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Exam 24: Standard Costing and Variance Analysis

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Question 31

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James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. -Using the above information provided for James Corporation,the standard overhead cost for each unit is

A) $45.
B) $33.
C) $30.
D) $63.

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

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Question 32

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Underfoot Products uses standard costing.The following information about overhead was generated during May: -Using the above information provided for Underfoot Products,compute the fixed overhead volume variance.

A) $5,000 (U)
B) $10,000 (U)
C) $10,000 (F)
D) $15,000 (F)

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

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Question 33

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Candy Stores Inc.gives you the following information: The standard material cost is $7 per pound for a 15 pound bag of chocolate.The following is the actual cost and usage data: -Using the above information provided for Candy Stores,compute the direct materials quantity variance for Candy Stores.

Which of the following yields the standard direct material cost?

Variance analysis involves computing the difference between standard and actual costs.

Crazy Cars Corporation's flexible budget for 30,000 units,for March,gives you the following information: The company produced 25,000 units in March with the following actual costs: Prepare a performance report for March,to compare the data from Crazy Cars' flexible budget with the actual costs incurred.Also,find if the costs are under or over budgeted.

The fixed overhead volume variance measures the use of existing facilities and capacity.

The direct labor rate variance is the difference between the standard hours allowed and the actual hours multiplied by the actual labor rate.

Nexus Star Inc.produces various kinds of oils.One of its product,Product X,is made from castor oil,beeswax,aloe vera,and a base compound. For the next 12 months,the company's purchasing agent believes that the cost of ingredients will be as follows: The direct labor time standard is 3.50 hours per unit at a standard direct labor rate of $12.00 per hour.The standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hour for the standard fixed overhead rate. a.Using these production standards,compute the standard unit cost of direct materials per unit if it takes 0.50 gallon of castor oil,1 pound of beeswax,0.25 gallon of aloe vera,and 1 gallon of base compound to produce one unit of product X.Round values to two decimal places. b.Using the standard unit cost of direct materials per case determined in (a)and the production standards given for direct labor and overhead,compute the standard unit cost of one unit of product X.

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Using the above information provided for Underfoot Products,compute the variable overhead spending variance.

Which of the following is a drawback of using standard costing system?

"A favorable direct materials price variance is always good for a company." Is this statement true? Justify your answer.

It is not necessary to provide an area on the performance report for a manager's reasons for variances.

James Corporation's controller has developed the cost and usage data listed below in preparation of standard unit cost information for the coming year. -Using the above information provided for James Corporation,the standard unit cost for direct materials is

The direct materials price standard is a carefully derived estimate of what a particular type of direct material will cost when purchased during the next accounting period.

Robert Inc.uses the standard costing method.The company's main product is a fine-quality headphones that normally takes 0.5 hour to produce.Normal annual capacity is 5,000 direct labor hours,and budgeted fixed overhead costs for the year were $8,750.During the year,the company produced and sold 5,800 units.Actual fixed overhead costs were $6,000. -Using the information provided for Robert Inc,compute the fixed overhead cost variance.

The standard fixed overhead rate is usually based on the expected number of standard labor hours.

Blue Bull Inc.uses direct labor hours to allocate variable and fixed overhead costs.Under which of the following circumstances would the base used to calculate the variable overhead rate be the same as that used for the fixed overhead rate?

The responsibility of a production manager is limited to direct materials used.

Choco Sweet Inc.gives you the following information: The standard labor time of 0.75 labor hour is required to produce one unit.The standard labor cost for a 10 pound bag of chocolate is $8 per labor hour.The following is data relating to the actual cost and usage data. -Using the above information provided for Choco Sweet,compute the direct labor efficiency variance for Choco Sweet.