 per hour.​ The direct labor time variance is