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Exam 7: Performance Evaluation Using Variances From Standard Costs

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Question 21

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The Trumpet Company produced 8,700 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.

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(29,000 hours - (8,7...

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Question 22

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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?

A) Used to indicate where changes in technology and machinery need to be made.
B) Used to identify inventory
C) Used to plan direct materials, direct labor, and factory factory overhead.
D) Used to control costs.

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

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Question 23

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Which of the following conditions normally would not indicate that standard costs should be revised?

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 $1,000 unfavorable.

The use of standards for nonmanufacturing expenses is:

Calculate the Direct Materials Quantity variance using the above information:

Define ideal and currently attainable standards. Which type of standard should be used and why?

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

The following data relate to direct materials costs for November: What is the direct materials quantity variance?

The following data is given for the Stringer Company: Overhead is applied on standard labor hours. The direct material price variance is:

Calculate the Direct Labor Rate Variance using the above information

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% 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 factory overhead controllable variance?

The following are inputs and outputs to the help desk. Operator training Number of calls per day Maintenance of computer equipment Number of operators Number of complaints Identify whether each is an input or an output to the help desk.

Favorable volume variances may be harmful when:

Standard costs can be used with both the process cost and job order cost systems.

Volume variance measures fixed factory overhead.

The following data is given for the Bahia Company: Overhead is applied on standard labor hours. The factory overhead volume variance is:

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

The following data is given for the Harry Company: Overhead is applied on standard labor hours. The direct labor rate variance is:

The following data relate to direct labor costs for February: What is the direct labor time variance?