Bobadilla-standard Costs and Variance Analysis

Standard Costs and Variance Analysis 

 A. &. C. D. 1. A primary primary prpos prposee o! sin" a standa standard rd cost cost system system is  A. To ma#e t$in"s easier easier !or mana"ers mana"ers in t$e prodction prodction !aci%ity. &. To pro'ide pro'ide a distinct distinct measr measree o! cost contro contro%.%. C. To minimi(e mi(e t$e t$e cost per per nit o! prodct prodction. ion. D. ) and and c are correc correctt

No incenti'e )ons )ons ,i%% )e paid. 7ost 'aria 'ariances nces ,i%% )e n!a' n!a'ora) ora)%e. %e. Emp%oyees ,i%% )e stron"%y moti'ated to attain t$e standard. standard. Costs ,i%% )e contro%%ed contro%%ed )etter t$an i! %o,er standards standards ,ere sed.

=. To measre measre contro%%a)%e contro%%a)%e prodction prodction ine!!iciencies ine!!iciencies ,$ic$ o! t$e t$e !o%%o,in" is t$e )est )asis !or a company to se in esta)%is$in" t$e standard $ors a%%o,ed !or t$e otpt o! one nit o!  prodct A. A'era"e $istorica% $istorica% per!ormance per!ormance !or t$e %ast se'era% se'era% years &. En"ineerin" neerin" estimates estimates )ased )ased on idea% per!orman per!ormance ce C. En"ineerin" estimates )ased on attaina)%e attaina)%e per!ormanc per!ormancee D. T$e $ors $ors per nit t$at ,o%d )e re>ired re>ired !or t$e present present ,or#!orc ,or#!orcee to satis!y s!y e6pected e6pected demand o'er t$e %on" rn

*. +$ic$ one o! t$e !o%%o,in" !o%%o,in" statements statements is tre tre concernin" concernin" standard standard costscosts A. Standard costs are estimates estimates o! costs attaina)%e on%y nder t$e most idea% conditions conditions )t rare%y practica)%e. &. Standard costs costs are di!!ic%t to se ,it$ a process/costin" process/costin" system. C. I! proper%y sed standards standards can can $e%p moti'ate emp%oyees. emp%oyees. D. 0n!a'ora 0n!a'ora)%e )%e 'ariances 'ariances materia% materia% in amont s$o%d )e in'esti" in'esti"ated ated )t %ar"e %ar"e !a'ora)% !a'ora)%e 'ariances need not )e in'esti"ated.

?. +$ic$ o! t$e !o%%o,in" statements a)ot a)ot t$e se%ection o! o! standards standards is tretre A. Idea% standards tend to e6tract $i"$er per!ormance per!ormance %e'e%s since t$ey "i'e emp%oyees somet$in" to %i'e p to. &. Crrent%y attaina)%e standards standards may may encora"e encora"e operatin" operatin" ine!!iciencies. ine!!iciencies. C. Crre Crrent% nt%yy attain attaina)% a)%e standa standards rds disco discora" ra"ee emp%oy emp%oyees ees !rom !rom ac$ie' ac$ie'in" in" t$eir t$eir !%% !%% per!ormance per!ormance potentia%. D. Idea Idea%% stan standard dardss dema demand nd ma6imm e!!iciency ency ,$ic$ ,$ic$ may %ea'e ,or#ers ,or#ers !rstrated !rstrated t$s casin" a dec%ine in per!ormance.

. +$ic$ +$ic$ o! t$e !o%%o,in" !o%%o,in" is a prpose prpose o! standard standard costin"costin" A. Determine 2)rea#e'en3 2)rea#e'en3 prodction prodction %e'e% &. Co Cont ntro ro%% cos costs ts C. E%iminate t$e need !or s)4ecti'e decisions )y mana"ement mana"ement D. A%%ocate A%%ocate cost cost ,it$ more more accr accracy acy

Standard costs 's. )d"eted costs @. A di!!erence di!!erence )et,een standard standard costs sed sed !or cost contro% contro% and t$e )d"eted costs costs representin" representin" t$e same man!actrin" e!!ort can e6ist )ecase  A. standard costs costs mst )e determined determined a!ter t$e )d"et )d"et is comp%eted &. standard costs costs represent represent ,$at costs s$o%d s$o%d )e ,$i%e )d"eted )d"eted costs represent represent e6pected e6pected acta% costs C. )d"eted costs costs are $istorica% $istorica% costs ,$i%e standard standard costs are are )ased on en"ineerin" en"ineerin" stdies D. )d"eted costs costs inc%de some 2s%ac#3 2s%ac#3 or 2paddin"3 2paddin"3 ,$i%e standard standard costs do not

5. +$en e'a%atin" e'a%atin" t$e operatin" operatin" per!orma per!ormance nce mana"emen mana"ementt sometimes sometimes ses t$e di!!erence di!!erence )et,een e6pected and acta% per!ormance. T$is re!ers to:  A. 7ana"ement )y De'iation De'iation C. 7ana"ement )y O)4ecti'e O)4ecti'e &. 7ana"e 7ana"emen mentt )y Contr Contro% o% D. 7ana 7ana"eme "ement nt )y E6ce E6ception ption Standard settin" 8. T$e )est )asis pon ,$ic$ ,$ic$ cost standards standards s$o%d s$o%d )e set to measre contro%% contro%%a)%e a)%e prodctio prodctionn ine!!iciencies is  A. En"ineerin" standards standards )ased )ased on idea% per!ormance per!ormance &. Norma Norma%% capaci capacity ty C. En"ineerin" standards )ased on attaina)%e attaina)%e per!ormance per!ormance D. 9racti 9ractica ca%% capac capacity ity

9rocess costin" 1. +$en standard costs costs are sed in a process/costin" process/costin" system system $o, i! at a%% are e>i'a%ent e>i'a%ent nits in'o%'ed or sed in t$e cost report at standard A. E>i'a%ent nits are are not sed. &. E>i'a%ent nits are are compted compted sin" sin" a 2specia%3 approac$. C. T$e acta% e>i'a%ent e>i'a%ent nits ts are m%tip%ied m%tip%ied )y t$e standard standard cost cost per nit.

. A company emp%oyin" 'ery 'ery ti"$t ;$i"$< standards standards in a standard standard cost system s$o%d s$o%d e6pect e6pect t$at

203

Standard Costs and Variance Analysis 

D. T$e standard standard e>i'a%ent e>i'a%ent nits are m%tip%ied m%tip%ied )y t$e acta% cost per nit.

 A. &. C. D.

Norma% costin" 11. T$e !i6ed o'er$ead o'er$ead app%ication app%ication rate is a !nction !nction o! a predetermined predetermined 2norma%3 2norma%3 acti'ity %e'e%. %e'e%. I!  standard $ors a%%o,ed !or "ood otpt e>a% t$is predetermined acti'ity %e'e% !or a "i'en period t$e 'o%me 'ariance ,i%% )e  A. Bero &. a'o a'ora ra)% )%e C. 0n!a 0n!a'o 'ora ra)% )%ee D. Eit$er !a'ora)%e !a'ora)%e or n!a'ora)%e n!a'ora)%e dependin" dependin" on t$e )d"eted o'er$ead. o'er$ead.

Tota% Tota% o'er$ead app%ication app%ication rate Vo%me Vo%me o! tota% e6pens e6penses es at 'arios 'arios acti'ity 'ity %e'e%s %e'e%s Varia)% Varia)%e o'er$ead o'er$ead app%ica app%ication tion rate i6edd o'er$ead i6e o'er$ead app%i app%ication cation rate

1=. Assmin" t$at t$e standard standard !i6ed o'er$ead rate is )ased )ased on !%% capacity capacity t$e cost o! a'ai%a)%e )t nsed prodcti'e capacity is indicated )y t$e:  A. actory o'er$ead o'er$ead cost 'o%me 'o%me 'ariance &. Direct Direct %a)or %a)or cost e!!icien e!!iciency cy 'arianc 'ariancee C. Direct Direct %a)or %a)or cost cost rate rate 'arianc 'ariancee D. actory actory o'er$ead o'er$ead cost cost contro%%a)%e a)%e 'ariance ance

1*. T$e a)so%te a)so%te minimm cost possi)%e possi)%e nder t$e )est concei'a) concei'a)%e %e operatin" operatin" conditio conditions ns is a description o! ,$ic$ type o! standard A. Crrent%y attaina)%e attaina)%e ;e6pected< ;e6pected< C. T$ T$eo eore retitica ca%% &. No N orma% D. 9r 9ractica%

1?. In ana%y(in" man!actrin" man!actrin" o'er$ead 'ariances 'ariances t$e 'o%me 'ariance 'ariance is t$e di!!erence )et,een t$e:  A. Amont s$o,n in t$e !%e6i)%e )d"et and t$e amont s$o,n in t$e de)it side o! t$e o'er$ead contro% accont &. 9redeter 9redetermine minedd o'er$ead o'er$ead app%ication cation rate and t$e !%e6i)%e !%e6i)%e )d"et )d"et app%icati ication on rate times acta% $ors ,or#ed C. &d" &d"et et a%%o,ance a%%o,ance )ased on standard standard $or $orss a%%o,ed !or acta% prodctio prodctionn !or t$e period and t$e amont )d"eted to )e app%ied drin" t$e period D. Acta% Acta% amont spent spent !or o'er$ead o'er$ead items drin" drin" t$e period and t$e o'er$ead o'er$ead amont amont app%ied to prodction drin" t$e period

1. Standards ,$ic$ are di!!ic%t di!!ic%t to ac$ie'e de to reasons )eyond )eyond t$e indi'ida% per!ormin" t$e tas# are t$e res%t o! !irm sin" ,$ic$ o! t$e !o%%o,in" met$ods to esta)%is$ standards A. Idea% Standards C. 9racti 9ractica% c a% Stand Standard ardss &. La6 Standards D. Emp%oyee Standards 15. Standards t$at represent represent %e'e%s o! operation t$at can )e attained attained ,it$ reasona)%e reasona)%e e!!ort are ca%%ed:  A. T$eoretica% standards standards C. Varia)%e standards standards &. Idea% Idea% standa standard rdss D. Norma% Norma% sta standa ndard rdss

1@. T$e 'arian 'ariance ce %east %east si"ni!icant !or prposes o! contro%%in" costs is t$e:  A. 7ateria% sa"e 'ariance 'ariance &. Varia)%e a)%e o'er$e o'er$ead ad e!!icienc e!!iciencyy 'ariance 'ariance C. i6ed i6ed o'er$ead o'er$ead spend spendin" in" 'arianc 'ariancee D. i6e i6edd o'er$ead o'er$ead 'o%me 'o%me 'aria 'ariance nce

eneric 'ariances 18. +$en per!ormin" inptotpt inptotpt 'ariance ana%ysis ana%ysis in standard costin" 2standard 2standard $ors a%%o,ed3 is a means o! measrin"  A. Standard otpt otpt at standard $ors C. Acta Acta%% otpt otpt at standa standard rd $ors $ors & . S ta tan da dar d ot p pt at at ac act a a % $o r rs D. A cctt a a% o o tp tp t a t ac tta % $o r r s

*. T$e 'ariance ance most se!% in e'a%atin" p%ant ti%i(ation is t$e:  A. Varia)%e o'er$ead o'er$ead spendin" spendin" 'ariance &. i6ed i6ed o'er$ead o'er$ead spend spendin" in" 'arianc 'ariance. e. C. Varia)%e a)%e o'er$ea o'er$eadd e!!iciency e!!iciency 'arianc 'ariancee D. i6e i6edd o'er$ead o'er$ead 'o%me 'o%me 'aria 'ariance nce

T,o ,ay 'ariances Vo%me 'ariance  1. A company company ses a t,o/,ay t,o/,ay ana%ysis ana%ysis !or o'er$ead o'er$ead 'ariances: 'ariances: )d"et )d"et ;contro%%a)% ;contro%%a)%e< e< and 'o%me. T$e 'o%me 'ariance 'ariance is )ased on t$e

or ,ay 'ariances *1. T$e c$oice o! prodction prodction 'o%me as a denominator !or ca%c%atin" ca%c%atin" its !actory o'er$ead o'er$ead rate  A. Has no e!!ect e!!ect on t$e !i6ed !actory o'er$ead o'er$ead rate !or app%yin" costs to prodction

204

Standard Costs and Variance Analysis 

&. Has an e!!ect on t$e 'aria)%e !actory o'er$ead rate !or app%yin" costs to prodction C. Has no e!!ect on t$e !i6ed !actory o'er$ead )d"et 'ariance D. Has no e!!ect on t$e !i6ed !actory o'er$ead prodction 'o%me 'ariance **. T$e )d"eted o'er$ead costs !or standard $ors a%%o,ed and t$e o'er$ead costs app%ied to prodct are t$e same amont  A. !or )ot$ 'aria)%e and !i6ed o'er$ead costs. &. on%y ,$en standard $ors a%%o,ed is %ess t$an norma% capacity. C. !or 'aria)%e o'er$ead costs. D. !or !i6ed o'er$ead costs. Responsi)i%ity !or 'ariances *. +$ic$ department is cstomari%y $e%d responsi)%e !or an n!a'ora)%e materia%s sa"e 'ariance A. Fa%ity contro% C. 9rc$asin" &. En"ineerin" D. 9rodction

*5. +$ic$ o! t$e !o%%o,in" s$o%d )e %east considered ,$en decidin" ,$et$er to in'esti"ate a 'ariance A. +$et$er t$e 'ariance is !a'ora)%e or n!a'ora)%e &. Si"ni!icance o! t$e 'ariance C. Cost o! in'esti"atin" t$e 'ariance D. Trend o! t$e 'ariances o'er time Tota% materia%s 'ariance *8. I! t$e tota% materia%s 'ariance ;acta% cost o! materia%s sed compared ,it$ t$e standard cost o! t$e standard amont o! materia%s re>ired< !or a "i'en operation is !a'ora)%e ,$y mst t$is 'ariance )e !rt$er e'a%ated as to price and sa"e-

position o! a prodction process on a %earnin" cr'e A. 7ateria%s mi6 C. La)or rate &. 7ateria %s price D. La)or e!!iciency *=. +$ic$ o! t$e !o%%o,in" is t$e most pro)a)%e reason ,it$ a company ,o%d e6perience an n!a'ora)%e %a)or rate 'ariance and a !a'ora)%e %a)or e!!iciency 'ariance A. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  $i"$er%y paid e6perienced indi'ida%s. &. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  ne, re%ati'e%y %o, paid ns#i%%ed ,or#ers. C. &ecase o! t$e prodcti'e sc$ed%e ,or#ers !rom ot$er prodction areas ,ere assi"ned to assist in t $is partic%ar process. D. De!ecti'e materia%s cased more %a)or to )e sed in order to prodce a standard nit. T,o/,ay o'er$ead 'ariance *?. T$e )d"et !or a "i'en cost drin" a "i'en period ,as 91. T$e acta% cost !or t$e period ,as 9155. Considerin" t$ese !acts it can )e said t$at t$e p%ant mana"er $as done a )etter t$an e6pected 4o) in contro%%in" t$e cost i!:  A. T$e cost is 'aria)%e and acta% prodction ,as @G o! )d"eted prodction &. T$e cost is 'aria)%e and acta% prodction e>a%ed )d"eted prodction C. T$e cost is 'aria)%e and acta% prodction ,as ?G o! )d"eted prodction D. T$e cost is discretionary !i6ed cost and acta% prodction e>a%ed )d"eted prodction &d"et 'ariance  *@. T$e )d"et 'ariance !or !i6ed !actory o'er$ead !or t$e norma%/'o%me practica%/capacity and e6pected/acti'ity %e'e%s ,o%d )e t$e:  A. Same e6cept !or norma% 'o%me C. Same e6cept !or e6pected acti'ity &. Same e6cept !or practica% capacity D. Same !or a%% t$ree acti'ity %e'e%s Vo%me 'ariance 

Standard Costs and Variance Analysis 

D. T$e standard standard e>i'a%ent e>i'a%ent nits are m%tip%ied m%tip%ied )y t$e acta% cost per nit.

 A. &. C. D.

Norma% costin" 11. T$e !i6ed o'er$ead o'er$ead app%ication app%ication rate is a !nction !nction o! a predetermined predetermined 2norma%3 2norma%3 acti'ity %e'e%. %e'e%. I!  standard $ors a%%o,ed !or "ood otpt e>a% t$is predetermined acti'ity %e'e% !or a "i'en period t$e 'o%me 'ariance ,i%% )e  A. Bero &. a'o a'ora ra)% )%e C. 0n!a 0n!a'o 'ora ra)% )%ee D. Eit$er !a'ora)%e !a'ora)%e or n!a'ora)%e n!a'ora)%e dependin" dependin" on t$e )d"eted o'er$ead. o'er$ead.

Tota% Tota% o'er$ead app%ication app%ication rate Vo%me Vo%me o! tota% e6pens e6penses es at 'arios 'arios acti'ity 'ity %e'e%s %e'e%s Varia)% Varia)%e o'er$ead o'er$ead app%ica app%ication tion rate i6edd o'er$ead i6e o'er$ead app%i app%ication cation rate

1=. Assmin" t$at t$e standard standard !i6ed o'er$ead rate is )ased )ased on !%% capacity capacity t$e cost o! a'ai%a)%e )t nsed prodcti'e capacity is indicated )y t$e:  A. actory o'er$ead o'er$ead cost 'o%me 'o%me 'ariance &. Direct Direct %a)or %a)or cost e!!icien e!!iciency cy 'arianc 'ariancee C. Direct Direct %a)or %a)or cost cost rate rate 'arianc 'ariancee D. actory actory o'er$ead o'er$ead cost cost contro%%a)%e a)%e 'ariance ance

1*. T$e a)so%te a)so%te minimm cost possi)%e possi)%e nder t$e )est concei'a) concei'a)%e %e operatin" operatin" conditio conditions ns is a description o! ,$ic$ type o! standard A. Crrent%y attaina)%e attaina)%e ;e6pected< ;e6pected< C. T$ T$eo eore retitica ca%% &. No N orma% D. 9r 9ractica%

1?. In ana%y(in" man!actrin" man!actrin" o'er$ead 'ariances 'ariances t$e 'o%me 'ariance 'ariance is t$e di!!erence )et,een t$e:  A. Amont s$o,n in t$e !%e6i)%e )d"et and t$e amont s$o,n in t$e de)it side o! t$e o'er$ead contro% accont &. 9redeter 9redetermine minedd o'er$ead o'er$ead app%ication cation rate and t$e !%e6i)%e !%e6i)%e )d"et )d"et app%icati ication on rate times acta% $ors ,or#ed C. &d" &d"et et a%%o,ance a%%o,ance )ased on standard standard $or $orss a%%o,ed !or acta% prodctio prodctionn !or t$e period and t$e amont )d"eted to )e app%ied drin" t$e period D. Acta% Acta% amont spent spent !or o'er$ead o'er$ead items drin" drin" t$e period and t$e o'er$ead o'er$ead amont amont app%ied to prodction drin" t$e period

1. Standards ,$ic$ are di!!ic%t di!!ic%t to ac$ie'e de to reasons )eyond )eyond t$e indi'ida% per!ormin" t$e tas# are t$e res%t o! !irm sin" ,$ic$ o! t$e !o%%o,in" met$ods to esta)%is$ standards A. Idea% Standards C. 9racti 9ractica% c a% Stand Standard ardss &. La6 Standards D. Emp%oyee Standards 15. Standards t$at represent represent %e'e%s o! operation t$at can )e attained attained ,it$ reasona)%e reasona)%e e!!ort are ca%%ed:  A. T$eoretica% standards standards C. Varia)%e standards standards &. Idea% Idea% standa standard rdss D. Norma% Norma% sta standa ndard rdss

1@. T$e 'arian 'ariance ce %east %east si"ni!icant !or prposes o! contro%%in" costs is t$e:  A. 7ateria% sa"e 'ariance 'ariance &. Varia)%e a)%e o'er$e o'er$ead ad e!!icienc e!!iciencyy 'ariance 'ariance C. i6ed i6ed o'er$ead o'er$ead spend spendin" in" 'arianc 'ariancee D. i6e i6edd o'er$ead o'er$ead 'o%me 'o%me 'aria 'ariance nce

eneric 'ariances 18. +$en per!ormin" inptotpt inptotpt 'ariance ana%ysis ana%ysis in standard costin" 2standard 2standard $ors a%%o,ed3 is a means o! measrin"  A. Standard otpt otpt at standard $ors C. Acta Acta%% otpt otpt at standa standard rd $ors $ors & . S ta tan da dar d ot p pt at at ac act a a % $o r rs D. A cctt a a% o o tp tp t a t ac tta % $o r r s

*. T$e 'ariance ance most se!% in e'a%atin" p%ant ti%i(ation is t$e:  A. Varia)%e o'er$ead o'er$ead spendin" spendin" 'ariance &. i6ed i6ed o'er$ead o'er$ead spend spendin" in" 'arianc 'ariance. e. C. Varia)%e a)%e o'er$ea o'er$eadd e!!iciency e!!iciency 'arianc 'ariancee D. i6e i6edd o'er$ead o'er$ead 'o%me 'o%me 'aria 'ariance nce

T,o ,ay 'ariances Vo%me 'ariance  1. A company company ses a t,o/,ay t,o/,ay ana%ysis ana%ysis !or o'er$ead o'er$ead 'ariances: 'ariances: )d"et )d"et ;contro%%a)% ;contro%%a)%e< e< and 'o%me. T$e 'o%me 'ariance 'ariance is )ased on t$e

or ,ay 'ariances *1. T$e c$oice o! prodction prodction 'o%me as a denominator !or ca%c%atin" ca%c%atin" its !actory o'er$ead o'er$ead rate  A. Has no e!!ect e!!ect on t$e !i6ed !actory o'er$ead o'er$ead rate !or app%yin" costs to prodction

204

Standard Costs and Variance Analysis 

&. Has an e!!ect on t$e 'aria)%e !actory o'er$ead rate !or app%yin" costs to prodction C. Has no e!!ect on t$e !i6ed !actory o'er$ead )d"et 'ariance D. Has no e!!ect on t$e !i6ed !actory o'er$ead prodction 'o%me 'ariance

position o! a prodction process on a %earnin" cr'e A. 7ateria%s mi6 C. La)or rate &. 7ateria %s price D. La)or e!!iciency

**. T$e )d"eted o'er$ead costs !or standard $ors a%%o,ed and t$e o'er$ead costs app%ied to prodct are t$e same amont  A. !or )ot$ 'aria)%e and !i6ed o'er$ead costs. &. on%y ,$en standard $ors a%%o,ed is %ess t$an norma% capacity. C. !or 'aria)%e o'er$ead costs. D. !or !i6ed o'er$ead costs.

*=. +$ic$ o! t$e !o%%o,in" is t$e most pro)a)%e reason ,it$ a company ,o%d e6perience an n!a'ora)%e %a)or rate 'ariance and a !a'ora)%e %a)or e!!iciency 'ariance A. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  $i"$er%y paid e6perienced indi'ida%s. &. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  ne, re%ati'e%y %o, paid ns#i%%ed ,or#ers. C. &ecase o! t$e prodcti'e sc$ed%e ,or#ers !rom ot$er prodction areas ,ere assi"ned to assist in t $is partic%ar process. D. De!ecti'e materia%s cased more %a)or to )e sed in order to prodce a standard nit.

Responsi)i%ity !or 'ariances *. +$ic$ department is cstomari%y $e%d responsi)%e !or an n!a'ora)%e materia%s sa"e 'ariance A. Fa%ity contro% C. 9rc$asin" &. En"ineerin" D. 9rodction

T,o/,ay o'er$ead 'ariance *?. T$e )d"et !or a "i'en cost drin" a "i'en period ,as 91. T$e acta% cost !or t$e period ,as 9155. Considerin" t$ese !acts it can )e said t$at t$e p%ant mana"er $as done a )etter t$an e6pected 4o) in contro%%in" t$e cost i!:  A. T$e cost is 'aria)%e and acta% prodction ,as @G o! )d"eted prodction &. T$e cost is 'aria)%e and acta% prodction e>a%ed )d"eted prodction C. T$e cost is 'aria)%e and acta% prodction ,as ?G o! )d"eted prodction D. T$e cost is discretionary !i6ed cost and acta% prodction e>a%ed )d"eted prodction

*5. +$ic$ o! t$e !o%%o,in" s$o%d )e %east considered ,$en decidin" ,$et$er to in'esti"ate a 'ariance A. +$et$er t$e 'ariance is !a'ora)%e or n!a'ora)%e &. Si"ni!icance o! t$e 'ariance C. Cost o! in'esti"atin" t$e 'ariance D. Trend o! t$e 'ariances o'er time

&d"et 'ariance  *@. T$e )d"et 'ariance !or !i6ed !actory o'er$ead !or t$e norma%/'o%me practica%/capacity and e6pected/acti'ity %e'e%s ,o%d )e t$e:  A. Same e6cept !or norma% 'o%me C. Same e6cept !or e6pected acti'ity &. Same e6cept !or practica% capacity D. Same !or a%% t$ree acti'ity %e'e%s

Tota% materia%s 'ariance *8. I! t$e tota% materia%s 'ariance ;acta% cost o! materia%s sed compared ,it$ t$e standard cost o! t$e standard amont o! materia%s re>ired< !or a "i'en operation is !a'ora)%e ,$y mst t$is 'ariance )e !rt$er e'a%ated as to price and sa"e A. T$ere is no need to !rt$er e'a%ate t$e tota% materia%s 'ariance i! it is !a'ora)%e &. enera%%y accepted accontin" princip%es re>ire t$at a%% 'ariances )e ana%y(ed in t$ree sta"es C. A%% 'ariances mst appear in t$e anna% report to e>ity o,ners !or proper disc%osre D. To a%%o, mana"ement to e'a%ate t$e e!!iciency o! t$e prc$asin" and prodction !nctions

Vo%me 'ariance  . Yo $a'e %eased a 8/"a%%on stora"e tan# !or 98 per mont$. Yo stored 5 "a%%ons o! %i>id in t$e tan# drin" t$e mont$. T$e cost o! stora"e ,as 91.*8 per "a%%on rat$er t$an 91. per "a%%on )ased on 8 "a%%on capacity. T$ere!ore t$e cost o! storin" 5 "a%%ons ,as 91 more ;9.*8 6 5< in tota% t$an i! yo $ad stored 8 "a%%ons o! %i>id in t$e tan#. +$ic$ 'ariance is )ein" descri)ed A. Varia)%e/o'er$ead e!!iciency 'ariance &. i6ed/o'er$ead spendin" 'ariance C. Varia)%e/o'er$ead spendin" 'ariance

La)or 'ariances *. +$ic$ o! t$e !o%%o,in" n!a'ora)%e cost 'ariances ,o%d )e direct%y a!!ected )y t$e re%ati'e

205

Standard Costs and Variance Analysis 

D. i6ed/o'er$ead 'o%me 'ariance 1. a'ora)%e !i6ed o'er$ead 'o%me 'ariance occrs i!:  A. T$ere is a !a'ora)%e %a)or e!!iciency 'ariance &. T$ere is a !a'ora)%e %a)or rate 'ariance C. 9rodction is %ess t$an p%anned D. 9rodction is "reater t$an p%anned

Ra, 7ateria%s i . S$ampoo Company is a c$emica% man!actrer t$at spp%ies indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion and needs to de'e%op a standard prodct cost !or  t$is ne, so%tion.

*. T$e n!a'ora)%e 'o%me 'ariance may )e de to a%% )t ,$ic$ o! t$e !o%%o,in" !actors A. ai%re to maintain an e'en !%o, o! ,or# &. 7ac$ine )rea#do,ns C. 0ne6pected increases in t$e cost o! ti%ities D. ai%re to o)tain eno"$ sa%es orders

T$e ne, c$emica% so%tion is made )y com)inin" a c$emica% compond ;Nyc%yn< and a so%tion ;Sa%e6< )oi%in" t$e mi6tre addin" a second compond ;9rotet< and )ott%in" t$e res%tin" so%tion in */%iter containers. T$e initia% mi6 ,$ic$ is * %iters in 'o%me consists o!  *5 #i%o"rams o! Nyc%yn and 1@.* %iters o! Sa%e6. A *G redction in 'o%me occrs drin" t$e )oi%in" process. T$e so%tion is t$en coo%ed s%i"$t%y )e!ore 1 #i%o"rams o! 9rotet are added t$e addition o! 9rotet does not a!!ect t$e tota% %i>id 'o%me.

33. How will a favorable volume variance affect net income under each of the following methods?

 A. &. C. D.

 A)sorption Decrease Decrease Increase Increase

Varia)%e No e!!ect Increase No e!!ect Decrease

5. a'ora)%e 'o%me 'ariances may )e $arm!% ,$en:  A. 7ac$ine repairs case ,or# stoppa"es &. Sper'isors !ai% to maintain an e'en !%o, o! ,or# C. 9rodction in e6cess o! norma% capacity cannot )e so%d D. T$ere are ins!!icient sa%es orders to #eep t$e !actory operatin" at norma% capacity T$ree/,ay O'er$ead 'ariance 35. During 2006 a departments three!variance overhead standard costing s"stem reported

T$e prc$ase prices o! t$e ra, materia%s sed so%tion are as !o%%o,s: Nyc%yn Sa%e6 9rotet T$e tota% standard materia%s cost o! * %iters o! t$e  A. 915.* C. &. 915. D. ii

.

in t$e man!actre o! t$is ne, c$emica% 918. per #i%o"ram 9*1. per %iter 9*?. per #i%o"ram

 

prodct is: 9 ?5.8 91*5.

E% Andre Co. ses a standard costin" system in connection ,it$ t$e man!actre o! a %ine o! T/ s$irts. Eac$ nit o! !inis$ed prodct contains *.*8 yards o! direct materia%. Ho,e'er a *8 percent direct materia% spoi%a"e ca%c%ated on inpt >antities occrs drin" t$e man!actrin" process. T$e cost o! t$e direct materia%s is 918 per yard. T$e standard direct materia% cost per nit o! !inis$ed prodct is

Standard Costs and Variance Analysis 

&. Has an e!!ect on t$e 'aria)%e !actory o'er$ead rate !or app%yin" costs to prodction C. Has no e!!ect on t$e !i6ed !actory o'er$ead )d"et 'ariance D. Has no e!!ect on t$e !i6ed !actory o'er$ead prodction 'o%me 'ariance

position o! a prodction process on a %earnin" cr'e A. 7ateria%s mi6 C. La)or rate &. 7ateria %s price D. La)or e!!iciency

**. T$e )d"eted o'er$ead costs !or standard $ors a%%o,ed and t$e o'er$ead costs app%ied to prodct are t$e same amont  A. !or )ot$ 'aria)%e and !i6ed o'er$ead costs. &. on%y ,$en standard $ors a%%o,ed is %ess t$an norma% capacity. C. !or 'aria)%e o'er$ead costs. D. !or !i6ed o'er$ead costs.

*=. +$ic$ o! t$e !o%%o,in" is t$e most pro)a)%e reason ,it$ a company ,o%d e6perience an n!a'ora)%e %a)or rate 'ariance and a !a'ora)%e %a)or e!!iciency 'ariance A. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  $i"$er%y paid e6perienced indi'ida%s. &. T$e mi6 o! ,or#ers assi"ned to t$e partic%ar 4o) ,as $ea'i%y ,ei"$ted to,ard t$e se o!  ne, re%ati'e%y %o, paid ns#i%%ed ,or#ers. C. &ecase o! t$e prodcti'e sc$ed%e ,or#ers !rom ot$er prodction areas ,ere assi"ned to assist in t $is partic%ar process. D. De!ecti'e materia%s cased more %a)or to )e sed in order to prodce a standard nit.

Responsi)i%ity !or 'ariances *. +$ic$ department is cstomari%y $e%d responsi)%e !or an n!a'ora)%e materia%s sa"e 'ariance A. Fa%ity contro% C. 9rc$asin" &. En"ineerin" D. 9rodction

T,o/,ay o'er$ead 'ariance *?. T$e )d"et !or a "i'en cost drin" a "i'en period ,as 91. T$e acta% cost !or t$e period ,as 9155. Considerin" t$ese !acts it can )e said t$at t$e p%ant mana"er $as done a )etter t$an e6pected 4o) in contro%%in" t$e cost i!:  A. T$e cost is 'aria)%e and acta% prodction ,as @G o! )d"eted prodction &. T$e cost is 'aria)%e and acta% prodction e>a%ed )d"eted prodction C. T$e cost is 'aria)%e and acta% prodction ,as ?G o! )d"eted prodction D. T$e cost is discretionary !i6ed cost and acta% prodction e>a%ed )d"eted prodction

*5. +$ic$ o! t$e !o%%o,in" s$o%d )e %east considered ,$en decidin" ,$et$er to in'esti"ate a 'ariance A. +$et$er t$e 'ariance is !a'ora)%e or n!a'ora)%e &. Si"ni!icance o! t$e 'ariance C. Cost o! in'esti"atin" t$e 'ariance D. Trend o! t$e 'ariances o'er time

&d"et 'ariance  *@. T$e )d"et 'ariance !or !i6ed !actory o'er$ead !or t$e norma%/'o%me practica%/capacity and e6pected/acti'ity %e'e%s ,o%d )e t$e:  A. Same e6cept !or norma% 'o%me C. Same e6cept !or e6pected acti'ity &. Same e6cept !or practica% capacity D. Same !or a%% t$ree acti'ity %e'e%s

Tota% materia%s 'ariance *8. I! t$e tota% materia%s 'ariance ;acta% cost o! materia%s sed compared ,it$ t$e standard cost o! t$e standard amont o! materia%s re>ired< !or a "i'en operation is !a'ora)%e ,$y mst t$is 'ariance )e !rt$er e'a%ated as to price and sa"e A. T$ere is no need to !rt$er e'a%ate t$e tota% materia%s 'ariance i! it is !a'ora)%e &. enera%%y accepted accontin" princip%es re>ire t$at a%% 'ariances )e ana%y(ed in t$ree sta"es C. A%% 'ariances mst appear in t$e anna% report to e>ity o,ners !or proper disc%osre D. To a%%o, mana"ement to e'a%ate t$e e!!iciency o! t$e prc$asin" and prodction !nctions

Vo%me 'ariance  . Yo $a'e %eased a 8/"a%%on stora"e tan# !or 98 per mont$. Yo stored 5 "a%%ons o! %i>id in t$e tan# drin" t$e mont$. T$e cost o! stora"e ,as 91.*8 per "a%%on rat$er t$an 91. per "a%%on )ased on 8 "a%%on capacity. T$ere!ore t$e cost o! storin" 5 "a%%ons ,as 91 more ;9.*8 6 5< in tota% t$an i! yo $ad stored 8 "a%%ons o! %i>id in t$e tan#. +$ic$ 'ariance is )ein" descri)ed A. Varia)%e/o'er$ead e!!iciency 'ariance &. i6ed/o'er$ead spendin" 'ariance C. Varia)%e/o'er$ead spendin" 'ariance

La)or 'ariances *. +$ic$ o! t$e !o%%o,in" n!a'ora)%e cost 'ariances ,o%d )e direct%y a!!ected )y t$e re%ati'e

205

Standard Costs and Variance Analysis 

D. i6ed/o'er$ead 'o%me 'ariance 1. a'ora)%e !i6ed o'er$ead 'o%me 'ariance occrs i!:  A. T$ere is a !a'ora)%e %a)or e!!iciency 'ariance &. T$ere is a !a'ora)%e %a)or rate 'ariance C. 9rodction is %ess t$an p%anned D. 9rodction is "reater t$an p%anned

Ra, 7ateria%s i . S$ampoo Company is a c$emica% man!actrer t$at spp%ies indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion and needs to de'e%op a standard prodct cost !or  t$is ne, so%tion.

*. T$e n!a'ora)%e 'o%me 'ariance may )e de to a%% )t ,$ic$ o! t$e !o%%o,in" !actors A. ai%re to maintain an e'en !%o, o! ,or# &. 7ac$ine )rea#do,ns C. 0ne6pected increases in t$e cost o! ti%ities D. ai%re to o)tain eno"$ sa%es orders

T$e ne, c$emica% so%tion is made )y com)inin" a c$emica% compond ;Nyc%yn< and a so%tion ;Sa%e6< )oi%in" t$e mi6tre addin" a second compond ;9rotet< and )ott%in" t$e res%tin" so%tion in */%iter containers. T$e initia% mi6 ,$ic$ is * %iters in 'o%me consists o!  *5 #i%o"rams o! Nyc%yn and 1@.* %iters o! Sa%e6. A *G redction in 'o%me occrs drin" t$e )oi%in" process. T$e so%tion is t$en coo%ed s%i"$t%y )e!ore 1 #i%o"rams o! 9rotet are added t$e addition o! 9rotet does not a!!ect t$e tota% %i>id 'o%me.

33. How will a favorable volume variance affect net income under each of the following methods?

 A. &. C. D.

 A)sorption Decrease Decrease Increase Increase

Varia)%e No e!!ect Increase No e!!ect Decrease

T$e prc$ase prices o! t$e ra, materia%s sed so%tion are as !o%%o,s: Nyc%yn Sa%e6 9rotet T$e tota% standard materia%s cost o! * %iters o! t$e  A. 915.* C. &. 915. D.

5. a'ora)%e 'o%me 'ariances may )e $arm!% ,$en:  A. 7ac$ine repairs case ,or# stoppa"es &. Sper'isors !ai% to maintain an e'en !%o, o! ,or# C. 9rodction in e6cess o! norma% capacity cannot )e so%d D. T$ere are ins!!icient sa%es orders to #eep t$e !actory operatin" at norma% capacity

ii

 A. &. C. D.

Spendin " Varia nce Increased Increased 0nc$an"ed 0nc$an"ed

 

prodct is: 9 ?5.8 91*5.

E% Andre Co. ses a standard costin" system in connection ,it$ t$e man!actre o! a %ine o! T/ s$irts. Eac$ nit o! !inis$ed prodct contains *.*8 yards o! direct materia%. Ho,e'er a *8 percent direct materia% spoi%a"e ca%c%ated on inpt >antities occrs drin" t$e man!actrin" process. T$e cost o! t$e direct materia%s is 918 per yard. T$e standard direct materia% cost per nit o! !inis$ed prodct is  A. 9 *8 C. 9 58 &. 9 5** D. 9 58

iii

Eac$ !inis$ed nit o! 9rodct E7 contains  ponds o! ra, materia%. T$e man!actrin" process mst pro'ide !or a *G ,aste a%%o,ance. T$e ra, materia% can )e prc$ased !or  9*.8 a pond nder terms o! *1 n. T$e company ta#es a%% cas$ disconts. T$e standard direct materia% cost !or eac$ nit o! E7 is:  A. 91?. C. 91?=.8

.

Vo%me Variance 0nc$an"ed Increased Increased 0nc$an"ed

918. per #i%o"ram 9*1. per %iter 9*?. per #i%o"ram

.

T$ree/,ay O'er$ead 'ariance 35. During 2006, a departments three!variance overhead standard costing s"stem reported unfavorable spending and volume variances. #he activit" level selected for allocating overhead to the product was based on $0% of practical capacit". &t '00% of practical capacit" had been selected instead, how would the reported unfavorable spending and volume variances be affected?

in t$e man!actre o! t$is ne, c$emica%

206

Standard Costs and Variance Analysis 

& . 9 1? .=8 i'

.

D. 9 1=. 5

T$e Vandana Company $as a si"natre scar! !or %adie s t$at is 'ery pop%ar. Certain prodction and mar#etin" data are indicated )e%o,: Cost per yard o! c%ot$ 95.  A%%o,ance !or re4ected scar! 8G o! prodction Yards o! c%ot$ needed per scar! .5=8 yard  Air!rei"$t !rom spp%ier 91.yard 7otor !rei"$t to cstomers 9.@ scar!   9rc$ase disconts !rom spp%ier G Sa%es discont to cstomers *G T$e a%%o,ance !or re4ected scar! is not part o! t$e .5=8 yard o! c%ot$ per scar!. Re4ects $a'e no mar#et 'a%e. 7ateria%s are sed at t$e start o! prodction. Ca%c%ate t$e standard cost o! c%ot$ per scar! t$at Vandana Company s$o%d se in its cost s$eets.  A. 91@.?8 C. [email protected] &. 9*.  D. 9 1@. @

Direct %a)or  ' . Do)%e 7 company is a c$emica% man!actrer t$at spp%ies 'arios prodcts to indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion ca%%ed &ysap !or ,$ic$ it needs to de'e%op a standard prodct cost. T$e !o%%o,in" %a)or in!ormation is a'ai%a)%e on t$e prodction o! &ysap. T$e prodct ,$ic$ is )ott%ed in 1/%iter containers is primari%y a mi6tre o! &yc%yn Sa%e6 and 9rotet. T$e !inis$ed prodct is $i"$%y nsta)%e and one 1/%iter )atc$ ot o! si6 is re4ected at !ina% inspection. Re4ected )atc$es $a'e no commercia% 'a%e and are t$ro,n ot. It ta#es a ,or#er 8 mintes to process one 1/%iter )atc$ o! &ysap. Emp%oyees ,or# on ei"$t/$or a day inc%din" one $or per day !or rest )rea#s and c%eanp. 





La) or ersJ ! ri n"e )e ne !i ts t re at ed a s d ir ect % a)o r cos ts +$at is t$e standard direct %a)or cost per nit o! 9art 8 A. 9*.8 C. 951.= & . 9= ?. 1*8 D. 9 ?5 .1* 8

*8G o ! , a"e s

7ateria%s K La)or  Festions Nos. = and ? are )ased on t$e !o%%o,in": Sperco%d Company is a sma%% prodcer o! !rit/!%a'ored !ro(en desserts. or many years Sperco%dJs prodcts $a'e $ad stron" re"iona% sa%es on t$e )asis o! )rand reco"nition. Ho,e'er ot$er companies $a'e )e"n mar#etin" simi%ar prodcts in t$e area and price competition $as )ecome increasin"%y important. Haydee 7e4ia t$e companyJs contro%%er is p%annin" to imp%ement a standard costin" system !or Sperco%d and $as "at$ered considera)%e in!ormation on prodction and materia% re>irements !or Sperco%dJs prodcts. Haydee )e%ie'es t$at t$e se o! standard costin" ,i%% a%%o, Sperco%d to impro'e cost contro% and ma#e )etter pricin" decisions. Sperco%dJs most pop%ar prodcts is stra,)erry s$er)et. T$e s$er)et is prodced in 1/"a%%on )atc$es and eac$ )atc$ re>ires si6 >arts o! "ood stra,)erries. T$e !res$ stra,)erries are sorted )y $and )e!ore enterin" t$e prodction process. &ecase o! imper!ections in t$e stra,)erries and norma% spoi%a"e one >art o! )erries is discarded !or e'ery !or >arts o!  accepta)%e )erries. T$ree mintes is t$e standard direct %a)or time !or sortin" t$at is re>ired to o)tain one >art o! accepta)%e )erries. T$e accepta)%e )erries are t$en )%ended ,it$ t$e ot$er  in"redients )%endin" re>ires 1* mintes o! direct %a)or time per )atc$. A!ter )%endin" t$e s$er)et is pac#a"e in >art containers. Haydee $as "at$ered t$e !o%%o,in" in!ormation !rom Ri((a A%ano Sperco%dJs cost accontant. Sperco%d prc$ases stra,)erries at a cost o! 9?. per >art. A%% ot$er in"redients cost a tota% o!  95.8 per "a%%on. Direct %a)or is paid at t$e rate o! 98 per $or. T$e tota% cost o! materia% and %a)or re>ired to pac#a"e t$e s$er)et is 9.? per >art.

Standard Costs and Variance Analysis 

D. i6ed/o'er$ead 'o%me 'ariance 1. a'ora)%e !i6ed o'er$ead 'o%me 'ariance occrs i!:  A. T$ere is a !a'ora)%e %a)or e!!iciency 'ariance &. T$ere is a !a'ora)%e %a)or rate 'ariance C. 9rodction is %ess t$an p%anned D. 9rodction is "reater t$an p%anned

Ra, 7ateria%s i . S$ampoo Company is a c$emica% man!actrer t$at spp%ies indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion and needs to de'e%op a standard prodct cost !or  t$is ne, so%tion.

*. T$e n!a'ora)%e 'o%me 'ariance may )e de to a%% )t ,$ic$ o! t$e !o%%o,in" !actors A. ai%re to maintain an e'en !%o, o! ,or# &. 7ac$ine )rea#do,ns C. 0ne6pected increases in t$e cost o! ti%ities D. ai%re to o)tain eno"$ sa%es orders

T$e ne, c$emica% so%tion is made )y com)inin" a c$emica% compond ;Nyc%yn< and a so%tion ;Sa%e6< )oi%in" t$e mi6tre addin" a second compond ;9rotet< and )ott%in" t$e res%tin" so%tion in */%iter containers. T$e initia% mi6 ,$ic$ is * %iters in 'o%me consists o!  *5 #i%o"rams o! Nyc%yn and 1@.* %iters o! Sa%e6. A *G redction in 'o%me occrs drin" t$e )oi%in" process. T$e so%tion is t$en coo%ed s%i"$t%y )e!ore 1 #i%o"rams o! 9rotet are added t$e addition o! 9rotet does not a!!ect t$e tota% %i>id 'o%me.

33. How will a favorable volume variance affect net income under each of the following methods?

 A. &. C. D.

 A)sorption Decrease Decrease Increase Increase

Varia)%e No e!!ect Increase No e!!ect Decrease

T$e prc$ase prices o! t$e ra, materia%s sed so%tion are as !o%%o,s: Nyc%yn Sa%e6 9rotet T$e tota% standard materia%s cost o! * %iters o! t$e  A. 915.* C. &. 915. D.

5. a'ora)%e 'o%me 'ariances may )e $arm!% ,$en:  A. 7ac$ine repairs case ,or# stoppa"es &. Sper'isors !ai% to maintain an e'en !%o, o! ,or# C. 9rodction in e6cess o! norma% capacity cannot )e so%d D. T$ere are ins!!icient sa%es orders to #eep t$e !actory operatin" at norma% capacity

ii

 A. &. C. D.

Spendin " Varia nce Increased Increased 0nc$an"ed 0nc$an"ed

 

prodct is: 9 ?5.8 91*5.

E% Andre Co. ses a standard costin" system in connection ,it$ t$e man!actre o! a %ine o! T/ s$irts. Eac$ nit o! !inis$ed prodct contains *.*8 yards o! direct materia%. Ho,e'er a *8 percent direct materia% spoi%a"e ca%c%ated on inpt >antities occrs drin" t$e man!actrin" process. T$e cost o! t$e direct materia%s is 918 per yard. T$e standard direct materia% cost per nit o! !inis$ed prodct is  A. 9 *8 C. 9 58 &. 9 5** D. 9 58

iii

Eac$ !inis$ed nit o! 9rodct E7 contains  ponds o! ra, materia%. T$e man!actrin" process mst pro'ide !or a *G ,aste a%%o,ance. T$e ra, materia% can )e prc$ased !or  9*.8 a pond nder terms o! *1 n. T$e company ta#es a%% cas$ disconts. T$e standard direct materia% cost !or eac$ nit o! E7 is:  A. 91?. C. 91?=.8

.

Vo%me Variance 0nc$an"ed Increased Increased 0nc$an"ed

918. per #i%o"ram 9*1. per %iter 9*?. per #i%o"ram

.

T$ree/,ay O'er$ead 'ariance 35. During 2006, a departments three!variance overhead standard costing s"stem reported unfavorable spending and volume variances. #he activit" level selected for allocating overhead to the product was based on $0% of practical capacit". &t '00% of practical capacit" had been selected instead, how would the reported unfavorable spending and volume variances be affected?

in t$e man!actre o! t$is ne, c$emica%

206

Standard Costs and Variance Analysis 

& . 9 1? .=8 i'

.

D. 9 1=. 5

La) or ersJ ! ri n"e )e ne !i ts t re at ed a s d ir ect % a)o r cos ts +$at is t$e standard direct %a)or cost per nit o! 9art 8 A. 9*.8 C. 951.= & . 9= ?. 1*8 D. 9 ?5 .1* 8

T$e Vandana Company $as a si"natre scar! !or %adie s t$at is 'ery pop%ar. Certain prodction and mar#etin" data are indicated )e%o,: Cost per yard o! c%ot$ 95.  A%%o,ance !or re4ected scar! 8G o! prodction Yards o! c%ot$ needed per scar! .5=8 yard  Air!rei"$t !rom spp%ier 91.yard 7otor !rei"$t to cstomers 9.@ scar!   9rc$ase disconts !rom spp%ier G Sa%es discont to cstomers *G T$e a%%o,ance !or re4ected scar! is not part o! t$e .5=8 yard o! c%ot$ per scar!. Re4ects $a'e no mar#et 'a%e. 7ateria%s are sed at t$e start o! prodction. Ca%c%ate t$e standard cost o! c%ot$ per scar! t$at Vandana Company s$o%d se in its cost s$eets.  A. 91@.?8 C. [email protected] &. 9*.  D. 9 1@. @

7ateria%s K La)or  Festions Nos. = and ? are )ased on t$e !o%%o,in": Sperco%d Company is a sma%% prodcer o! !rit/!%a'ored !ro(en desserts. or many years Sperco%dJs prodcts $a'e $ad stron" re"iona% sa%es on t$e )asis o! )rand reco"nition. Ho,e'er ot$er companies $a'e )e"n mar#etin" simi%ar prodcts in t$e area and price competition $as )ecome increasin"%y important. Haydee 7e4ia t$e companyJs contro%%er is p%annin" to imp%ement a standard costin" system !or Sperco%d and $as "at$ered considera)%e in!ormation on prodction and materia% re>irements !or Sperco%dJs prodcts. Haydee )e%ie'es t$at t$e se o! standard costin" ,i%% a%%o, Sperco%d to impro'e cost contro% and ma#e )etter pricin" decisions. Sperco%dJs most pop%ar prodcts is stra,)erry s$er)et. T$e s$er)et is prodced in 1/"a%%on )atc$es and eac$ )atc$ re>ires si6 >arts o! "ood stra,)erries. T$e !res$ stra,)erries are sorted )y $and )e!ore enterin" t$e prodction process. &ecase o! imper!ections in t$e stra,)erries and norma% spoi%a"e one >art o! )erries is discarded !or e'ery !or >arts o!  accepta)%e )erries. T$ree mintes is t$e standard direct %a)or time !or sortin" t$at is re>ired to o)tain one >art o! accepta)%e )erries. T$e accepta)%e )erries are t$en )%ended ,it$ t$e ot$er  in"redients )%endin" re>ires 1* mintes o! direct %a)or time per )atc$. A!ter )%endin" t$e s$er)et is pac#a"e in >art containers. Haydee $as "at$ered t$e !o%%o,in" in!ormation !rom Ri((a A%ano Sperco%dJs cost accontant.

Direct %a)or  ' . Do)%e 7 company is a c$emica% man!actrer t$at spp%ies 'arios prodcts to indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion ca%%ed &ysap !or ,$ic$ it needs to de'e%op a standard prodct cost. T$e !o%%o,in" %a)or in!ormation is a'ai%a)%e on t$e prodction o! &ysap. T$e prodct ,$ic$ is )ott%ed in 1/%iter containers is primari%y a mi6tre o! &yc%yn Sa%e6 and 9rotet. T$e !inis$ed prodct is $i"$%y nsta)%e and one 1/%iter )atc$ ot o! si6 is re4ected at !ina% inspection. Re4ected )atc$es $a'e no commercia% 'a%e and are t$ro,n ot. It ta#es a ,or#er 8 mintes to process one 1/%iter )atc$ o! &ysap. Emp%oyees ,or# on ei"$t/$or a day inc%din" one $or per day !or rest )rea#s and c%eanp. +$at is t$e standard %a)or time to prodce one 1/%iter )atc$ o! &ysap A. 8 mintes C. 5? mintes &. 5 mintes D. 58 mintes 

Sperco%d prc$ases stra,)erries at a cost o! 9?. per >art. A%% ot$er in"redients cost a tota% o!  95.8 per "a%%on. Direct %a)or is paid at t$e rate o! 98 per $or. T$e tota% cost o! materia% and %a)or re>ired to pac#a"e t$e s$er)et is 9.? per >art.





'i

.

T$e !o%%o,in" direct %a)or in!ormation pertains to t$e man!actre o! 9art 8: Nm)er o! $ors re>ired to ma#e a part Nm)er o! Direct ,or#ers Nm)er o! tota% prodcti'e $ors per ,ee# +ee#%y ,a"es per ,or#er

*8G o ! , a"e s

Ri((a A%ano $as a !riend ,$o o,ns a )erry !arm t$at $as )een %osin" money in recent years. &ecase o! "ood crops t$ere $as )een an o'erspp%y o! stra,)erries and prices $a'e dropped to 98. per >art. Ri((a $as arran"ed !or Sperco%d to prc$ase stra,)erries !orm $er !riend and $opes t$at 9?. per >art ,i%% $e%p $er !riendJs !arm )ecome pro!ita)%e a"ain.

*.8 DLH =8  91

'ii

.

T$e standard materia%s cost per 1/"a%%on )atc$ o! stra,)erry s$er)et is:  A. 9 ?8. C. 911. &. 9 . D. 9 1 8. 

207

Standard Costs and Variance Analysis 

 A. 9 n!a'ora)%e &. 98* n!a'ora)%e

'iii

. T$e standard direct %a)or cost per 1/"a%%on )atc$ o! s$er)et is:  A. 98. C. 9 *8.  &. 9*?.=8 D. 918.

i6

.

6

.

6i

0nder a standard cost system t$e materia%s >antity 'ariance ,as recorded at 91@= n!a'ora)%e t$e materia%s price 'ariance ,as recorded at 9=5 !a'ora)%e and t$e oods in 9rocess ,as de)ited !or 981@. Ninety/si6 t$osand nits ,ere comp%eted. +$at ,as t$e per nit price o! t$e acta% materia%s sed A. 9.8* eac$ C. 9.85 eac &. 9.8 eac$ D. 9.81 eac$ &%a#e Company $as a standard price o! 98.8 per pond !or materia%s. %yJs res%ts s$o,ed an n!a'ora)%e materia% price 'ariance o! 955 and a !a'ora)%e >antity 'ariance o! 9*@. I!  1 ponds ,ere sed in prodction ,$at ,as t$e standard >antity a%%o,ed !or materia%s A. 115 C. 1 &. 1=5 D. 11

.

E%ite Company ses a standard costin" system in t$e man!actre o! its sin"%e prodct. T$e 8 nits o! ra, materia% in in'entory ,ere prc$ased !or 918 and t,o nits o! ra, materia% are re>ired to prodce one nit o! !ina% prodct. In No'em)er t$e company prodced 1* nits o! prodct. T$e standard a%%o,ed !or materia% ,as 9 and t$ere ,as an n!a'ora)%e >antity 'ariance o! 9*8. T$e materia%s price 'ariance !or t$e nits sed in No'em)er ,as  A. 9 *8 0 C. 91*8 0 &. 911 0 D. 9 8 

. S$eridan Company $as a standard o! 18 parts o! component && costin " 91.8 eac$. S$eridan prc$ased 15@1 nits o! component && !or 9**158. S$eridan "enerated a 9**

C. 9* n!a'ora)%e D. 9* n!a'ora)%e

6i'

. T$e &o$o% Company ses standard costin". T$e !o%%o,in" data are a'ai%a)%e !or Octo)er:  Acta% >antity o! direct materia%s sed *8 ponds Standard price o! direct materia%s 9* per pond 7ateria% >antity 'ariance 91 0 T$e standard >antity o! materia%s a%%o,ed !or Octo)er prodction is:  A. * %)s C. *5 %) s &. *58 %)s D. *8 %)s

6'

. In!ormation on D%ceJs direct materia% costs !or 7ay is as !o%%o,s:  Acta% >antity o! direct materia%s prc$ased and sed  Acta% cost o! direct materia%s 0n!a'ora)%e direct materia%s sa"e 'ariance Standard >antity o! direct materia%s a%% o,ed !or 7ay prodction or t$e mont$ o! 7ay D%ceJs direct materia%s price 'ariance ,as:  A. 9*? !a'ora)%e C. 9*? n!a'ora)%e &. 9 n!a'ora)%e D. 9 !a'ora)%e

 %)s. 9?5 9  *@ %) s

6'i

. In!ormation on atrina CompanyJs direct materia% costs is as !o%%o,s: Standard nit price  Acta% >antity prc$ased Standard >antity a%%o,ed !or acta% prodction 7ateria%s prc$ase price 'ariance M !a'ora)%e +$at ,as t$e acta% prc$ase price per nit ronded to t$e nearest centa'os A. 9. C. 9.11 &. 9.58 D. 9. =8

6'ii

9 . 1 158 9 *5

9a%mas Company ,$ic$ $as a standard cost system $ad 8 nits o! ra, materia%  in its

Standard Costs and Variance Analysis 

& . 9 1? .=8 i'

.

D. 9 1=. 5

La) or ersJ ! ri n"e )e ne !i ts t re at ed a s d ir ect % a)o r cos ts +$at is t$e standard direct %a)or cost per nit o! 9art 8 A. 9*.8 C. 951.= & . 9= ?. 1*8 D. 9 ?5 .1* 8

T$e Vandana Company $as a si"natre scar! !or %adie s t$at is 'ery pop%ar. Certain prodction and mar#etin" data are indicated )e%o,: Cost per yard o! c%ot$ 95.  A%%o,ance !or re4ected scar! 8G o! prodction Yards o! c%ot$ needed per scar! .5=8 yard  Air!rei"$t !rom spp%ier 91.yard 7otor !rei"$t to cstomers 9.@ scar!   9rc$ase disconts !rom spp%ier G Sa%es discont to cstomers *G T$e a%%o,ance !or re4ected scar! is not part o! t$e .5=8 yard o! c%ot$ per scar!. Re4ects $a'e no mar#et 'a%e. 7ateria%s are sed at t$e start o! prodction. Ca%c%ate t$e standard cost o! c%ot$ per scar! t$at Vandana Company s$o%d se in its cost s$eets.  A. 91@.?8 C. [email protected] &. 9*.  D. 9 1@. @

7ateria%s K La)or  Festions Nos. = and ? are )ased on t$e !o%%o,in": Sperco%d Company is a sma%% prodcer o! !rit/!%a'ored !ro(en desserts. or many years Sperco%dJs prodcts $a'e $ad stron" re"iona% sa%es on t$e )asis o! )rand reco"nition. Ho,e'er ot$er companies $a'e )e"n mar#etin" simi%ar prodcts in t$e area and price competition $as )ecome increasin"%y important. Haydee 7e4ia t$e companyJs contro%%er is p%annin" to imp%ement a standard costin" system !or Sperco%d and $as "at$ered considera)%e in!ormation on prodction and materia% re>irements !or Sperco%dJs prodcts. Haydee )e%ie'es t$at t$e se o! standard costin" ,i%% a%%o, Sperco%d to impro'e cost contro% and ma#e )etter pricin" decisions. Sperco%dJs most pop%ar prodcts is stra,)erry s$er)et. T$e s$er)et is prodced in 1/"a%%on )atc$es and eac$ )atc$ re>ires si6 >arts o! "ood stra,)erries. T$e !res$ stra,)erries are sorted )y $and )e!ore enterin" t$e prodction process. &ecase o! imper!ections in t$e stra,)erries and norma% spoi%a"e one >art o! )erries is discarded !or e'ery !or >arts o!  accepta)%e )erries. T$ree mintes is t$e standard direct %a)or time !or sortin" t$at is re>ired to o)tain one >art o! accepta)%e )erries. T$e accepta)%e )erries are t$en )%ended ,it$ t$e ot$er  in"redients )%endin" re>ires 1* mintes o! direct %a)or time per )atc$. A!ter )%endin" t$e s$er)et is pac#a"e in >art containers. Haydee $as "at$ered t$e !o%%o,in" in!ormation !rom Ri((a A%ano Sperco%dJs cost accontant.

Direct %a)or  ' . Do)%e 7 company is a c$emica% man!actrer t$at spp%ies 'arios prodcts to indstria% sers. T$e company p%ans to introdce a ne, c$emica% so%tion ca%%ed &ysap !or ,$ic$ it needs to de'e%op a standard prodct cost. T$e !o%%o,in" %a)or in!ormation is a'ai%a)%e on t$e prodction o! &ysap. T$e prodct ,$ic$ is )ott%ed in 1/%iter containers is primari%y a mi6tre o! &yc%yn Sa%e6 and 9rotet. T$e !inis$ed prodct is $i"$%y nsta)%e and one 1/%iter )atc$ ot o! si6 is re4ected at !ina% inspection. Re4ected )atc$es $a'e no commercia% 'a%e and are t$ro,n ot. It ta#es a ,or#er 8 mintes to process one 1/%iter )atc$ o! &ysap. Emp%oyees ,or# on ei"$t/$or a day inc%din" one $or per day !or rest )rea#s and c%eanp. +$at is t$e standard %a)or time to prodce one 1/%iter )atc$ o! &ysap A. 8 mintes C. 5? mintes &. 5 mintes D. 58 mintes 

Sperco%d prc$ases stra,)erries at a cost o! 9?. per >art. A%% ot$er in"redients cost a tota% o!  95.8 per "a%%on. Direct %a)or is paid at t$e rate o! 98 per $or. T$e tota% cost o! materia% and %a)or re>ired to pac#a"e t$e s$er)et is 9.? per >art.





'i

.

T$e !o%%o,in" direct %a)or in!ormation pertains to t$e man!actre o! 9art 8: Nm)er o! $ors re>ired to ma#e a part Nm)er o! Direct ,or#ers Nm)er o! tota% prodcti'e $ors per ,ee# +ee#%y ,a"es per ,or#er

*8G o ! , a"e s

Ri((a A%ano $as a !riend ,$o o,ns a )erry !arm t$at $as )een %osin" money in recent years. &ecase o! "ood crops t$ere $as )een an o'erspp%y o! stra,)erries and prices $a'e dropped to 98. per >art. Ri((a $as arran"ed !or Sperco%d to prc$ase stra,)erries !orm $er !riend and $opes t$at 9?. per >art ,i%% $e%p $er !riendJs !arm )ecome pro!ita)%e a"ain.

*.8 DLH =8  91

'ii

.

T$e standard materia%s cost per 1/"a%%on )atc$ o! stra,)erry s$er)et is:  A. 9 ?8. C. 911. &. 9 . D. 9 1 8. 

207

Standard Costs and Variance Analysis 

 A. 9 n!a'ora)%e &. 98* n!a'ora)%e

'iii

. T$e standard direct %a)or cost per 1/"a%%on )atc$ o! s$er)et is:  A. 98. C. 9 *8.  &. 9*?.=8 D. 918.

i6

.

.

6i

6i'

. T$e &o$o% Company ses standard costin". T$e !o%%o,in" data are a'ai%a)%e !or Octo)er:  Acta% >antity o! direct materia%s sed *8 ponds Standard price o! direct materia%s 9* per pond 7ateria% >antity 'ariance 91 0 T$e standard >antity o! materia%s a%%o,ed !or Octo)er prodction is:  A. * %)s C. *5 %) s &. *58 %)s D. *8 %)s

0nder a standard cost system t$e materia%s >antity 'ariance ,as recorded at 91@= n!a'ora)%e t$e materia%s price 'ariance ,as recorded at 9=5 !a'ora)%e and t$e oods in 9rocess ,as de)ited !or 981@. Ninety/si6 t$osand nits ,ere comp%eted. +$at ,as t$e per nit price o! t$e acta% materia%s sed A. 9.8* eac$ C. 9.85 eac &. 9.8 eac$ D. 9.81 eac$

6

6'

. In!ormation on D%ceJs direct materia% costs !or 7ay is as !o%%o,s:  Acta% >antity o! direct materia%s prc$ased and sed  Acta% cost o! direct materia%s 0n!a'ora)%e direct materia%s sa"e 'ariance Standard >antity o! direct materia%s a%% o,ed !or 7ay prodction or t$e mont$ o! 7ay D%ceJs direct materia%s price 'ariance ,as:  A. 9*? !a'ora)%e C. 9*? n!a'ora)%e &. 9 n!a'ora)%e D. 9 !a'ora)%e

&%a#e Company $as a standard price o! 98.8 per pond !or materia%s. %yJs res%ts s$o,ed an n!a'ora)%e materia% price 'ariance o! 955 and a !a'ora)%e >antity 'ariance o! 9*@. I!  1 ponds ,ere sed in prodction ,$at ,as t$e standard >antity a%%o,ed !or materia%s A. 115 C. 1 &. 1=5 D. 11

.

C. 9* n!a'ora)%e D. 9* n!a'ora)%e

E%ite Company ses a standard costin" system in t$e man!actre o! its sin"%e prodct. T$e 8 nits o! ra, materia% in in'entory ,ere prc$ased !or 918 and t,o nits o! ra, materia% are re>ired to prodce one nit o! !ina% prodct. In No'em)er t$e company prodced 1* nits o! prodct. T$e standard a%%o,ed !or materia% ,as 9 and t$ere ,as an n!a'ora)%e >antity 'ariance o! 9*8. T$e materia%s price 'ariance !or t$e nits sed in No'em)er ,as  A. 9 *8 0 C. 91*8 0 &. 911 0 D. 9 8 

 %)s. 9?5 9  *@ %) s

6'i

. In!ormation on atrina CompanyJs direct materia% costs is as !o%%o,s: Standard nit price  Acta% >antity prc$ased Standard >antity a%%o,ed !or acta% prodction 7ateria%s prc$ase price 'ariance M !a'ora)%e +$at ,as t$e acta% prc$ase price per nit ronded to t$e nearest centa'os A. 9. C. 9.11 &. 9.58 D. 9. =8

. S$eridan Company $as a standard o! 18 parts o! component && costin " 91.8 eac$. S$eridan prc$ased 15@1 nits o! component && !or 9**158. S$eridan "enerated a 9** !a'ora)%e price 'ariance and a 9=8 !a'ora)%e >antity 'ariance. I! t$ere ,ere no c$an"es in t$e component in'entory $o, many nits o! !inis$ed prodct ,ere prodced A. @@5 nits. C. 1 nits &. 1@ nits. D. 11 nits

6'ii

6iii

. T$e standard sa"e !or ra, materia%s is 8 ponds at 95. per pond. Ca'e Company spent 911* in prc$asin" * ponds. Ca'e sed 18 ponds to prodce  nits o!  !inis$ed prodct. T$e materia% >antity 'ariance is:

9 . 1 158 9 *5

. 9a%mas Company ,$ic$ $as a standard cost system $ad 8 nits o! ra, materia%  in its in'entory at ne 1 prc$ased in 7ay !or 91.* per nit and carried at a standard cost o!  91.. T$e !o%%o,in" in!ormation pertains to ra, materia%  !or t$e mont$ o! ne:  Acta% nm)er o! nits prc$ased 15  Acta% nm)er o! nits sed 18 Standard nm)er o! nits a%%o,ed !or acta% prodction 1 Standard cost per nit 91.  Acta% cost per nit 91.1 T$e n!a'ora)%e materia%s prc$ase price 'ariance !or ra, materia%  !or ne ,as:

208

Standard Costs and Variance Analysis 

 A. 9  &. 91

C. 915 D. 918

Scents Tota%  Acta% otpt T$e materia% yie%d 'ariance is:  A. 9 *? n!a'ora)%e &. 9@?@ n!a'ora)%e

6'iii

. Drin" 7arc$ Lm)an CompanyJs direct materia% costs !or t$e man!actre o! prodct T ,ere as !o%%o,s:  Acta% nit prc$ase price 9.8 Standard >antity a%%o,ed !or acta% prodction *1 Fantity prc$ased and sed !or acta% prodction * Standard nit price 9.*8 Lm)anJs materia% sa"e 'ariance !or 7arc$ ,as:  A. 91*8 n!a'ora)%e C. 91*8 !a'ora)%e &. 91 n!a'ora)%e D. 91 !a'ora)%e

6i6

. Ra(ona)%e Company insta%%s s$in"%e roo!s on $oses. T$e standard materia% cost !or a Type R $ose is 91*8 )ased on 1 nits at a cost o! 91.*8 eac$. Drin" Apri% Ra(ona)%e insta%%ed roo!s on * Type R $oses sin" ** nits o! materia% cost o! 9*5. Ra(ona)%eJs materia% price 'ariance !or Apri% is:  A. 91 !a'ora)%e C. 911 !a'ora)%e &. 915 n!a'ora)%e D. 9*8 n!a'ora)%e

66

. (amson )andle )o. manufactures candles in various shapes, si*es, colors, and scents. Depending on the orders received, not all candles re+uire the same amount of color, d"e, or scent materials. ields also var", depending upon the usage of beeswa- or s"nthetic wa-. (tandard ingredients for ',000 pounds of  candles are Inpt: Standard 7i6 Standard Cost per 9ond &ees,a6 * %)s. 1. Synt$etic ,a6 ?5 %)s. .* Co%ors = %)s * 

 *1 1?8 C. 9 *? !a'ora)%e D. 9@?@ !a'ora)%e

66i

. T$e !%e6i)%e )d"et !or t$e mont$ o! 7ay *= ,as !or @ nits ,it$ direct materia% at 918 per nit. Direct %a)or ,as )d"eted at 58 mintes per nit !or a tota% o! 9?1. Acta% otpt !or t$e mont$ ,as ?8 nits ,it$ 91*=8 in direct materia% and 9====8 in direct %a)or  e6pense. Direct %a)or $ors o! =8 ,ere acta%%y ,or#ed drin" t$e mont$. Variance ana%ysis o! t$e per!ormance !or t$e mont$ o! 7ay ,o%d s$o, a;n<:  A. a'ora)%e materia% >antity 'ariance o! 9=8. &. 0n!a'ora)%e direct %a)or e!!iciency 'ariance o! 91*=8. C. 0n!a'ora)%e materia% >antity 'ariance o! 9=8. D. 0n!a'ora)%e direct %a)or rate 'ariance o! 91*=8.

66ii

. T$e standard $or%y rate ,as 95.1. Standard $ors !or t$e %e'e% o! prodction are 5. T$e acta% rate ,as 95.*=. T$e %a)or rate 'ariance ,as 985.8 n!a'ora)%e. +$at ,ere t$e acta% %a)or $ors A. = C. ?8 &. 518 D. 5

66iii

. C%ean Harry Corp. ses t,o di!!erent types o! %a)or to man!actre its prodct. T$e types o!  %a)or 7i6in" and inis$in" $a'e t$e !o%%o,in" standards: La)or Type Standard 7i6 Std Hor%y Rate Standard Cost 7i6in" 8 $ors 91 98 inis$in" *8 $ors 98 91*8

Standard Costs and Variance Analysis 

 A. 9 n!a'ora)%e &. 98* n!a'ora)%e

'iii

. T$e standard direct %a)or cost per 1/"a%%on )atc$ o! s$er)et is:  A. 98. C. 9 *8.  &. 9*?.=8 D. 918.

i6

.

.

6i

6i'

. T$e &o$o% Company ses standard costin". T$e !o%%o,in" data are a'ai%a)%e !or Octo)er:  Acta% >antity o! direct materia%s sed *8 ponds Standard price o! direct materia%s 9* per pond 7ateria% >antity 'ariance 91 0 T$e standard >antity o! materia%s a%%o,ed !or Octo)er prodction is:  A. * %)s C. *5 %) s &. *58 %)s D. *8 %)s

0nder a standard cost system t$e materia%s >antity 'ariance ,as recorded at 91@= n!a'ora)%e t$e materia%s price 'ariance ,as recorded at 9=5 !a'ora)%e and t$e oods in 9rocess ,as de)ited !or 981@. Ninety/si6 t$osand nits ,ere comp%eted. +$at ,as t$e per nit price o! t$e acta% materia%s sed A. 9.8* eac$ C. 9.85 eac &. 9.8 eac$ D. 9.81 eac$

6

6'

. In!ormation on D%ceJs direct materia% costs !or 7ay is as !o%%o,s:  Acta% >antity o! direct materia%s prc$ased and sed  Acta% cost o! direct materia%s 0n!a'ora)%e direct materia%s sa"e 'ariance Standard >antity o! direct materia%s a%% o,ed !or 7ay prodction or t$e mont$ o! 7ay D%ceJs direct materia%s price 'ariance ,as:  A. 9*? !a'ora)%e C. 9*? n!a'ora)%e &. 9 n!a'ora)%e D. 9 !a'ora)%e

&%a#e Company $as a standard price o! 98.8 per pond !or materia%s. %yJs res%ts s$o,ed an n!a'ora)%e materia% price 'ariance o! 955 and a !a'ora)%e >antity 'ariance o! 9*@. I!  1 ponds ,ere sed in prodction ,$at ,as t$e standard >antity a%%o,ed !or materia%s A. 115 C. 1 &. 1=5 D. 11

.

C. 9* n!a'ora)%e D. 9* n!a'ora)%e

E%ite Company ses a standard costin" system in t$e man!actre o! its sin"%e prodct. T$e 8 nits o! ra, materia% in in'entory ,ere prc$ased !or 918 and t,o nits o! ra, materia% are re>ired to prodce one nit o! !ina% prodct. In No'em)er t$e company prodced 1* nits o! prodct. T$e standard a%%o,ed !or materia% ,as 9 and t$ere ,as an n!a'ora)%e >antity 'ariance o! 9*8. T$e materia%s price 'ariance !or t$e nits sed in No'em)er ,as  A. 9 *8 0 C. 91*8 0 &. 911 0 D. 9 8 

 %)s. 9?5 9  *@ %) s

6'i

. In!ormation on atrina CompanyJs direct materia% costs is as !o%%o,s: Standard nit price  Acta% >antity prc$ased Standard >antity a%%o,ed !or acta% prodction 7ateria%s prc$ase price 'ariance M !a'ora)%e +$at ,as t$e acta% prc$ase price per nit ronded to t$e nearest centa'os A. 9. C. 9.11 &. 9.58 D. 9. =8

. S$eridan Company $as a standard o! 18 parts o! component && costin " 91.8 eac$. S$eridan prc$ased 15@1 nits o! component && !or 9**158. S$eridan "enerated a 9** !a'ora)%e price 'ariance and a 9=8 !a'ora)%e >antity 'ariance. I! t$ere ,ere no c$an"es in t$e component in'entory $o, many nits o! !inis$ed prodct ,ere prodced A. @@5 nits. C. 1 nits &. 1@ nits. D. 11 nits

6'ii

6iii

. T$e standard sa"e !or ra, materia%s is 8 ponds at 95. per pond. Ca'e Company spent 911* in prc$asin" * ponds. Ca'e sed 18 ponds to prodce  nits o!  !inis$ed prodct. T$e materia% >antity 'ariance is:

9 . 1 158 9 *5

. 9a%mas Company ,$ic$ $as a standard cost system $ad 8 nits o! ra, materia%  in its in'entory at ne 1 prc$ased in 7ay !or 91.* per nit and carried at a standard cost o!  91.. T$e !o%%o,in" in!ormation pertains to ra, materia%  !or t$e mont$ o! ne:  Acta% nm)er o! nits prc$ased 15  Acta% nm)er o! nits sed 18 Standard nm)er o! nits a%%o,ed !or acta% prodction 1 Standard cost per nit 91.  Acta% cost per nit 91.1 T$e n!a'ora)%e materia%s prc$ase price 'ariance !or ra, materia%  !or ne ,as:

208

Standard Costs and Variance Analysis 

 A. 9  &. 91

C. 915 D. 918

Scents Tota%  Acta% otpt T$e materia% yie%d 'ariance is:  A. 9 *? n!a'ora)%e &. 9@?@ n!a'ora)%e

6'iii

. Drin" 7arc$ Lm)an CompanyJs direct materia% costs !or t$e man!actre o! prodct T ,ere as !o%%o,s:  Acta% nit prc$ase price 9.8 Standard >antity a%%o,ed !or acta% prodction *1 Fantity prc$ased and sed !or acta% prodction * Standard nit price 9.*8 Lm)anJs materia% sa"e 'ariance !or 7arc$ ,as:  A. 91*8 n!a'ora)%e C. 91*8 !a'ora)%e &. 91 n!a'ora)%e D. 91 !a'ora)%e

 *1 1?8 C. 9 *? !a'ora)%e D. 9@?@ !a'ora)%e

66i

. T$e !%e6i)%e )d"et !or t$e mont$ o! 7ay *= ,as !or @ nits ,it$ direct materia% at 918 per nit. Direct %a)or ,as )d"eted at 58 mintes per nit !or a tota% o! 9?1. Acta% otpt !or t$e mont$ ,as ?8 nits ,it$ 91*=8 in direct materia% and 9====8 in direct %a)or  e6pense. Direct %a)or $ors o! =8 ,ere acta%%y ,or#ed drin" t$e mont$. Variance ana%ysis o! t$e per!ormance !or t$e mont$ o! 7ay ,o%d s$o, a;n<:  A. a'ora)%e materia% >antity 'ariance o! 9=8. &. 0n!a'ora)%e direct %a)or e!!iciency 'ariance o! 91*=8. C. 0n!a'ora)%e materia% >antity 'ariance o! 9=8. D. 0n!a'ora)%e direct %a)or rate 'ariance o! 91*=8.

6i6

. Ra(ona)%e Company insta%%s s$in"%e roo!s on $oses. T$e standard materia% cost !or a Type R $ose is 91*8 )ased on 1 nits at a cost o! 91.*8 eac$. Drin" Apri% Ra(ona)%e insta%%ed roo!s on * Type R $oses sin" ** nits o! materia% cost o! 9*5. Ra(ona)%eJs materia% price 'ariance !or Apri% is:  A. 91 !a'ora)%e C. 911 !a'ora)%e &. 915 n!a'ora)%e D. 9*8 n!a'ora)%e

66ii

66

. (amson )andle )o. manufactures candles in various shapes, si*es, colors, and scents. Depending on the orders received, not all candles re+uire the same amount of color, d"e, or scent materials. ields also var", depending upon the usage of beeswa- or s"nthetic wa-. (tandard ingredients for ',000 pounds of  candles are Inpt: Standard 7i6 Standard Cost per 9ond &ees,a6 * %)s. 1. Synt$etic ,a6 ?5 %)s. .* Co%ors = %)s. *. Scents  %)s. . Tota%s 18 %)s. @.* Standard otpt 1 %)s. 9rice 'ariances are c$ar"ed o!! at t$e time o! prc$ase. Drin" anary t$e company ,as )sy man!actrin" red cand%es !or Va%entineJ s Day. Acta% prodcti on t$en ,as: In 9onds &ees,a6 51 Synt$etic ,a6 1? Co%ors **

. T$e standard $or%y rate ,as 95.1. Standard $ors !or t$e %e'e% o! prodction are 5. T$e acta% rate ,as 95.*=. T$e %a)or rate 'ariance ,as 985.8 n!a'ora)%e. +$at ,ere t$e acta% %a)or $ors A. = C. ?8 &. 518 D. 5

66iii

. C%ean Harry Corp. ses t,o di!!erent types o! %a)or to man!actre its prodct. T$e types o!  %a)or 7i6in" and inis$in" $a'e t$e !o%%o,in" standards: La)or Type Standard 7i6 Std Hor%y Rate Standard Cost 7i6in" 8 $ors 91 98 inis$in" *8 $ors 98 91*8 Yie%d: 5 nits During /anuar", the following actual production information was provided La)or Type Acta% 7i6 7i6in" 58 $ors inis$in"  $ors Yie%d:  nits +$at is t$e %a)or mi6 'ariance A. 9*8  C. 9 * 8 0 &. 98  D. 98 

209

Standard Costs and Variance Analysis  66i6

. Sim)ad CompanyJs operations !or t$e mont$ 4st ended ori"ina%%y set p a  direct %a)or  $or %e'e% ,it$ )d"eted direct %a)or o! 9@ and )d"eted 'aria)%e o'er$ead o!  9*5. T$e acta% res%ts re'ea%ed t$at direct %a)or incrred amonted to 9115? and t$at t$e n!a'ora)%e 'aria)%e o'er$ead 'ariance ,as 95. La)or tro)%e cased an n!a'ora)%e %a)or e!!iciency 'ariance o! 91* and ne, emp%oyees $ired at $i"$er rates res%ted in an acta% a'era"e ,a"e rate o! 91.5 per $or. T$e tota% nm)er o! standard direct %a)or $ors a%%o,ed !or t$e acta% nits prodced is  A. 98*8 C. 9 * 8  &. 9==8 D. 9=

66i'

. Ho, mc$ %a)or yie%d 'ariances s$o%d )e reported A. 9*8 0 C. 9 8 *8   &. 9*8  D. 98*8 0

66'

. Hin"is $ad a 9=8 n!a'ora)%e direct %a)or rate 'ariance and an 9? !a'ora)%e e!!iciency 'ariance. Hin"is paid 9=18 !or ? $ors o! %a)or. +$at ,as t$e standard direct %a)or  ,a"e rate A. 9?.@5 C. 9?. &. 9=.@5 D. 9=.?

66'i

. 9o,er%ess CompanyJs operations !or Apri% disc%osed t$e !o%%o,in" data re%atin" to direct %a)or:  Acta% cost 91 Rate 'ariance 1 !a'ora)%e E!!iciency 'ariance 18 n!a'ora)%e Standard cost 9 @8  Acta% direct %a)or $ors !or Apri% amonted to *. 9o,er%essJ standard direct %a)or rate per  $or in Apri% ,as:  A. 98.8 C. 98. &. 95.=8 D. 95.8

In!ormation on oode'e CompanyJs direct %a)or costs are presented )e%o,: Standard direct %a)or $ors  Acta% direct %a)or $ors Direct %a)or e!!iciency 'ariance a'ora)%e Direct %a)or rate 'ariance a'ora)%e Tota% payro%%

 *@ 9 5 9 8? 911*

666

. +$at ,as oode'eJs standard direct %a)or rate A. 9.85 C. 9.? &. 95. D. 98. ?

66'ii

. Lion CompanyJs direct %a)or costs !or t$e mont$ o! anary ,ere as !o%%o,s:  Acta% direct %a)or $ors Standard direct %a)or $ors Direct %a)or rate 'ariance M 0n!a'. Tota% payro%% +$at ,as LionJs direct %a)or e!!iciency 'ariance A. 9 !a'ora)%e C. 918 !a'ora)%e &. 9 !a'ora)%e D. 958 !a'ora)%e

* *1 9  91*

666i

. +$at ,as oode'eJs acta% direct %a)or rate A. 9. C. 9. ? &. 95. D. 98.?

666ii

. T$e Is%ander Corporation ma#es a 'ariety o! %eat$er "oods. It ses standards costs and a !%e6i)%e )d"et to aid p%annin" and contro%. &d"eted 'aria)%e o'er$ead at a 58/direct %a)or $or %e'e% is 9*=. Drin" Apri% materia% prc$ases ,ere 9*51@. Acta% direct/%a)or costs incrred ,ere

Standard Costs and Variance Analysis 

 A. 9  &. 91

C. 915 D. 918

Scents Tota%  Acta% otpt T$e materia% yie%d 'ariance is:  A. 9 *? n!a'ora)%e &. 9@?@ n!a'ora)%e

6'iii

. Drin" 7arc$ Lm)an CompanyJs direct materia% costs !or t$e man!actre o! prodct T ,ere as !o%%o,s:  Acta% nit prc$ase price 9.8 Standard >antity a%%o,ed !or acta% prodction *1 Fantity prc$ased and sed !or acta% prodction * Standard nit price 9.*8 Lm)anJs materia% sa"e 'ariance !or 7arc$ ,as:  A. 91*8 n!a'ora)%e C. 91*8 !a'ora)%e &. 91 n!a'ora)%e D. 91 !a'ora)%e

 *1 1?8 C. 9 *? !a'ora)%e D. 9@?@ !a'ora)%e

66i

. T$e !%e6i)%e )d"et !or t$e mont$ o! 7ay *= ,as !or @ nits ,it$ direct materia% at 918 per nit. Direct %a)or ,as )d"eted at 58 mintes per nit !or a tota% o! 9?1. Acta% otpt !or t$e mont$ ,as ?8 nits ,it$ 91*=8 in direct materia% and 9====8 in direct %a)or  e6pense. Direct %a)or $ors o! =8 ,ere acta%%y ,or#ed drin" t$e mont$. Variance ana%ysis o! t$e per!ormance !or t$e mont$ o! 7ay ,o%d s$o, a;n<:  A. a'ora)%e materia% >antity 'ariance o! 9=8. &. 0n!a'ora)%e direct %a)or e!!iciency 'ariance o! 91*=8. C. 0n!a'ora)%e materia% >antity 'ariance o! 9=8. D. 0n!a'ora)%e direct %a)or rate 'ariance o! 91*=8.

6i6

. Ra(ona)%e Company insta%%s s$in"%e roo!s on $oses. T$e standard materia% cost !or a Type R $ose is 91*8 )ased on 1 nits at a cost o! 91.*8 eac$. Drin" Apri% Ra(ona)%e insta%%ed roo!s on * Type R $oses sin" ** nits o! materia% cost o! 9*5. Ra(ona)%eJs materia% price 'ariance !or Apri% is:  A. 91 !a'ora)%e C. 911 !a'ora)%e &. 915 n!a'ora)%e D. 9*8 n!a'ora)%e

66ii

66

. (amson )andle )o. manufactures candles in various shapes, si*es, colors, and scents. Depending on the orders received, not all candles re+uire the same amount of color, d"e, or scent materials. ields also var", depending upon the usage of beeswa- or s"nthetic wa-. (tandard ingredients for ',000 pounds of  candles are Inpt: Standard 7i6 Standard Cost per 9ond &ees,a6 * %)s. 1. Synt$etic ,a6 ?5 %)s. .* Co%ors = %)s. *. Scents  %)s. . Tota%s 18 %)s. @.* Standard otpt 1 %)s. 9rice 'ariances are c$ar"ed o!! at t$e time o! prc$ase. Drin" anary t$e company ,as )sy man!actrin" red cand%es !or Va%entineJ s Day. Acta% prodcti on t$en ,as: In 9onds &ees,a6 51 Synt$etic ,a6 1? Co%ors **

. T$e standard $or%y rate ,as 95.1. Standard $ors !or t$e %e'e% o! prodction are 5. T$e acta% rate ,as 95.*=. T$e %a)or rate 'ariance ,as 985.8 n!a'ora)%e. +$at ,ere t$e acta% %a)or $ors A. = C. ?8 &. 518 D. 5

66iii

. C%ean Harry Corp. ses t,o di!!erent types o! %a)or to man!actre its prodct. T$e types o!  %a)or 7i6in" and inis$in" $a'e t$e !o%%o,in" standards: La)or Type Standard 7i6 Std Hor%y Rate Standard Cost 7i6in" 8 $ors 91 98 inis$in" *8 $ors 98 91*8 Yie%d: 5 nits During /anuar", the following actual production information was provided La)or Type Acta% 7i6 7i6in" 58 $ors inis$in"  $ors Yie%d:  nits +$at is t$e %a)or mi6 'ariance A. 9*8  C. 9 * 8 0 &. 98  D. 98 

209

Standard Costs and Variance Analysis  66i6

. Sim)ad CompanyJs operations !or t$e mont$ 4st ended ori"ina%%y set p a  direct %a)or  $or %e'e% ,it$ )d"eted direct %a)or o! 9@ and )d"eted 'aria)%e o'er$ead o!  9*5. T$e acta% res%ts re'ea%ed t$at direct %a)or incrred amonted to 9115? and t$at t$e n!a'ora)%e 'aria)%e o'er$ead 'ariance ,as 95. La)or tro)%e cased an n!a'ora)%e %a)or e!!iciency 'ariance o! 91* and ne, emp%oyees $ired at $i"$er rates res%ted in an acta% a'era"e ,a"e rate o! 91.5 per $or. T$e tota% nm)er o! standard direct %a)or $ors a%%o,ed !or t$e acta% nits prodced is  A. 98*8 C. 9 * 8  &. 9==8 D. 9=

66i'

. Ho, mc$ %a)or yie%d 'ariances s$o%d )e reported A. 9*8 0 C. 9 8 *8   &. 9*8  D. 98*8 0

66'

. Hin"is $ad a 9=8 n!a'ora)%e direct %a)or rate 'ariance and an 9? !a'ora)%e e!!iciency 'ariance. Hin"is paid 9=18 !or ? $ors o! %a)or. +$at ,as t$e standard direct %a)or  ,a"e rate A. 9?.@5 C. 9?. &. 9=.@5 D. 9=.?

66'i

. 9o,er%ess CompanyJs operations !or Apri% disc%osed t$e !o%%o,in" data re%atin" to direct %a)or:  Acta% cost 91 Rate 'ariance 1 !a'ora)%e E!!iciency 'ariance 18 n!a'ora)%e Standard cost 9 @8  Acta% direct %a)or $ors !or Apri% amonted to *. 9o,er%essJ standard direct %a)or rate per  $or in Apri% ,as:  A. 98.8 C. 98. &. 95.=8 D. 95.8

In!ormation on oode'e CompanyJs direct %a)or costs are presented )e%o,: Standard direct %a)or $ors  Acta% direct %a)or $ors Direct %a)or e!!iciency 'ariance a'ora)%e Direct %a)or rate 'ariance a'ora)%e Tota% payro%%

 *@ 9 5 9 8? 911*

666

. +$at ,as oode'eJs standard direct %a)or rate A. 9.85 C. 9.? &. 95. D. 98. ?

66'ii

. Lion CompanyJs direct %a)or costs !or t$e mont$ o! anary ,ere as !o%%o,s:  Acta% direct %a)or $ors Standard direct %a)or $ors Direct %a)or rate 'ariance M 0n!a'. Tota% payro%% +$at ,as LionJs direct %a)or e!!iciency 'ariance A. 9 !a'ora)%e C. 918 !a'ora)%e &. 9 !a'ora)%e D. 958 !a'ora)%e

666i

* *1 9  91*

666ii

. T$e Is%ander Corporation ma#es a 'ariety o! %eat$er "oods. It ses standards costs and a !%e6i)%e )d"et to aid p%annin" and contro%. &d"eted 'aria)%e o'er$ead at a 58/direct %a)or $or %e'e% is 9*=. Drin" Apri% materia% prc$ases ,ere 9*51@. Acta% direct/%a)or costs incrred ,ere 915=. T$e direct/%a)or sa"e 'ariance ,as 981 n!a'ora)%e. T$e acta% a'era"e ,a"e rate ,as 9.* %o,er t$an t$e a'era"e standard ,a"e rate. T$e company ses a 'aria)%e o'er$ead rate o! *G o! standard direct/%a)or cost !or !%e6i)%e )d"etin" prposes. Acta% 'aria)%e o'er$ead !or t$e mont$ ,as 9=8. +$at ,ere t$e standard $ors a%%o,ed drin" t$e mont$ o! Apri% A. 8*8 C. 8?*8 &. 5? 88 D.  = 8*

66'iii

. 0sin" t$e in!ormation "i'en )e%o, determine t$e %a)or e!!iciency 'ariance: La)or price per $or Standard %a)or price per "a%%on o! otpt at * "a%.$r Standard %a)or cost o! ?55 "a%%ons o! acta% otpt  Acta% tota% inpts;51 $ors at 9*1$r<  A. 9 51 n!a'ora)%e C. 9 *5 !a'ora)%e &. 9 1= n!a'ora)%e D. 9 51 !a'ora)%e

. +$at ,as oode'eJs acta% direct %a)or rate A. 9. C. 9. ? &. 95. D. 98.?

9 * 9 1 9?55 9?1

210

Standard Costs and Variance Analysis  666iii

. In!ormation on &ar)er CompanyJs direct %a)or costs !or t$e mont$ o! anary is as !o%%o,s:  Acta% direct %a)or $ors 58 Standard direct %a)or $ors 8 Tota% direct %a)or payro%% 9*518 Direct %a)or e!!iciency 'ariance M !a'ora)%e 9 * +$at is &ar)erJs direct %a)or rate 'ariance A. 91=*8 0 C. 9*1 0 &. 9*= 0 D. 9*1 

666i'

. STA Company ses a standard cost system. T$e !o%%o,in" in!ormation pertains to direct %a)or  costs !or t$e mont$ o! ne: Standard direct %a)or rate per $or 9 1.  Acta% direct %a)or rate per $or 9 @. La)or rate 'ariance ;!a'ora)%e< 91*  Acta% otpt ;nits< * Standard $ors a%%o,ed !or acta% prodction 1 $ors Ho, many acta% %a)or $ors ,ere ,or#ed drin" 7arc$ !or STA Company A. 1 C. ? &. 1* D. 1  8

666'

. In!ormation o! HanesJ direct %a)or costs !or t$e mont$ o! 7ay is as !o%%o,s:  Acta% direct %a)or rate Standard direct %a)or $ors a%%o,ed  Acta% direct %a)or $ors Direct %a)or rate 'ariance M !a'ora)%e +$at ,as t$e standard direct %a)or rate in e!!ect !or t$e mont$ o! 7ay A. 9.@8 C. 9?. &. 9=. D. 9?.8

9=.8 11 1 988

666'ii

. ent Company sets t$e !o%%o,in" standards !or *=: Direct %a)or cost ;* DLH  95.8< 9 @. 7an!actrin" o'er$ead ;* DLH  9=.8< 18. ent Company p%ans to prodce its on%y prodct e>a%%y eac$ mont$. T$e anna% )d"et !or  o'er$ead costs are: i6ed o'er$ead 918 Varia)%e o'er$ead  Norma% acti'ity in direct %a)or $ors  In 7arc$ ent Company prodced *58 nits ,it$ acta% direct %a)or $ors sed o! 88.  Acta% o'er$ead costs !or t$e mont$ amonted to 9=*58 ;i6ed o'er$ead is as )d"eted.< T$e amont o! o'er$ead 'o%me 'ariance !or ent Company is  A. 9*8 n!a'ora)%e C. 98 n!a'ora)%e &. 9=8 0n!a'ora)%e D. 9=8 0n!a'ora)%e

666'iii

. Ca%ma Company ses a standard cost system. T$e !o%%o,in" )d"et at norma% capacity and t$e acta% res%ts are smmari(ed !or t$e mont$ o! Decem)er: Direct %a)or $ors *5 Varia)%e !actory OH 9 5? i6ed !actory OH 91? Tota% !actory OH per DLH 9 .8  Acta% data !or Decem)er ,ere as !o%%o,s: Direct %a)or $ors ,or#ed ** Tota% !actory OH 915= Standard DLHs a%%o,ed !or capacity attained *1 0sin" t$e t,o/,ay ana%ysis o! o'er$ead 'ariance ,$at is t$e contro%%a)%e 'ariance !or  Decem)er A. 9  a'ora)%e C. 9 8 a'ora)%e &. 9 @ a'ora)%e D. 918 0n!a'ora)%e

Standard Costs and Variance Analysis  66i6

. Sim)ad CompanyJs operations !or t$e mont$ 4st ended ori"ina%%y set p a  direct %a)or  $or %e'e% ,it$ )d"eted direct %a)or o! 9@ and )d"eted 'aria)%e o'er$ead o!  9*5. T$e acta% res%ts re'ea%ed t$at direct %a)or incrred amonted to 9115? and t$at t$e n!a'ora)%e 'aria)%e o'er$ead 'ariance ,as 95. La)or tro)%e cased an n!a'ora)%e %a)or e!!iciency 'ariance o! 91* and ne, emp%oyees $ired at $i"$er rates res%ted in an acta% a'era"e ,a"e rate o! 91.5 per $or. T$e tota% nm)er o! standard direct %a)or $ors a%%o,ed !or t$e acta% nits prodced is  A. 98*8 C. 9 * 8  &. 9==8 D. 9=

66i'

. Ho, mc$ %a)or yie%d 'ariances s$o%d )e reported A. 9*8 0 C. 9 8 *8   &. 9*8  D. 98*8 0

66'

. Hin"is $ad a 9=8 n!a'ora)%e direct %a)or rate 'ariance and an 9? !a'ora)%e e!!iciency 'ariance. Hin"is paid 9=18 !or ? $ors o! %a)or. +$at ,as t$e standard direct %a)or  ,a"e rate A. 9?.@5 C. 9?. &. 9=.@5 D. 9=.?

66'i

. 9o,er%ess CompanyJs operations !or Apri% disc%osed t$e !o%%o,in" data re%atin" to direct %a)or:  Acta% cost 91 Rate 'ariance 1 !a'ora)%e E!!iciency 'ariance 18 n!a'ora)%e Standard cost 9 @8  Acta% direct %a)or $ors !or Apri% amonted to *. 9o,er%essJ standard direct %a)or rate per  $or in Apri% ,as:  A. 98.8 C. 98. &. 95.=8 D. 95.8

In!ormation on oode'e CompanyJs direct %a)or costs are presented )e%o,: Standard direct %a)or $ors  Acta% direct %a)or $ors Direct %a)or e!!iciency 'ariance a'ora)%e Direct %a)or rate 'ariance a'ora)%e Tota% payro%%

 *@ 9 5 9 8? 911*

666

. +$at ,as oode'eJs standard direct %a)or rate A. 9.85 C. 9.? &. 95. D. 98. ?

66'ii

. Lion CompanyJs direct %a)or costs !or t$e mont$ o! anary ,ere as !o%%o,s:  Acta% direct %a)or $ors Standard direct %a)or $ors Direct %a)or rate 'ariance M 0n!a'. Tota% payro%% +$at ,as LionJs direct %a)or e!!iciency 'ariance A. 9 !a'ora)%e C. 918 !a'ora)%e &. 9 !a'ora)%e D. 958 !a'ora)%e

666i

* *1 9  91*

666ii

. T$e Is%ander Corporation ma#es a 'ariety o! %eat$er "oods. It ses standards costs and a !%e6i)%e )d"et to aid p%annin" and contro%. &d"eted 'aria)%e o'er$ead at a 58/direct %a)or $or %e'e% is 9*=. Drin" Apri% materia% prc$ases ,ere 9*51@. Acta% direct/%a)or costs incrred ,ere 915=. T$e direct/%a)or sa"e 'ariance ,as 981 n!a'ora)%e. T$e acta% a'era"e ,a"e rate ,as 9.* %o,er t$an t$e a'era"e standard ,a"e rate. T$e company ses a 'aria)%e o'er$ead rate o! *G o! standard direct/%a)or cost !or !%e6i)%e )d"etin" prposes. Acta% 'aria)%e o'er$ead !or t$e mont$ ,as 9=8. +$at ,ere t$e standard $ors a%%o,ed drin" t$e mont$ o! Apri% A. 8*8 C. 8?*8 &. 5? 88 D.  = 8*

66'iii

. 0sin" t$e in!ormation "i'en )e%o, determine t$e %a)or e!!iciency 'ariance: La)or price per $or Standard %a)or price per "a%%on o! otpt at * "a%.$r Standard %a)or cost o! ?55 "a%%ons o! acta% otpt  Acta% tota% inpts;51 $ors at 9*1$r<  A. 9 51 n!a'ora)%e C. 9 *5 !a'ora)%e &. 9 1= n!a'ora)%e D. 9 51 !a'ora)%e

. +$at ,as oode'eJs acta% direct %a)or rate A. 9. C. 9. ? &. 95. D. 98.?

9 * 9 1 9?55 9?1

210

Standard Costs and Variance Analysis  666iii

. In!ormation on &ar)er CompanyJs direct %a)or costs !or t$e mont$ o! anary is as !o%%o,s:  Acta% direct %a)or $ors 58 Standard direct %a)or $ors 8 Tota% direct %a)or payro%% 9*518 Direct %a)or e!!iciency 'ariance M !a'ora)%e 9 * +$at is &ar)erJs direct %a)or rate 'ariance A. 91=*8 0 C. 9*1 0 &. 9*= 0 D. 9*1 

666'ii

. ent Company sets t$e !o%%o,in" standards !or *=: Direct %a)or cost ;* DLH  95.8< 9 @. 7an!actrin" o'er$ead ;* DLH  9=.8< 18. ent Company p%ans to prodce its on%y prodct e>a%%y eac$ mont$. T$e anna% )d"et !or  o'er$ead costs are: i6ed o'er$ead 918 Varia)%e o'er$ead  Norma% acti'ity in direct %a)or $ors  In 7arc$ ent Company prodced *58 nits ,it$ acta% direct %a)or $ors sed o! 88.  Acta% o'er$ead costs !or t$e mont$ amonted to 9=*58 ;i6ed o'er$ead is as )d"eted.< T$e amont o! o'er$ead 'o%me 'ariance !or ent Company is  A. 9*8 n!a'ora)%e C. 98 n!a'ora)%e &. 9=8 0n!a'ora)%e D. 9=8 0n!a'ora)%e

666i'

. STA Company ses a standard cost system. T$e !o%%o,in" in!ormation pertains to direct %a)or  costs !or t$e mont$ o! ne: Standard direct %a)or rate per $or 9 1.  Acta% direct %a)or rate per $or 9 @. La)or rate 'ariance ;!a'ora)%e< 91*  Acta% otpt ;nits< * Standard $ors a%%o,ed !or acta% prodction 1 $ors Ho, many acta% %a)or $ors ,ere ,or#ed drin" 7arc$ !or STA Company A. 1 C. ? &. 1* D. 1  8

666'iii

. Ca%ma Company ses a standard cost system. T$e !o%%o,in" )d"et at norma% capacity and t$e acta% res%ts are smmari(ed !or t$e mont$ o! Decem)er: Direct %a)or $ors *5 Varia)%e !actory OH 9 5? i6ed !actory OH 91? Tota% !actory OH per DLH 9 .8  Acta% data !or Decem)er ,ere as !o%%o,s: Direct %a)or $ors ,or#ed ** Tota% !actory OH 915= Standard DLHs a%%o,ed !or capacity attained *1 0sin" t$e t,o/,ay ana%ysis o! o'er$ead 'ariance ,$at is t$e contro%%a)%e 'ariance !or  Decem)er A. 9  a'ora)%e C. 9 8 a'ora)%e &. 9 @ a'ora)%e D. 918 0n!a'ora)%e

666'

. In!ormation o! HanesJ direct %a)or costs !or t$e mont$ o! 7ay is as !o%%o,s:  Acta% direct %a)or rate Standard direct %a)or $ors a%%o,ed  Acta% direct %a)or $ors Direct %a)or rate 'ariance M !a'ora)%e +$at ,as t$e standard direct %a)or rate in e!!ect !or t$e mont$ o! 7ay A. 9.@8 C. 9?. &. 9=. D. 9?.8

9=.8 11 1 988

666'i

666i6

. T$e o'er$ead 'ariances !or &i" Company ,ere: Varia)%e o'er$ead spendin" 'ariance: 9 !a'ora)%e. Varia)%e o'er$ead e!!iciency 'ariance: 9 n!a'ora)%e . i6ed o'er$ead spendin" 'ariance: 91 !a'ora)%e. i6ed o'er$ead 'o%me 'ariance: 9*5 !a'ora)%e. +$at ,as t$e o'er$ead contro%%a)%e 'ariance A. 91 !a'ora)%e C. 9*5 !a'ora)%e &. 91 !a'ora)%e D. 9 = !a'ora)%e

. Heart )ompan" uses a fle-ible budget s"stem and prepared the following information for the "ear 9ercent o! Capacity ? 9ercent @ 9ercent Direct %a)or $ors *5 *= Varia)%e !actory o'er$ead 9 85 9 =8 i6ed !actory o'er$ead 9 ?1 9 ?1 Tota% !actory o'er$ead rate per DLH 98.*8 98.*8 Heart operated at ? percent o! capacity drin" t$e year )t app%ied !actory o'er$ead )ased

211

Standard Costs and Variance Analysis 

on t$e @ percent capacity %e'e%. Assmin" t$at acta% !actory o'er$ead ,as e>a% to t$e )d"eted amont o! o'er$ead $o, mc$ ,as t$e o'er$ead 'o%me 'ariance !or t$e year A. 9 @ n!a'ora)%e C. 9 @ !a'ora)%e &. 918=8 n!a'ora)%e D. 918=8 !a'ora)%e 6%

.

 A. 91 !a'ora)%e &. 9 !a'ora)%e 6%i'

T$e ire Company $as a standard a)sorption and !%e6i)%e )d"etin" system and ses a t,o/ ,ay ana%ysis o! o'er$ead 'ariances. Se%ected data !or t$e ne prodction acti'ity are: &d"eted !i6ed !actory o'er$ead costs 9 5  Acta% !actory o'er$ead * Varia)%e !actory o'er$ead rater per DLH 9 8 Standard DLH *  Acta% DLH * T$e )d"et ;contro%%a)%e< 'ariance !or ne is  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 !a'ora)%e D. 9 n!a'ora)%e

C. 91 n!a'ora)%e D. 9 n!a'ora)%e

. T$e standard !actory o'er$ead rate is 91 per direct %a)or $or ;9? !or 'aria)%e !actory o'er$ead and 9* !or !i6ed !actory o'er$ead< )ased on 1G capacity o!  direct %a)or  $ors. T$e standard cost and t$e acta% cost o! !actory o'er$ead !or t$e prodction o! 8 nits drin" 7ay ,ere as !o%%o,s: Standard: *8 $ors at 91 9*8  Acta%: Varia)%e !actory o'er$ead **8 i6ed !actory o'er$ead  +$at is t$e amont o! t$e !actory o'er$ead 'o%me 'ariance A. 1*8 !a'ora)%e C. 1*8 n!a'ora)%e &. 1 n!a'ora)%e D. 1 !a'ora)%e

6%' 6%i

.

6%ii

Sorso"on Company $ad acta% o'er$ead o! 915 !or t$e year. T$e company app%ied o'er$ead o! 915. I! t$e o'er$ead )d"eted !or t$e standard $ors a%%o,ed is 918 t$e o'er$ead contro%%a)%e 'ariance is  A. 9  a'ora)%e C. 91 a'ora)%e &. 9** 0n!a'ora)%e D. 91 0n!a'ora)%e

. Compo Co. ses a predetermined !actory OH app%ication rate )ased on direct %a)or cost. or  t$e year ended Decem)er 1 CompoJs )d"eted !actory OH ,as 9 )ased on a )d"eted 'o%me o! 8 direct %a)or $ors at a standard direct %a)or rate o! 9 per $or.  Acta% !actory OH amonted to 9* ,it$ acta% direct %a)or cost o! 9*8. or t$e year o'er/app%ied !actory OH ,as  A. 9* C. 9   &. 9*8 D. 98

. T$e !o%%o,in" data are t$e acta% res%ts !or +o, Company !or t$e mont$ o! 7ay:  Acta% otpt 58 nits  Acta% 'aria)%e o'er$ead 9  Acta% !i6ed o'er$ead 91?  Acta% mac$ine time 15 7H Standard cost and )d"et in!ormation !or +o, Company !o%%o,s: Standard 'aria)%e o'er$ead rate 9. per 7H Standard >antity o! mac$ine $ors  $ors per nit &d"eted !i6ed o'er$ead 9=== per year   &d"eted otpt 5? nits per mont$ T$e o'er$ead e!!iciency 'ariance is  A. 9 a'ora)%e C. 9 0n!a'ora)%e &. 985 a'ora)%e D. 985 0n!a'ora)%e

6%'i

T$e Li)iran Comp

dces its on%y prodct 7ent$o% C$e,in" m. T$e standard

Standard Costs and Variance Analysis  666iii

. In!ormation on &ar)er CompanyJs direct %a)or costs !or t$e mont$ o! anary is as !o%%o,s:  Acta% direct %a)or $ors 58 Standard direct %a)or $ors 8 Tota% direct %a)or payro%% 9*518 Direct %a)or e!!iciency 'ariance M !a'ora)%e 9 * +$at is &ar)erJs direct %a)or rate 'ariance A. 91=*8 0 C. 9*1 0 &. 9*= 0 D. 9*1 

666'ii

. ent Company sets t$e !o%%o,in" standards !or *=: Direct %a)or cost ;* DLH  95.8< 9 @. 7an!actrin" o'er$ead ;* DLH  9=.8< 18. ent Company p%ans to prodce its on%y prodct e>a%%y eac$ mont$. T$e anna% )d"et !or  o'er$ead costs are: i6ed o'er$ead 918 Varia)%e o'er$ead  Norma% acti'ity in direct %a)or $ors  In 7arc$ ent Company prodced *58 nits ,it$ acta% direct %a)or $ors sed o! 88.  Acta% o'er$ead costs !or t$e mont$ amonted to 9=*58 ;i6ed o'er$ead is as )d"eted.< T$e amont o! o'er$ead 'o%me 'ariance !or ent Company is  A. 9*8 n!a'ora)%e C. 98 n!a'ora)%e &. 9=8 0n!a'ora)%e D. 9=8 0n!a'ora)%e

666i'

. STA Company ses a standard cost system. T$e !o%%o,in" in!ormation pertains to direct %a)or  costs !or t$e mont$ o! ne: Standard direct %a)or rate per $or 9 1.  Acta% direct %a)or rate per $or 9 @. La)or rate 'ariance ;!a'ora)%e< 91*  Acta% otpt ;nits< * Standard $ors a%%o,ed !or acta% prodction 1 $ors Ho, many acta% %a)or $ors ,ere ,or#ed drin" 7arc$ !or STA Company A. 1 C. ? &. 1* D. 1  8

666'iii

. Ca%ma Company ses a standard cost system. T$e !o%%o,in" )d"et at norma% capacity and t$e acta% res%ts are smmari(ed !or t$e mont$ o! Decem)er: Direct %a)or $ors *5 Varia)%e !actory OH 9 5? i6ed !actory OH 91? Tota% !actory OH per DLH 9 .8  Acta% data !or Decem)er ,ere as !o%%o,s: Direct %a)or $ors ,or#ed ** Tota% !actory OH 915= Standard DLHs a%%o,ed !or capacity attained *1 0sin" t$e t,o/,ay ana%ysis o! o'er$ead 'ariance ,$at is t$e contro%%a)%e 'ariance !or  Decem)er A. 9  a'ora)%e C. 9 8 a'ora)%e &. 9 @ a'ora)%e D. 918 0n!a'ora)%e

666'

. In!ormation o! HanesJ direct %a)or costs !or t$e mont$ o! 7ay is as !o%%o,s:  Acta% direct %a)or rate Standard direct %a)or $ors a%%o,ed  Acta% direct %a)or $ors Direct %a)or rate 'ariance M !a'ora)%e +$at ,as t$e standard direct %a)or rate in e!!ect !or t$e mont$ o! 7ay A. 9.@8 C. 9?. &. 9=. D. 9?.8

9=.8 11 1 988

666'i

666i6

. T$e o'er$ead 'ariances !or &i" Company ,ere: Varia)%e o'er$ead spendin" 'ariance: 9 !a'ora)%e. Varia)%e o'er$ead e!!iciency 'ariance: 9 n!a'ora)%e . i6ed o'er$ead spendin" 'ariance: 91 !a'ora)%e. i6ed o'er$ead 'o%me 'ariance: 9*5 !a'ora)%e. +$at ,as t$e o'er$ead contro%%a)%e 'ariance A. 91 !a'ora)%e C. 9*5 !a'ora)%e &. 91 !a'ora)%e D. 9 = !a'ora)%e

. Heart )ompan" uses a fle-ible budget s"stem and prepared the following information for the "ear 9ercent o! Capacity ? 9ercent @ 9ercent Direct %a)or $ors *5 *= Varia)%e !actory o'er$ead 9 85 9 =8 i6ed !actory o'er$ead 9 ?1 9 ?1 Tota% !actory o'er$ead rate per DLH 98.*8 98.*8 Heart operated at ? percent o! capacity drin" t$e year )t app%ied !actory o'er$ead )ased

211

Standard Costs and Variance Analysis 

on t$e @ percent capacity %e'e%. Assmin" t$at acta% !actory o'er$ead ,as e>a% to t$e )d"eted amont o! o'er$ead $o, mc$ ,as t$e o'er$ead 'o%me 'ariance !or t$e year A. 9 @ n!a'ora)%e C. 9 @ !a'ora)%e &. 918=8 n!a'ora)%e D. 918=8 !a'ora)%e 6%

.

 A. 91 !a'ora)%e &. 9 !a'ora)%e 6%i'

T$e ire Company $as a standard a)sorption and !%e6i)%e )d"etin" system and ses a t,o/ ,ay ana%ysis o! o'er$ead 'ariances. Se%ected data !or t$e ne prodction acti'ity are: &d"eted !i6ed !actory o'er$ead costs 9 5  Acta% !actory o'er$ead * Varia)%e !actory o'er$ead rater per DLH 9 8 Standard DLH *  Acta% DLH * T$e )d"et ;contro%%a)%e< 'ariance !or ne is  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 !a'ora)%e D. 9 n!a'ora)%e

C. 91 n!a'ora)%e D. 9 n!a'ora)%e

. T$e standard !actory o'er$ead rate is 91 per direct %a)or $or ;9? !or 'aria)%e !actory o'er$ead and 9* !or !i6ed !actory o'er$ead< )ased on 1G capacity o!  direct %a)or  $ors. T$e standard cost and t$e acta% cost o! !actory o'er$ead !or t$e prodction o! 8 nits drin" 7ay ,ere as !o%%o,s: Standard: *8 $ors at 91 9*8  Acta%: Varia)%e !actory o'er$ead **8 i6ed !actory o'er$ead  +$at is t$e amont o! t$e !actory o'er$ead 'o%me 'ariance A. 1*8 !a'ora)%e C. 1*8 n!a'ora)%e &. 1 n!a'ora)%e D. 1 !a'ora)%e

6%' 6%i

.

. T$e !o%%o,in" data are t$e acta% res%ts !or +o, Company !or t$e mont$ o! 7ay:  Acta% otpt 58 nits  Acta% 'aria)%e o'er$ead 9  Acta% !i6ed o'er$ead 91?  Acta% mac$ine time 15 7H Standard cost and )d"et in!ormation !or +o, Company !o%%o,s: Standard 'aria)%e o'er$ead rate 9. per 7H Standard >antity o! mac$ine $ors  $ors per nit &d"eted !i6ed o'er$ead 9=== per year   &d"eted otpt 5? nits per mont$ T$e o'er$ead e!!iciency 'ariance is  A. 9 a'ora)%e C. 9 0n!a'ora)%e &. 985 a'ora)%e D. 985 0n!a'ora)%e

Sorso"on Company $ad acta% o'er$ead o! 915 !or t$e year. T$e company app%ied o'er$ead o! 915. I! t$e o'er$ead )d"eted !or t$e standard $ors a%%o,ed is 918 t$e o'er$ead contro%%a)%e 'ariance is  A. 9  a'ora)%e C. 91 a'ora)%e &. 9** 0n!a'ora)%e D. 91 0n!a'ora)%e

6%ii

. Compo Co. ses a predetermined !actory OH app%ication rate )ased on direct %a)or cost. or  t$e year ended Decem)er 1 CompoJs )d"eted !actory OH ,as 9 )ased on a )d"eted 'o%me o! 8 direct %a)or $ors at a standard direct %a)or rate o! 9 per $or.  Acta% !actory OH amonted to 9* ,it$ acta% direct %a)or cost o! 9*8. or t$e year o'er/app%ied !actory OH ,as  A. 9* C. 9   &. 9*8 D. 98

6%'i 6%iii

. T$e Terrain Company $as a standard a)sorption and !%e6i)%e )d"etin" system and ses a t,o/,ay ana%ysis o! o'er$ead 'ariances. Se%ected data !or t$e ne prodction acti'ity are: &d"eted !i6ed !actory o'er$ead costs 9 5  Acta% !actory o'er$ead * Varia)%e !actory o'er$ead rater per DLH 9 8 Standard DLH *  Acta% DLH * T$e )d"et ;contro%%a)%e< 'ariance !or t$e mont$ o! ne is:

. T$e Li)iran Company prodces its on%y prodct 7ent$o% C$e,in" m. T$e standard o'er$ead cost !or one pac# o! t$e prodct !o%%o,s: i6ed o'er$ead ;1.8 $ors at 91?.< 9*=. Varia)%e o'er$ead ;1.8 $ors at 91.< 18. Tota% app%ication rate 95*. Li)iran ses e6pected 'o%me o! * nits. Drin" t$e year Li)iran sed 18 direct %a)or $ors !or t$e prodction o! * nits. Acta% o'er$ead costs ,ere 9858 !i6ed and 9?= 'aria)%e. T$e o'er$ead e!!iciency 'ariance is

212

Standard Costs and Variance Analysis 

 A. 9**8 a'ora)%e &. 9**8 0n!a'ora)%e

C. 918 a'ora)%e D. 918 0n!a'ora)%e

&d"eted otpt T$e o'er$ead e!!iciency 'ariance is:  A. 9 a'ora)%e &. 985 a'ora)%e

6%'ii

. A))ey Company prodces a sin"%e prodct. A))ey emp%oys a standard cost system and ses a !%e6i)%e )d"et to predict o'er$ead costs at 'arios %e'e%s o! acti'ity. or t$e most recent year A))ey sed a standard o'er$ead rate e>a% to 9?.8 per direct %a)or $or. T$e rate ,as compted sin" norma% acti'ity. &d"eted o'er$ead costs are 91 !or 1 direct %a)or $ors and 91 !or * direct %a)or $ors. Drin" t$e past year A))ey "enerate t$e !o%%o,in" data:  Acta% prodction: 15 nits i6ed o'er$ead 'o%me 'ariance: 98 0 Varia)%e o'er$ead e!!iciency 'ariance: 9   Acta% !i6ed o'er$ead costs: 95*=  Acta% 'aria)%e o'er$ead costs: 9?* T$e nm)er o! direct %a)or $ors sed as norma% acti'ity are:  A. 1 C. 1 5  &. 18 D. 18

%

.

%i

.

6%'iii

. 0sin" t$e in!ormation presented )e%o, ca%c%ate t$e tota% o'er$ead spendin" 'ariance. &d"eted !i6ed o'er$ead 91 Standard 'aria)%e o'er$ead ;* DLH at 9* per DLH< 95 per nit  Acta% !i6ed o'er$ead 91  Acta% 'aria)%e o'er$ead 91@8 &d"eted 'o%me ;8 nits 6 * DLH< 1 DLH  Acta% direct %a)or $ors ;DLH< @8 0nits prodced 58  A. 9 8 0 C. 91 0 &. 9 ?  0 D. 9 1   0

6%i6

T$e !o%%o,in" data are t$e acta% res%ts !or &stos Company !or t$e mont$ o! 7a

%ii

.

5? nit per mont$ C. 9 0n!a'ora)%e D. 985 0n!a'ora)%e

T$e !o%%o,in" in!ormation is a'ai%a)%e !rom t$e Tyro Company:  Acta% !actory o'er$ead i6ed o'er$ead e6penses acta% i6ed o'er$ead e6penses )d"eted  Acta% $ors Standard $ors Varia)%e o'er$ead rate per DLH  Assmin" t$at Tyro ses a t$ree/,ay ana%ysis o! o'er$ead 'ariances ,$at is 'ariance A. 9 =8  C. 9 @ 8  &. 9 =8 0 D. 918 0

918 9 =* 9 = 8 ? 9 *.8 t$e spendin"

T$e Sacto Co.Js standard !i6ed o'er$ead cost is 9 per direct %a)or $or )ased on )d"eted !i6ed costs o! 9. T$e standard a%%o,s * direct %a)or $ors per nit. Drin" * Sacto prodced 88 nits o! prodct incrred 918 o! !i6ed o'er$ead costs and recorded 91 acta% $ors o! direct %a)or. +$at are t$e !i6ed o'er$ead 'ariancesSpendin" 'ariance Vo%me 'ariance  A. 918 0 9  &. 9 0 9  C. 918 0 91?  D. 9 0 91?  0sin" t$e in!ormation in t$e precedin" nm)er t$e amonts o! contro%%a)%e 'ariances !or  'aria)%e o'er$ead are: S di E!!i i

Standard Costs and Variance Analysis 

on t$e @ percent capacity %e'e%. Assmin" t$at acta% !actory o'er$ead ,as e>a% to t$e )d"eted amont o! o'er$ead $o, mc$ ,as t$e o'er$ead 'o%me 'ariance !or t$e year A. 9 @ n!a'ora)%e C. 9 @ !a'ora)%e &. 918=8 n!a'ora)%e D. 918=8 !a'ora)%e 6%

.

 A. 91 !a'ora)%e &. 9 !a'ora)%e 6%i'

T$e ire Company $as a standard a)sorption and !%e6i)%e )d"etin" system and ses a t,o/ ,ay ana%ysis o! o'er$ead 'ariances. Se%ected data !or t$e ne prodction acti'ity are: &d"eted !i6ed !actory o'er$ead costs 9 5  Acta% !actory o'er$ead * Varia)%e !actory o'er$ead rater per DLH 9 8 Standard DLH *  Acta% DLH * T$e )d"et ;contro%%a)%e< 'ariance !or ne is  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 !a'ora)%e D. 9 n!a'ora)%e

C. 91 n!a'ora)%e D. 9 n!a'ora)%e

. T$e standard !actory o'er$ead rate is 91 per direct %a)or $or ;9? !or 'aria)%e !actory o'er$ead and 9* !or !i6ed !actory o'er$ead< )ased on 1G capacity o!  direct %a)or  $ors. T$e standard cost and t$e acta% cost o! !actory o'er$ead !or t$e prodction o! 8 nits drin" 7ay ,ere as !o%%o,s: Standard: *8 $ors at 91 9*8  Acta%: Varia)%e !actory o'er$ead **8 i6ed !actory o'er$ead  +$at is t$e amont o! t$e !actory o'er$ead 'o%me 'ariance A. 1*8 !a'ora)%e C. 1*8 n!a'ora)%e &. 1 n!a'ora)%e D. 1 !a'ora)%e

6%' 6%i

.

. T$e !o%%o,in" data are t$e acta% res%ts !or +o, Company !or t$e mont$ o! 7ay:  Acta% otpt 58 nits  Acta% 'aria)%e o'er$ead 9  Acta% !i6ed o'er$ead 91?  Acta% mac$ine time 15 7H Standard cost and )d"et in!ormation !or +o, Company !o%%o,s: Standard 'aria)%e o'er$ead rate 9. per 7H Standard >antity o! mac$ine $ors  $ors per nit &d"eted !i6ed o'er$ead 9=== per year   &d"eted otpt 5? nits per mont$ T$e o'er$ead e!!iciency 'ariance is  A. 9 a'ora)%e C. 9 0n!a'ora)%e &. 985 a'ora)%e D. 985 0n!a'ora)%e

Sorso"on Company $ad acta% o'er$ead o! 915 !or t$e year. T$e company app%ied o'er$ead o! 915. I! t$e o'er$ead )d"eted !or t$e standard $ors a%%o,ed is 918 t$e o'er$ead contro%%a)%e 'ariance is  A. 9  a'ora)%e C. 91 a'ora)%e &. 9** 0n!a'ora)%e D. 91 0n!a'ora)%e

6%ii

. Compo Co. ses a predetermined !actory OH app%ication rate )ased on direct %a)or cost. or  t$e year ended Decem)er 1 CompoJs )d"eted !actory OH ,as 9 )ased on a )d"eted 'o%me o! 8 direct %a)or $ors at a standard direct %a)or rate o! 9 per $or.  Acta% !actory OH amonted to 9* ,it$ acta% direct %a)or cost o! 9*8. or t$e year o'er/app%ied !actory OH ,as  A. 9* C. 9   &. 9*8 D. 98

6%'i 6%iii

. T$e Terrain Company $as a standard a)sorption and !%e6i)%e )d"etin" system and ses a t,o/,ay ana%ysis o! o'er$ead 'ariances. Se%ected data !or t$e ne prodction acti'ity are: &d"eted !i6ed !actory o'er$ead costs 9 5  Acta% !actory o'er$ead * Varia)%e !actory o'er$ead rater per DLH 9 8 Standard DLH *  Acta% DLH * T$e )d"et ;contro%%a)%e< 'ariance !or t$e mont$ o! ne is:

. T$e Li)iran Company prodces its on%y prodct 7ent$o% C$e,in" m. T$e standard o'er$ead cost !or one pac# o! t$e prodct !o%%o,s: i6ed o'er$ead ;1.8 $ors at 91?.< 9*=. Varia)%e o'er$ead ;1.8 $ors at 91.< 18. Tota% app%ication rate 95*. Li)iran ses e6pected 'o%me o! * nits. Drin" t$e year Li)iran sed 18 direct %a)or $ors !or t$e prodction o! * nits. Acta% o'er$ead costs ,ere 9858 !i6ed and 9?= 'aria)%e. T$e o'er$ead e!!iciency 'ariance is

212

Standard Costs and Variance Analysis 

 A. 9**8 a'ora)%e &. 9**8 0n!a'ora)%e

C. 918 a'ora)%e D. 918 0n!a'ora)%e

&d"eted otpt T$e o'er$ead e!!iciency 'ariance is:  A. 9 a'ora)%e &. 985 a'ora)%e

6%'ii

. A))ey Company prodces a sin"%e prodct. A))ey emp%oys a standard cost system and ses a !%e6i)%e )d"et to predict o'er$ead costs at 'arios %e'e%s o! acti'ity. or t$e most recent year A))ey sed a standard o'er$ead rate e>a% to 9?.8 per direct %a)or $or. T$e rate ,as compted sin" norma% acti'ity. &d"eted o'er$ead costs are 91 !or 1 direct %a)or $ors and 91 !or * direct %a)or $ors. Drin" t$e past year A))ey "enerate t$e !o%%o,in" data:  Acta% prodction: 15 nits i6ed o'er$ead 'o%me 'ariance: 98 0 Varia)%e o'er$ead e!!iciency 'ariance: 9   Acta% !i6ed o'er$ead costs: 95*=  Acta% 'aria)%e o'er$ead costs: 9?* T$e nm)er o! direct %a)or $ors sed as norma% acti'ity are:  A. 1 C. 1 5  &. 18 D. 18

%

.

%i

6%i6

918 9 =* 9 = 8 ? 9 *.8 t$e spendin"

.

T$e Sacto Co.Js standard !i6ed o'er$ead cost is 9 per direct %a)or $or )ased on )d"eted !i6ed costs o! 9. T$e standard a%%o,s * direct %a)or $ors per nit. Drin" * Sacto prodced 88 nits o! prodct incrred 918 o! !i6ed o'er$ead costs and recorded 91 acta% $ors o! direct %a)or. +$at are t$e !i6ed o'er$ead 'ariancesSpendin" 'ariance Vo%me 'ariance  A. 918 0 9  &. 9 0 9  C. 918 0 91?  D. 9 0 91? 

%ii

0sin" t$e in!ormation in t$e precedin" nm)er t$e amonts o! contro%%a)%e 'ariances !or  'aria)%e o'er$ead are: Spendin" E!!iciency  A. 9* a' 9* 0n!  &. 9* 0n! 9* a' C. 9 8 0n! 9* 0n!   D. 9* a' 9 8 0n!  

.

. T$e !o%%o,in" data are t$e acta% res%ts !or &stos Company !or t$e mont$ o! 7ay:  Acta% otpt 58 nits  Acta% 'aria)%e o'er$ead 9  Acta% !i6ed o'er$ead 91?  Acta% mac$ine time 15 7H Standard cost and )d"et in!ormation !or &stos Company !o%%o,s: Standard 'aria)%e o'er$ead rate 9. per 7H Standard >antity o! mac$ine $ors  $ors per nit &d"eted !i6ed o'er$ead 9=== per year  

C. 9 0n!a'ora)%e D. 985 0n!a'ora)%e

T$e !o%%o,in" in!ormation is a'ai%a)%e !rom t$e Tyro Company:  Acta% !actory o'er$ead i6ed o'er$ead e6penses acta% i6ed o'er$ead e6penses )d"eted  Acta% $ors Standard $ors Varia)%e o'er$ead rate per DLH  Assmin" t$at Tyro ses a t$ree/,ay ana%ysis o! o'er$ead 'ariances ,$at is 'ariance A. 9 =8  C. 9 @ 8  &. 9 =8 0 D. 918 0

6%'iii

. 0sin" t$e in!ormation presented )e%o, ca%c%ate t$e tota% o'er$ead spendin" 'ariance. &d"eted !i6ed o'er$ead 91 Standard 'aria)%e o'er$ead ;* DLH at 9* per DLH< 95 per nit  Acta% !i6ed o'er$ead 91  Acta% 'aria)%e o'er$ead 91@8 &d"eted 'o%me ;8 nits 6 * DLH< 1 DLH  Acta% direct %a)or $ors ;DLH< @8 0nits prodced 58  A. 9 8 0 C. 91 0 &. 9 ?  0 D. 9 1   0

5? nit per mont$

%iii

.

Sa!in CorporationJs master )d"et ca%%s !or t$e prodction o! 8 nits o! prodct mont$%y. T$e anna% master )d"et inc%des indirect %a)or o! 9155 anna%%y. Sa!in considers

213

Standard Costs and Variance Analysis 

indirect %a)or to )e a 'aria)%e cost. Drin" t$e mont$ o! Apri% 58 nits o! prodct ,ere prodced and indirect %a)or costs o! 911 ,ere incrred. A per!ormance report ti%i(in" !%e6i)%e )d"etin" ,o%d report a )d"et 'ariance !or indirect %a)or o!:  A. 91@ 0n!a'ora)%e. C. 91@ a'ora)%e. &. 9 = 0n!a'ora)%e. D. 9 = a'ora)%e. %i'

.

%'

.

%'i

.

+a%a Company app%ies o'er$ead on a direct %a)or $or )asis. Eac$ nit o! prodct re>ires 8 direct %a)or $ors. O'er$ead is app%ied on a  percent 'aria)%e and = percent !i6ed )asis t$e o'er$ead app%ication rate is 91 per $or. Standards are )ased on a norma% mont$%y capacity o! 8 direct %a)or $ors. Drin" Septem)er * +a%a prodced 11 nits o! prodct and incrred 5@ direct %a)or  $ors. Acta% o'er$ead cost !or t$e mont$ ,as 9?. +$at is tota% anna% )d"eted !i6ed o'er$ead cost A. 9 8 C. 9=* &. 9 88 D. 9=?=* &d"eted 'aria)%e o'er$ead !or t$e %e'e% o! prodction ac$ie'ed is 5 mac$ine/$ors at a )d"eted cost o! 9*. Acta% 'aria)%e o'er$ead at t$e %e'e% o! prodction ac$ie'ed ,as ? $ors at an acta% cost o! 9*5. +$at is t$e tota% 'aria)%e o'er$ead 'ariance A. 95 !a'ora)%e C. 91 n!a'ora)%e &. 95 n!a'ora)%e D. 91 !a'ora)%e T$e 9inat)o Company ma#es and se%%s a sin"%e prodct and ses standard costin". Drin" anary t$e company acta%%y sed ?= direct %a)or/$ors ;DLHs< and prodced  nits o! prodct. T$e standard cost card !or one nit o! prodct inc%des t$e !o%%o,in": Varia)%e !actory o'er$ead: . DLHs  95. per DLH i6ed !actory o'er$ead: . DLHs  9.8 per DLH or anary t$e company incrred 9** o! acta% !i6ed o'er$ead costs and recorded a 9?=8 !a'ora)%e 'o%me 'ariance. T$e )d"eted !i6ed o'er$ead cost !or anary is:

%'iii

. Ca%'in %ein Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o!  ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9. C. 95?. &. 9. D. 9=8.

%i6

.

9ma Company $ad an *8 n!a'ora)%e 'o%me 'ariance a 91? n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6

.

Ar%ene $ad an 91? n!a'ora)%e 'o%me 'ariance a 9*8 n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is:  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6i

i6ed man!actrin" o'er$ead ,as )d"eted at 98 and *8 direct %a)or $ors ,ere )d"eted. I! t$e !i6ed o'er$ead 'o%me 'ariance ,as 91* !a'ora)%e and t$e !i6ed o'er$ead spendin" 'ariance ,as 91 n!a'ora)%e !i6ed man!actrin" o'er$ead app%ied mst )e:  A. 981 C. 981* &. 985 D. 9 5@

.

%6ii

. CTV Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o! ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9 C. 9 5?   &. 9  D. 9=8 

Standard Costs and Variance Analysis 

 A. 9**8 a'ora)%e &. 9**8 0n!a'ora)%e

C. 918 a'ora)%e D. 918 0n!a'ora)%e

&d"eted otpt T$e o'er$ead e!!iciency 'ariance is:  A. 9 a'ora)%e &. 985 a'ora)%e

6%'ii

. A))ey Company prodces a sin"%e prodct. A))ey emp%oys a standard cost system and ses a !%e6i)%e )d"et to predict o'er$ead costs at 'arios %e'e%s o! acti'ity. or t$e most recent year A))ey sed a standard o'er$ead rate e>a% to 9?.8 per direct %a)or $or. T$e rate ,as compted sin" norma% acti'ity. &d"eted o'er$ead costs are 91 !or 1 direct %a)or $ors and 91 !or * direct %a)or $ors. Drin" t$e past year A))ey "enerate t$e !o%%o,in" data:  Acta% prodction: 15 nits i6ed o'er$ead 'o%me 'ariance: 98 0 Varia)%e o'er$ead e!!iciency 'ariance: 9   Acta% !i6ed o'er$ead costs: 95*=  Acta% 'aria)%e o'er$ead costs: 9?* T$e nm)er o! direct %a)or $ors sed as norma% acti'ity are:  A. 1 C. 1 5  &. 18 D. 18

%

.

%i

6%i6

918 9 =* 9 = 8 ? 9 *.8 t$e spendin"

.

T$e Sacto Co.Js standard !i6ed o'er$ead cost is 9 per direct %a)or $or )ased on )d"eted !i6ed costs o! 9. T$e standard a%%o,s * direct %a)or $ors per nit. Drin" * Sacto prodced 88 nits o! prodct incrred 918 o! !i6ed o'er$ead costs and recorded 91 acta% $ors o! direct %a)or. +$at are t$e !i6ed o'er$ead 'ariancesSpendin" 'ariance Vo%me 'ariance  A. 918 0 9  &. 9 0 9  C. 918 0 91?  D. 9 0 91? 

%ii

0sin" t$e in!ormation in t$e precedin" nm)er t$e amonts o! contro%%a)%e 'ariances !or  'aria)%e o'er$ead are: Spendin" E!!iciency  A. 9* a' 9* 0n!  &. 9* 0n! 9* a' C. 9 8 0n! 9* 0n!   D. 9* a' 9 8 0n!  

.

. T$e !o%%o,in" data are t$e acta% res%ts !or &stos Company !or t$e mont$ o! 7ay:  Acta% otpt 58 nits  Acta% 'aria)%e o'er$ead 9  Acta% !i6ed o'er$ead 91?  Acta% mac$ine time 15 7H Standard cost and )d"et in!ormation !or &stos Company !o%%o,s: Standard 'aria)%e o'er$ead rate 9. per 7H Standard >antity o! mac$ine $ors  $ors per nit &d"eted !i6ed o'er$ead 9=== per year  

C. 9 0n!a'ora)%e D. 985 0n!a'ora)%e

T$e !o%%o,in" in!ormation is a'ai%a)%e !rom t$e Tyro Company:  Acta% !actory o'er$ead i6ed o'er$ead e6penses acta% i6ed o'er$ead e6penses )d"eted  Acta% $ors Standard $ors Varia)%e o'er$ead rate per DLH  Assmin" t$at Tyro ses a t$ree/,ay ana%ysis o! o'er$ead 'ariances ,$at is 'ariance A. 9 =8  C. 9 @ 8  &. 9 =8 0 D. 918 0

6%'iii

. 0sin" t$e in!ormation presented )e%o, ca%c%ate t$e tota% o'er$ead spendin" 'ariance. &d"eted !i6ed o'er$ead 91 Standard 'aria)%e o'er$ead ;* DLH at 9* per DLH< 95 per nit  Acta% !i6ed o'er$ead 91  Acta% 'aria)%e o'er$ead 91@8 &d"eted 'o%me ;8 nits 6 * DLH< 1 DLH  Acta% direct %a)or $ors ;DLH< @8 0nits prodced 58  A. 9 8 0 C. 91 0 &. 9 ?  0 D. 9 1   0

5? nit per mont$

%iii

.

Sa!in CorporationJs master )d"et ca%%s !or t$e prodction o! 8 nits o! prodct mont$%y. T$e anna% master )d"et inc%des indirect %a)or o! 9155 anna%%y. Sa!in considers

213

Standard Costs and Variance Analysis 

indirect %a)or to )e a 'aria)%e cost. Drin" t$e mont$ o! Apri% 58 nits o! prodct ,ere prodced and indirect %a)or costs o! 911 ,ere incrred. A per!ormance report ti%i(in" !%e6i)%e )d"etin" ,o%d report a )d"et 'ariance !or indirect %a)or o!:  A. 91@ 0n!a'ora)%e. C. 91@ a'ora)%e. &. 9 = 0n!a'ora)%e. D. 9 = a'ora)%e. %i'

.

%'

.

%'i

.

%'iii

. Ca%'in %ein Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o!  ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9. C. 95?. &. 9. D. 9=8.

+a%a Company app%ies o'er$ead on a direct %a)or $or )asis. Eac$ nit o! prodct re>ires 8 direct %a)or $ors. O'er$ead is app%ied on a  percent 'aria)%e and = percent !i6ed )asis t$e o'er$ead app%ication rate is 91 per $or. Standards are )ased on a norma% mont$%y capacity o! 8 direct %a)or $ors. Drin" Septem)er * +a%a prodced 11 nits o! prodct and incrred 5@ direct %a)or  $ors. Acta% o'er$ead cost !or t$e mont$ ,as 9?. +$at is tota% anna% )d"eted !i6ed o'er$ead cost A. 9 8 C. 9=* &. 9 88 D. 9=?=* &d"eted 'aria)%e o'er$ead !or t$e %e'e% o! prodction ac$ie'ed is 5 mac$ine/$ors at a )d"eted cost o! 9*. Acta% 'aria)%e o'er$ead at t$e %e'e% o! prodction ac$ie'ed ,as ? $ors at an acta% cost o! 9*5. +$at is t$e tota% 'aria)%e o'er$ead 'ariance A. 95 !a'ora)%e C. 91 n!a'ora)%e &. 95 n!a'ora)%e D. 91 !a'ora)%e

%i6

.

9ma Company $ad an *8 n!a'ora)%e 'o%me 'ariance a 91? n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6

.

Ar%ene $ad an 91? n!a'ora)%e 'o%me 'ariance a 9*8 n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is:  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6i

i6ed man!actrin" o'er$ead ,as )d"eted at 98 and *8 direct %a)or $ors ,ere )d"eted. I! t$e !i6ed o'er$ead 'o%me 'ariance ,as 91* !a'ora)%e and t$e !i6ed o'er$ead spendin" 'ariance ,as 91 n!a'ora)%e !i6ed man!actrin" o'er$ead app%ied mst )e:  A. 981 C. 981* &. 985 D. 9 5@

.

T$e 9inat)o Company ma#es and se%%s a sin"%e prodct and ses standard costin". Drin" anary t$e company acta%%y sed ?= direct %a)or/$ors ;DLHs< and prodced  nits o! prodct. T$e standard cost card !or one nit o! prodct inc%des t$e !o%%o,in": Varia)%e !actory o'er$ead: . DLHs  95. per DLH i6ed !actory o'er$ead: . DLHs  9.8 per DLH or anary t$e company incrred 9** o! acta% !i6ed o'er$ead costs and recorded a 9?=8 !a'ora)%e 'o%me 'ariance. T$e )d"eted !i6ed o'er$ead cost !or anary is:  A. 918 C. 9  *8 &. 9*=8 D. 9*8

%6ii

. CTV Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o! ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9 C. 9 5?   &. 9 D. 9=8

%6iii

. Ric$ard Company emp%oys a standard a)sorption system !or prodct costin". T$e standard cost o! its prodct is as !o%%o,s: Ra, materia%s 915.8 Direct %a)or ;* DLH 6 9?< 1. 7an!actrin" o'er$ead ;* DLH 6 911< **. Tota% standard cost 98*.8 T$e man!actrin" o'er$ead rate is )ased pon a norma% acti'ity %e'e% o!  direct %a)or 

%'ii

. T$e 'aria)%e/o'er$ead spendin" 'ariance is 91? n!a'ora)%e. Varia)%e o'er$ead )d"eted at 5 mac$ine $ors is 98. Acta% mac$ine $ors ,ere . +$at ,as t$e acta% 'aria)%e/o'er$ead rate per mac$ine $or A. 91.*? C. 91.@ &. 91.*8 D. 91.8*

214

Standard Costs and Variance Analysis 

$ors. Ric$ard p%anned to prodce *8 nits eac$ mont$ drin" t$e year. T$e )d"eted anna% man!actrin" o'er$ead is: Varia)%e 9  i6ed  9  Drin" No'em)er Ric$ard prodced * nits. Ric$ard sed 88 direct %a)or $ors in No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e !i6ed man!actrin" o'er$ead 'o%me 'ariance !or No'em)er is:  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 n!a'ora)%e D. 9** !a'ora)%e %6i'

. 0sin" t$e in!ormation !or Ric$ard Company in t$e precedin" nm)er t$e tota% 'ariance re%ated to e!!iciency o! t$e man!actrin" operation !or No'em)er is:  A. 9 @ n!a'ora)%e C. 91* n!a'ora)%e &. 9*1 n!a'ora)%e D. 911 n!a'ora)%e

Tiny &))%es Company $ad t$e !o%%o,in" acti'ity re%atin" to its !i6ed and 'aria)%e o'er$ead !or t$e mont$ o! %y.  Acta% costs i6ed o'er$ead 91* Varia)%e o'er$ead ? %e6i)%e )d"et ;Standard inpt a%%o,ed !or acta% otpt ac$ie'ed 6 t$e )d"eted rate< Varia)%e o'er$ead  App%ied

9 @

 A. 1 direct %a)or $ors ine!!icient &. 55 direct %a)or $ors ine!!icient %6'i

. T$e !i6ed o'er$ead e!!iciency 'ariance is:  A. 9  !a'ora)%e &. 91 n!a'ora)%e

C. 1 direct %a)or $ors e!!icient D. 55 direct %a)or $ors e!!icient

C. 9  n!a'ora)%e D. Ne'er a meanin"!% 'ariance

are )ased on a mont$%y norma% 'o%me o! 8 nits ;1 direct %a)or $ors<. Ra!! Co.Js standard cost system contains t$e !o%%o,in" o'er$ead costs: Varia)%e 9 per nit i6ed 9? per nit T$e !o%%o,in" in!ormation pertains to t$e mont$ o! 7arc$: 0nits acta%%y prodced  Acta% direct %a)or $ors ,or#ed  Acta% o'er$ead incrred: Varia)%e i6ed

? ? 9*8 ?5

%6'ii

. or 7arc$ t$e n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance ,as:  A. 9 C. 91* & . 91   D. 9 **  

%6'iii

. or 7arc$ t$e !i6ed o'er$ead 'o%me 'ariance ,as:  A. 9@0 C. 9?0 &. 9@ D. 9 ?

%6i6

. Edney Company emp%oys standard a)sorption system !or prodct costin". T$e standard cost o! its prodct is as !o%%o,s: R t i % 915 8

Standard Costs and Variance Analysis 

indirect %a)or to )e a 'aria)%e cost. Drin" t$e mont$ o! Apri% 58 nits o! prodct ,ere prodced and indirect %a)or costs o! 911 ,ere incrred. A per!ormance report ti%i(in" !%e6i)%e )d"etin" ,o%d report a )d"et 'ariance !or indirect %a)or o!:  A. 91@ 0n!a'ora)%e. C. 91@ a'ora)%e. &. 9 = 0n!a'ora)%e. D. 9 = a'ora)%e. %i'

.

%'

%'iii

. Ca%'in %ein Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o!  ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9. C. 95?. &. 9. D. 9=8.

+a%a Company app%ies o'er$ead on a direct %a)or $or )asis. Eac$ nit o! prodct re>ires 8 direct %a)or $ors. O'er$ead is app%ied on a  percent 'aria)%e and = percent !i6ed )asis t$e o'er$ead app%ication rate is 91 per $or. Standards are )ased on a norma% mont$%y capacity o! 8 direct %a)or $ors. Drin" Septem)er * +a%a prodced 11 nits o! prodct and incrred 5@ direct %a)or  $ors. Acta% o'er$ead cost !or t$e mont$ ,as 9?. +$at is tota% anna% )d"eted !i6ed o'er$ead cost A. 9 8 C. 9=* &. 9 88 D. 9=?=*

.

&d"eted 'aria)%e o'er$ead !or t$e %e'e% o! prodction ac$ie'ed is 5 mac$ine/$ors at a )d"eted cost o! 9*. Acta% 'aria)%e o'er$ead at t$e %e'e% o! prodction ac$ie'ed ,as ? $ors at an acta% cost o! 9*5. +$at is t$e tota% 'aria)%e o'er$ead 'ariance A. 95 !a'ora)%e C. 91 n!a'ora)%e &. 95 n!a'ora)%e D. 91 !a'ora)%e

%'i

.

%i6

.

9ma Company $ad an *8 n!a'ora)%e 'o%me 'ariance a 91? n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6

.

Ar%ene $ad an 91? n!a'ora)%e 'o%me 'ariance a 9*8 n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance and 9* tota% nder app%ied o'er$ead. T$e !i6ed o'er$ead )d"et 'ariance is:  A. 951 !a'ora)%e C. 958 !a'ora)%e &. 951 0n!a'ora)%e D. 958 0n!a'ora)%e

%6i

i6ed man!actrin" o'er$ead ,as )d"eted at 98 and *8 direct %a)or $ors ,ere )d"eted. I! t$e !i6ed o'er$ead 'o%me 'ariance ,as 91* !a'ora)%e and t$e !i6ed o'er$ead spendin" 'ariance ,as 91 n!a'ora)%e !i6ed man!actrin" o'er$ead app%ied mst )e:  A. 981 C. 981* &. 985 D. 9 5@

.

T$e 9inat)o Company ma#es and se%%s a sin"%e prodct and ses standard costin". Drin" anary t$e company acta%%y sed ?= direct %a)or/$ors ;DLHs< and prodced  nits o! prodct. T$e standard cost card !or one nit o! prodct inc%des t$e !o%%o,in": Varia)%e !actory o'er$ead: . DLHs  95. per DLH i6ed !actory o'er$ead: . DLHs  9.8 per DLH or anary t$e company incrred 9** o! acta% !i6ed o'er$ead costs and recorded a 9?=8 !a'ora)%e 'o%me 'ariance. T$e )d"eted !i6ed o'er$ead cost !or anary is:  A. 918 C. 9  *8 &. 9*=8 D. 9*8

%6ii

. CTV Company $as a standard !i6ed cost o! 9 per nit. At an acta% prodction o! ? nits a !a'ora)%e 'o%me 'ariance o! 91* res%ted. +$at ,ere tota% )d"eted !i6ed costs A. 9 C. 9 5?   &. 9 D. 9=8

%6iii

. Ric$ard Company emp%oys a standard a)sorption system !or prodct costin". T$e standard cost o! its prodct is as !o%%o,s: Ra, materia%s 915.8 Direct %a)or ;* DLH 6 9?< 1. 7an!actrin" o'er$ead ;* DLH 6 911< **. Tota% standard cost 98*.8 T$e man!actrin" o'er$ead rate is )ased pon a norma% acti'ity %e'e% o!  direct %a)or 

%'ii

. T$e 'aria)%e/o'er$ead spendin" 'ariance is 91? n!a'ora)%e. Varia)%e o'er$ead )d"eted at 5 mac$ine $ors is 98. Acta% mac$ine $ors ,ere . +$at ,as t$e acta% 'aria)%e/o'er$ead rate per mac$ine $or A. 91.*? C. 91.@ &. 91.*8 D. 91.8*

214

Standard Costs and Variance Analysis 

$ors. Ric$ard p%anned to prodce *8 nits eac$ mont$ drin" t$e year. T$e )d"eted anna% man!actrin" o'er$ead is: Varia)%e 9  i6ed  9  Drin" No'em)er Ric$ard prodced * nits. Ric$ard sed 88 direct %a)or $ors in No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e !i6ed man!actrin" o'er$ead 'o%me 'ariance !or No'em)er is:  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 n!a'ora)%e D. 9** !a'ora)%e %6i'

 A. 1 direct %a)or $ors ine!!icient &. 55 direct %a)or $ors ine!!icient %6'i

T$e !o%%o,in" in!ormation pertains to t$e mont$ o! 7arc$: 0nits acta%%y prodced  Acta% direct %a)or $ors ,or#ed  Acta% o'er$ead incrred: Varia)%e i6ed

 App%ied ;Standard inpt a%%o,ed !or acta% otpt ac$ie'ed 6 t$e )d"eted rate< i6ed o'er$ead Varia)%e o'er$ead spendin" 'ariance 9rodction 'o%me 'ariance

91*8 1*  8 0

? ? 9*8 ?5

%6'ii

Tiny &))%es Company $ad t$e !o%%o,in" acti'ity re%atin" to its !i6ed and 'aria)%e o'er$ead !or t$e mont$ o! %y.  Acta% costs i6ed o'er$ead 91* Varia)%e o'er$ead ?

9 @

C. 9  n!a'ora)%e D. Ne'er a meanin"!% 'ariance

are )ased on a mont$%y norma% 'o%me o! 8 nits ;1 direct %a)or $ors<. Ra!! Co.Js standard cost system contains t$e !o%%o,in" o'er$ead costs: Varia)%e 9 per nit i6ed 9? per nit

. 0sin" t$e in!ormation !or Ric$ard Company in t$e precedin" nm)er t$e tota% 'ariance re%ated to e!!iciency o! t$e man!actrin" operation !or No'em)er is:  A. 9 @ n!a'ora)%e C. 91* n!a'ora)%e &. 9*1 n!a'ora)%e D. 911 n!a'ora)%e

%e6i)%e )d"et ;Standard inpt a%%o,ed !or acta% otpt ac$ie'ed 6 t$e )d"eted rate< Varia)%e o'er$ead

. T$e !i6ed o'er$ead e!!iciency 'ariance is:  A. 9  !a'ora)%e &. 91 n!a'ora)%e

C. 1 direct %a)or $ors e!!icient D. 55 direct %a)or $ors e!!icient

. or 7arc$ t$e n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance ,as:  A. 9 C. 91* & . 91   D. 9 **  

%6'iii

. or 7arc$ t$e !i6ed o'er$ead 'o%me 'ariance ,as:  A. 9@0 C. 9?0 &. 9@ D. 9 ?

%6i6

%6'

. I! t$e )d"eted rate !or app%yin" 'aria)%e man!actrin" o'er$ead ,as 9* per direct %a)or  $or $o, e!!icient or ine!!icient ,as Tiny &))%es in terms o! sin" direct %a)or $ors as an acti'ity )ase-

. Edney Company emp%oys standard a)sorption system !or prodct costin". T$e standard cost o! its prodct is as !o%%o,s: Ra, materia%s 915.8 Direct %a)or ;* DLH 6 9?< 1. 7an!actrin" o'er$ead ;* DLH 6 911< **. T$e man!actrin" o'er$ead rate is )ased pon a norma% acti'ity %e'e% o!  direct %a)or  $ors. Edney p%anned to prodce *8 nits eac$ mont$ drin" t$e year. T$e )d"eted anna% man!actrin" o'er$ead is Varia)%e 9 i6ed  Drin" No'em)er Edney prodced * nits. Edney sed 88 direct %a)or $ors in

215

Standard Costs and Variance Analysis 

No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e 'aria)%e man!actrin" o'er$ead 'ariances !or No'em)er are: Spendin" E!!iciency  A. 9@ n!a'ora)%e 9 n!a'ora)%e &. 9 !a'ora)%e 9@ n!a'ora)%e C. 95 n!a'ora)%e 91 !a'ora)%e D. 9@ !a'ora)%e 91* n!a'ora)%e

 A. 91 a'ora)%e &. 9 ? a'ora)%e

C. 91 0n!a'ora)%e D. 9? 0n!a'ora)%e

 on Dar! Company ,$ic$ app%ies o'er$ead on t$e )asis o!  direct %a)or $ors. T,o direct %a)or $ors are re>ired !or eac$ prodct nit. 9%anned prodction !or t$e period ,as set at @ nits. 7an!actrin" o'er$ead is )d"eted at 918 !or t$e period o! ,$ic$ *G o! t$is cost is !i6ed. T$e 1=* $ors ,or#ed drin" t$e period res%ted in prodction o! ?8 nits. Varia)%e man!actrin" o'er$ead cost incrred ,as 91?8 and !i6ed man!actrin" o'er$ead cost ,as 9*?. Dar! Company ses a !or 'ariance met$od !or  ana%y(in" man!actrin" o'er$ead.

%66

. T$e !i6ed man!actrin" o'er$ead 'ariances !or No'em)er are:   Spendin" Vo%me  A. 91 !a'ora)%e 91 !a'ora)%e &. 91 n!a'ora)%e 91 !a'ora)%e C. 9  !a'ora)%e 9  n!a'ora)%e D. 9 5 n!a'ora)%e 9** !a'ora)%e

%66'

. T$e 'aria)%e o'er$ead spendin" 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 9 n!a'ora)%e &. 91* n!a'ora)%e D. 98 n!a'ora)%e

%66'i

. T$e 'aria)%e o'er$ead e!!iciency 'ariance ;>antity< 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 91* n!a'ora)%e &. 918 n!a'ora)%e D. 98 n!a'ora)%e

arch, &nc. anal"*es manufacturing overhead in the production of its onl" one product, )D. #he following set of information applies to the month of 1a", 2006

&d"eted 5 9 5DLH 9*DLH  minnit

0nits prodced Varia)%e man!actrin" OH i6ed man!actrin" o'er$ead Direct %a)or $ors %66i . +$at is t$e !i6ed o'er$ead spendin" 'ariance A. 95 a'ora)%e C. 9? 0n!a'ora)%e &. 9? a'ora)%e D. 95 0n!a'ora)%e %66ii

Acta% ? 915 9?? 5* $r  

%66'ii

. T$e !i6ed o'er$ead )d"et ;spendin"< 'ariance !or t$e period is  A. 9 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

%66'iii

. T$e !i6ed o'er$ead 'o%me ;denominator< 'ariance !or t$e period is  A. 9 =8 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

%66i6

. &i" 7arat Inc. )e"an operations on anary . Standard costs ,ere esta)%is$ed in ear%y anary assmi a% prodction 'o%me o! 1 nits. Ho, &i" 7arat

Standard Costs and Variance Analysis 

$ors. Ric$ard p%anned to prodce *8 nits eac$ mont$ drin" t$e year. T$e )d"eted anna% man!actrin" o'er$ead is: Varia)%e 9  i6ed  9  Drin" No'em)er Ric$ard prodced * nits. Ric$ard sed 88 direct %a)or $ors in No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e !i6ed man!actrin" o'er$ead 'o%me 'ariance !or No'em)er is:  A. 91 !a'ora)%e C. 91 n!a'ora)%e &. 9 n!a'ora)%e D. 9** !a'ora)%e %6i'

 A. 1 direct %a)or $ors ine!!icient &. 55 direct %a)or $ors ine!!icient %6'i

T$e !o%%o,in" in!ormation pertains to t$e mont$ o! 7arc$: 0nits acta%%y prodced  Acta% direct %a)or $ors ,or#ed  Acta% o'er$ead incrred: Varia)%e i6ed

 App%ied ;Standard inpt a%%o,ed !or acta% otpt ac$ie'ed 6 t$e )d"eted rate< i6ed o'er$ead Varia)%e o'er$ead spendin" 'ariance 9rodction 'o%me 'ariance

91*8 1*  8 0

? ? 9*8 ?5

%6'ii

Tiny &))%es Company $ad t$e !o%%o,in" acti'ity re%atin" to its !i6ed and 'aria)%e o'er$ead !or t$e mont$ o! %y.  Acta% costs i6ed o'er$ead 91* Varia)%e o'er$ead ?

9 @

C. 9  n!a'ora)%e D. Ne'er a meanin"!% 'ariance

are )ased on a mont$%y norma% 'o%me o! 8 nits ;1 direct %a)or $ors<. Ra!! Co.Js standard cost system contains t$e !o%%o,in" o'er$ead costs: Varia)%e 9 per nit i6ed 9? per nit

. 0sin" t$e in!ormation !or Ric$ard Company in t$e precedin" nm)er t$e tota% 'ariance re%ated to e!!iciency o! t$e man!actrin" operation !or No'em)er is:  A. 9 @ n!a'ora)%e C. 91* n!a'ora)%e &. 9*1 n!a'ora)%e D. 911 n!a'ora)%e

%e6i)%e )d"et ;Standard inpt a%%o,ed !or acta% otpt ac$ie'ed 6 t$e )d"eted rate< Varia)%e o'er$ead

. T$e !i6ed o'er$ead e!!iciency 'ariance is:  A. 9  !a'ora)%e &. 91 n!a'ora)%e

C. 1 direct %a)or $ors e!!icient D. 55 direct %a)or $ors e!!icient

. or 7arc$ t$e n!a'ora)%e 'aria)%e o'er$ead spendin" 'ariance ,as:  A. 9 C. 91* & . 91   D. 9 **  

%6'iii

. or 7arc$ t$e !i6ed o'er$ead 'o%me 'ariance ,as:  A. 9@0 C. 9?0 &. 9@ D. 9 ?

%6i6

%6'

. I! t$e )d"eted rate !or app%yin" 'aria)%e man!actrin" o'er$ead ,as 9* per direct %a)or  $or $o, e!!icient or ine!!icient ,as Tiny &))%es in terms o! sin" direct %a)or $ors as an acti'ity )ase-

. Edney Company emp%oys standard a)sorption system !or prodct costin". T$e standard cost o! its prodct is as !o%%o,s: Ra, materia%s 915.8 Direct %a)or ;* DLH 6 9?< 1. 7an!actrin" o'er$ead ;* DLH 6 911< **. T$e man!actrin" o'er$ead rate is )ased pon a norma% acti'ity %e'e% o!  direct %a)or  $ors. Edney p%anned to prodce *8 nits eac$ mont$ drin" t$e year. T$e )d"eted anna% man!actrin" o'er$ead is Varia)%e 9 i6ed  Drin" No'em)er Edney prodced * nits. Edney sed 88 direct %a)or $ors in

215

Standard Costs and Variance Analysis 

No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e 'aria)%e man!actrin" o'er$ead 'ariances !or No'em)er are: Spendin" E!!iciency  A. 9@ n!a'ora)%e 9 n!a'ora)%e &. 9 !a'ora)%e 9@ n!a'ora)%e C. 95 n!a'ora)%e 91 !a'ora)%e D. 9@ !a'ora)%e 91* n!a'ora)%e

 A. 91 a'ora)%e &. 9 ? a'ora)%e

C. 91 0n!a'ora)%e D. 9? 0n!a'ora)%e

 on Dar! Company ,$ic$ app%ies o'er$ead on t$e )asis o!  direct %a)or $ors. T,o direct %a)or $ors are re>ired !or eac$ prodct nit. 9%anned prodction !or t$e period ,as set at @ nits. 7an!actrin" o'er$ead is )d"eted at 918 !or t$e period o! ,$ic$ *G o! t$is cost is !i6ed. T$e 1=* $ors ,or#ed drin" t$e period res%ted in prodction o! ?8 nits. Varia)%e man!actrin" o'er$ead cost incrred ,as 91?8 and !i6ed man!actrin" o'er$ead cost ,as 9*?. Dar! Company ses a !or 'ariance met$od !or  ana%y(in" man!actrin" o'er$ead.

%66

. T$e !i6ed man!actrin" o'er$ead 'ariances !or No'em)er are:   Spendin" Vo%me  A. 91 !a'ora)%e 91 !a'ora)%e &. 91 n!a'ora)%e 91 !a'ora)%e C. 9  !a'ora)%e 9  n!a'ora)%e D. 9 5 n!a'ora)%e 9** !a'ora)%e

%66'

. T$e 'aria)%e o'er$ead spendin" 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 9 n!a'ora)%e &. 91* n!a'ora)%e D. 98 n!a'ora)%e

%66'i

. T$e 'aria)%e o'er$ead e!!iciency 'ariance ;>antity< 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 91* n!a'ora)%e &. 918 n!a'ora)%e D. 98 n!a'ora)%e

arch, &nc. anal"*es manufacturing overhead in the production of its onl" one product, )D. #he following set of information applies to the month of 1a", 2006

&d"eted 5 9 5DLH 9*DLH  minnit

0nits prodced Varia)%e man!actrin" OH i6ed man!actrin" o'er$ead Direct %a)or $ors %66i . +$at is t$e !i6ed o'er$ead spendin" 'ariance A. 95 a'ora)%e C. 9? 0n!a'ora)%e &. 9? a'ora)%e D. 95 0n!a'ora)%e

%66'ii

. T$e !i6ed o'er$ead )d"et ;spendin"< 'ariance !or t$e period is  A. 9 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

Acta% ? 915 9?? 5* $r  

%66'iii

. T$e !i6ed o'er$ead 'o%me ;denominator< 'ariance !or t$e period is  A. 9 =8 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

%66i6

. &i" 7arat Inc. )e"an operations on anary . Standard costs ,ere esta)%is$ed in ear%y anary assmin" a norma% prodction 'o%me o! 1 nits. Ho,e'er &i" 7arat prodced on%y 15 nits o! prodct and so%d 1 nits at a se%%in" price o! 91? per  nit drin" t$e year. Varia)%e costs tota%ed 9= o! ,$ic$ G ,ere man!actrin" and 5G ,ere se%%in". i6ed costs tota%ed 911* o! ,$ic$ 8G ,ere man!actrin" and 8G ,ere se%%in". &i" 7arat $ad no ra, materia%s or ,or#/in/process in'entories at Decem)er  1. Acta% inpt prices and >antities per nit o! prodct ,ere e>a% to standard. sing absorption costing, ig 1arats income statement would show  A. &. C. D. Cost o! oods So%d at Standard Cost 9?* 9=* 98 9=

%66ii

. +$at is t$e 'o%me 'ariance A. 95 a'ora)%e &. 95 0n!a'ora)%e

C. 9? a'ora)%e D. 9? 0n!a'ora)%e

%66iii

. Ho, mc$ ,as t$e 'aria)%e o'er$ead spendin" 'ariance A. 9 5 a'ora)%e C. 95 0n!a'ora)%e &. 91* a'ora)%e. D. 91* 0n!a'ora)%e

%66i'

. Ho, mc$ o'er$ead e!!iciency 'ariance res%ted !or t$e mont$ o! 7ay216

Standard Costs and Variance Analysis 

O'er$ead Vo%me Variance

9? 0 9?  9= 0 9= 

Yo $a'e recent%y "radated !rom a ni'ersity and $a'e accepted a position ,it$ Vi%%ar Company t$e man!actrer o! a pop%ar consmer prodct. Drin" yor !irst ,ee# on t$e 4o) t$e 'ice president $as )een !a'ora)%y impressed ,it$ yor ,or#. S$e $as )een so impressed in !act t$at yesterday s$e ca%%ed yo into $er o!!ice and as#ed yo to attend t$e e6ecti'e committee meetin" t$is mornin" !or t$e prpose o! %eadin" a discssion on t$e 'ariances reported !or %ast period.  An6ios to !a'ora)%y impress t$e e6ecti'e committee yo too# t$e 'ariances and spportin" data $ome %ast ni"$t to stdy. On yor ,ay to ,or# t$is mornin" t$e papers ,ere %ayin" on t$e seat o! yor ne, red con'erti)%e.  As yo ,ere crossin" a )rid"e on t$e $i"$,ay a sdden "st o! ,ind ca"$t t$e papers and )%e, t$em o'er t$e ed"e o! t$e )rid"e and into t$e stream )e%o,. Yo mana"ed to retrie'e on%y one pa"e ,$ic$ contains t$e !o%%o,in" in!ormation:

(tandard )ost (ummar" Direct materia%s  ponds at 9 Direct %a)or .? $ors at 98 Varia)%e o'er$ead .? $ors at 9 i6ed o'er$ead .? $ors at 9=

Direct materia%s Direct %a)or Varia)%e o'er$ead

Tota% Standard Cost 958 @ 85

91?. 5. *.5 8. 9. V A R I AN C E S R E 9 O R T E D 9rice or  Spendin" or  Fantity or  Vo%me Rate &d"et E!!iciency 9@  9@ 0 5?8 0 = 0 91  -

It is no, ?: A.7. T$e e6ecti'e committee meetin" starts in 4st one $or yo rea%i(e t$at to a'oid %oo#in" %i#e a )n"%in" !oo% yo mst some$o, "enerate t$e necessary 2)ac#p3 data !or t$e 'ariances )e!ore t$e meetin" )e"ins. +it$ot )ac#p data it ,i%% )e impossi)%e to %ead t$e discssion or ans,er any >estions. %666

. Ho, many ponds o! direct materia%s ,ere prc$ased and sed in t$e prodction o! **8 nits A. 1? %)s. C. 18 %)s. &. 1* %)s. D. 1= %)s.

%666i

. +$at ,as t$e acta% cost per pond o! materia% A. 9. C. 9*. @8 &. 9.8 D. 9. 1

%666ii

. Ho, many acta% direct %a)or $ors ,ere ,or#ed drin" t$e period A. 1? C. 1 @ 5 &. 1 D. 1?@=

%666iii

. Ho, mc$ acta% 'aria)%e man!actrin" o'er$ead cost ,as incrred drin" t$e period A. 988 C. 98@ & . 98 ? * D. 9 8@ 8 

%666i'

. +$at is t$e tota% !i6ed man!actrin" o'er$ead cost in t$e companyJs !%e6i)%e )d"et A. 911*8 C. 91@8 &. 915 D. 91*88

%666'

. +$at ,ere t$e denominator $ors !or %ast period A. 1? $ors C. * $ors &. ** $ors D. *8 $ors

Standard Costs and Variance Analysis 

No'em)er at a cost o! 958. Acta% man!actrin" o'er$ead !or t$e mont$ ,as 9* !i6ed and 918 'aria)%e. T$e tota% man!actrin" o'er$ead app%ied drin" No'em)er ,as 98=*. T$e 'aria)%e man!actrin" o'er$ead 'ariances !or No'em)er are: Spendin" E!!iciency  A. 9@ n!a'ora)%e 9 n!a'ora)%e &. 9 !a'ora)%e 9@ n!a'ora)%e C. 95 n!a'ora)%e 91 !a'ora)%e D. 9@ !a'ora)%e 91* n!a'ora)%e

 A. 91 a'ora)%e &. 9 ? a'ora)%e

C. 91 0n!a'ora)%e D. 9? 0n!a'ora)%e

 on Dar! Company ,$ic$ app%ies o'er$ead on t$e )asis o!  direct %a)or $ors. T,o direct %a)or $ors are re>ired !or eac$ prodct nit. 9%anned prodction !or t$e period ,as set at @ nits. 7an!actrin" o'er$ead is )d"eted at 918 !or t$e period o! ,$ic$ *G o! t$is cost is !i6ed. T$e 1=* $ors ,or#ed drin" t$e period res%ted in prodction o! ?8 nits. Varia)%e man!actrin" o'er$ead cost incrred ,as 91?8 and !i6ed man!actrin" o'er$ead cost ,as 9*?. Dar! Company ses a !or 'ariance met$od !or  ana%y(in" man!actrin" o'er$ead.

%66

. T$e !i6ed man!actrin" o'er$ead 'ariances !or No'em)er are:   Spendin" Vo%me  A. 91 !a'ora)%e 91 !a'ora)%e &. 91 n!a'ora)%e 91 !a'ora)%e C. 9  !a'ora)%e 9  n!a'ora)%e D. 9 5 n!a'ora)%e 9** !a'ora)%e

%66'

. T$e 'aria)%e o'er$ead spendin" 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 9 n!a'ora)%e &. 91* n!a'ora)%e D. 98 n!a'ora)%e

%66'i

. T$e 'aria)%e o'er$ead e!!iciency 'ariance ;>antity< 'ariance !or t$e period is  A. 98 n!a'ora)%e C. 91* n!a'ora)%e &. 918 n!a'ora)%e D. 98 n!a'ora)%e

arch, &nc. anal"*es manufacturing overhead in the production of its onl" one product, )D. #he following set of information applies to the month of 1a", 2006

&d"eted 5 9 5DLH 9*DLH  minnit

0nits prodced Varia)%e man!actrin" OH i6ed man!actrin" o'er$ead Direct %a)or $ors %66i . +$at is t$e !i6ed o'er$ead spendin" 'ariance A. 95 a'ora)%e C. 9? 0n!a'ora)%e &. 9? a'ora)%e D. 95 0n!a'ora)%e

%66'ii

. T$e !i6ed o'er$ead )d"et ;spendin"< 'ariance !or t$e period is  A. 9 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

Acta% ? 915 9?? 5* $r  

%66'iii

. T$e !i6ed o'er$ead 'o%me ;denominator< 'ariance !or t$e period is  A. 9 =8 n!a'ora)%e C. 9*8 n!a'ora)%e &. 918 n!a'ora)%e D. 91 n!a'ora)%e

%66i6

. &i" 7arat Inc. )e"an operations on anary . Standard costs ,ere esta)%is$ed in ear%y anary assmin" a norma% prodction 'o%me o! 1 nits. Ho,e'er &i" 7arat prodced on%y 15 nits o! prodct and so%d 1 nits at a se%%in" price o! 91? per  nit drin" t$e year. Varia)%e costs tota%ed 9= o! ,$ic$ G ,ere man!actrin" and 5G ,ere se%%in". i6ed costs tota%ed 911* o! ,$ic$ 8G ,ere man!actrin" and 8G ,ere se%%in". &i" 7arat $ad no ra, materia%s or ,or#/in/process in'entories at Decem)er  1. Acta% inpt prices and >antities per nit o! prodct ,ere e>a% to standard. sing absorption costing, ig 1arats income statement would show  A. &. C. D. Cost o! oods So%d at Standard Cost 9?* 9=* 98 9=

%66ii

. +$at is t$e 'o%me 'ariance A. 95 a'ora)%e &. 95 0n!a'ora)%e

C. 9? a'ora)%e D. 9? 0n!a'ora)%e

%66iii

. Ho, mc$ ,as t$e 'aria)%e o'er$ead spendin" 'ariance A. 9 5 a'ora)%e C. 95 0n!a'ora)%e &. 91* a'ora)%e. D. 91* 0n!a'ora)%e

%66i'

. Ho, mc$ o'er$ead e!!iciency 'ariance res%ted !or t$e mont$ o! 7ay216

Standard Costs and Variance Analysis 

O'er$ead Vo%me Variance

9? 0 9?  9= 0 9= 

It is no, ?: A.7. T$e e6ecti'e committee meetin" starts in 4st one $or yo rea%i(e t$at to a'oid %oo#in" %i#e a )n"%in" !oo% yo mst some$o, "enerate t$e necessary 2)ac#p3 data !or t$e 'ariances )e!ore t$e meetin" )e"ins. +it$ot )ac#p data it ,i%% )e impossi)%e to %ead t$e discssion or ans,er any >estions.

Yo $a'e recent%y "radated !rom a ni'ersity and $a'e accepted a position ,it$ Vi%%ar Company t$e man!actrer o! a pop%ar consmer prodct. Drin" yor !irst ,ee# on t$e 4o) t$e 'ice president $as )een !a'ora)%y impressed ,it$ yor ,or#. S$e $as )een so impressed in !act t$at yesterday s$e ca%%ed yo into $er o!!ice and as#ed yo to attend t$e e6ecti'e committee meetin" t$is mornin" !or t$e prpose o! %eadin" a discssion on t$e 'ariances reported !or %ast period.  An6ios to !a'ora)%y impress t$e e6ecti'e committee yo too# t$e 'ariances and spportin" data $ome %ast ni"$t to stdy.

%666

. Ho, many ponds o! direct materia%s ,ere prc$ased and sed in t$e prodction o! **8 nits A. 1? %)s. C. 18 %)s. &. 1* %)s. D. 1= %)s.

%666i

. +$at ,as t$e acta% cost per pond o! materia% A. 9. C. 9*. @8 &. 9.8 D. 9. 1

On yor ,ay to ,or# t$is mornin" t$e papers ,ere %ayin" on t$e seat o! yor ne, red con'erti)%e.  As yo ,ere crossin" a )rid"e on t$e $i"$,ay a sdden "st o! ,ind ca"$t t$e papers and )%e, t$em o'er t$e ed"e o! t$e )rid"e and into t$e stream )e%o,. Yo mana"ed to retrie'e on%y one pa"e ,$ic$ contains t$e !o%%o,in" in!ormation:

(tandard )ost (ummar" Direct materia%s  ponds at 9 Direct %a)or .? $ors at 98 Varia)%e o'er$ead .? $ors at 9 i6ed o'er$ead .? $ors at 9=

%666ii

. Ho, many acta% direct %a)or $ors ,ere ,or#ed drin" t$e period A. 1? C. 1 @ 5 &. 1 D. 1?@=

91?. 5. *.5 8. 9.

%666iii

. Ho, mc$ acta% 'aria)%e man!actrin" o'er$ead cost ,as incrred drin" t$e period A. 988 C. 98@ & . 98 ? * D. 9 8@ 8 

%666i'

. +$at is t$e tota% !i6ed man!actrin" o'er$ead cost in t$e companyJs !%e6i)%e )d"et A. 911*8 C. 91@8 &. 915 D. 91*88

Tota% V A R I AN C E S R E 9 O R T E D Standard 9rice or  Spendin" or  Fantity or  Vo%me Cost Rate &d"et E!!iciency Direct materia%s 958 9@  9@ 0 Direct %a)or @ 5?8 0 = 0 Varia)%e o'er$ead 85 91  - i6ed o'er$ead 1* 8  9150  App%ied to +or# in process drin" t$e period  i"re o)%iterated.

%666'

. +$at ,ere t$e denominator $ors !or %ast period A. 1? $ors C. * $ors &. ** $ors D. *8 $ors

7an!actrin" cyc%e e!!iciency %666'i . ireot Company man!actres !ire $ydrants in &%acan. T$e !o%%o,in" in!ormation pertains to operations drin" t$e mont$ o! 7ay: 9rocessin" $ors ;a'era"e per )atc$< ?. Inspection $ors ;a'era"e per )atc$< 1.8 +aitin" $ors ;a'era"e per )atc$< 1.8 7o'e time ;a'era"e per )atc$< 1.8

Yo reca%% t$at man!actrin" o'er$ead cost is app%ied to prodction on t$e )asis o! direct %a)or/$ors and t$at a%% o! t$e materia%s prc$ased drin" t$e period ,ere sed in prodction. Since t$e company ses IT to contro% ,or# !%o,s ,or# in process in'entories are insi"ni!icant and can )e i"nored.

217

Standard Costs and Variance Analysis 

0nits per )atc$ T$e man!actrin" cyc%e e!!iciency ;7CE< is:  A. =*.=G &. .G

* nits C. 5.G D. =.G

T$ro"$pt time %666'ii . C$oco Company man!actres !ire $ydrants in &%acan. T$e !o%%o,in" in!ormation pertains to operations drin" t$e mont$ o! 7ay: 9rocessin" time ;a'era"e per )atc$< ?. $ors Inspection time ;a'era"e per )atc$< 1.8 $ors +aitin" time ;a'era"e per )atc$< 1.8 $ors 7o'e time ;a'era"e per )atc$< 1.8 $ors 0nits per )atc$ * nits T$e t$ro"$pt time is:  A. 1*.8 $ors C. 5.8 $ors &. ?. $ors D. @.8 $ors De%i'ery cyc%e time %666'iii .A%a)an" Corporation is a $i"$%y atomated man!actrin" !irm. T$e 'ice president o! !inance $as decided t$at traditiona% standards are inappropriate !or per!ormance measres in an atomated en'ironment. La)or is insi"ni!icant in terms o! t$e tota% cost o! prodction and tends to )e !i6ed materia% >a%ity is considered more important t$an minimi(in" materia% cost and cstomer satis!action is t$e nm)er one priority. As a res%t prodction and de%i'ery per!ormance measres $a'e )een c$osen to e'a%ate per!ormance. T$e !o%%o,in" in!ormation is considered typica% o! t$e time in'o%'ed to comp%ete and s$ip orders. +aitin" Time: rom order )ein" p%aced to start o! prodction ?. days rom start o! prodction to comp%etion =. days Inspection time 1.8 days 9 i ti d

mst )e  A. 981 &. 95??

C. 981* D. 9 5@

Standard Costs and Variance Analysis 

O'er$ead Vo%me Variance

9? 0 9?  9= 0 9= 

It is no, ?: A.7. T$e e6ecti'e committee meetin" starts in 4st one $or yo rea%i(e t$at to a'oid %oo#in" %i#e a )n"%in" !oo% yo mst some$o, "enerate t$e necessary 2)ac#p3 data !or t$e 'ariances )e!ore t$e meetin" )e"ins. +it$ot )ac#p data it ,i%% )e impossi)%e to %ead t$e discssion or ans,er any >estions.

Yo $a'e recent%y "radated !rom a ni'ersity and $a'e accepted a position ,it$ Vi%%ar Company t$e man!actrer o! a pop%ar consmer prodct. Drin" yor !irst ,ee# on t$e 4o) t$e 'ice president $as )een !a'ora)%y impressed ,it$ yor ,or#. S$e $as )een so impressed in !act t$at yesterday s$e ca%%ed yo into $er o!!ice and as#ed yo to attend t$e e6ecti'e committee meetin" t$is mornin" !or t$e prpose o! %eadin" a discssion on t$e 'ariances reported !or %ast period.  An6ios to !a'ora)%y impress t$e e6ecti'e committee yo too# t$e 'ariances and spportin" data $ome %ast ni"$t to stdy.

%666

. Ho, many ponds o! direct materia%s ,ere prc$ased and sed in t$e prodction o! **8 nits A. 1? %)s. C. 18 %)s. &. 1* %)s. D. 1= %)s.

%666i

. +$at ,as t$e acta% cost per pond o! materia% A. 9. C. 9*. @8 &. 9.8 D. 9. 1

On yor ,ay to ,or# t$is mornin" t$e papers ,ere %ayin" on t$e seat o! yor ne, red con'erti)%e.  As yo ,ere crossin" a )rid"e on t$e $i"$,ay a sdden "st o! ,ind ca"$t t$e papers and )%e, t$em o'er t$e ed"e o! t$e )rid"e and into t$e stream )e%o,. Yo mana"ed to retrie'e on%y one pa"e ,$ic$ contains t$e !o%%o,in" in!ormation:

(tandard )ost (ummar" Direct materia%s  ponds at 9 Direct %a)or .? $ors at 98 Varia)%e o'er$ead .? $ors at 9 i6ed o'er$ead .? $ors at 9=

%666ii

. Ho, many acta% direct %a)or $ors ,ere ,or#ed drin" t$e period A. 1? C. 1 @ 5 &. 1 D. 1?@=

91?. 5. *.5 8. 9.

%666iii

. Ho, mc$ acta% 'aria)%e man!actrin" o'er$ead cost ,as incrred drin" t$e period A. 988 C. 98@ & . 98 ? * D. 9 8@ 8 

%666i'

. +$at is t$e tota% !i6ed man!actrin" o'er$ead cost in t$e companyJs !%e6i)%e )d"et A. 911*8 C. 91@8 &. 915 D. 91*88

Tota% V A R I AN C E S R E 9 O R T E D Standard 9rice or  Spendin" or  Fantity or  Vo%me Cost Rate &d"et E!!iciency Direct materia%s 958 9@  9@ 0 Direct %a)or @ 5?8 0 = 0 Varia)%e o'er$ead 85 91  - i6ed o'er$ead 1* 8  9150  App%ied to +or# in process drin" t$e period  i"re o)%iterated.

%666'

. +$at ,ere t$e denominator $ors !or %ast period A. 1? $ors C. * $ors &. ** $ors D. *8 $ors

7an!actrin" cyc%e e!!iciency %666'i . ireot Company man!actres !ire $ydrants in &%acan. T$e !o%%o,in" in!ormation pertains to operations drin" t$e mont$ o! 7ay: 9rocessin" $ors ;a'era"e per )atc$< ?. Inspection $ors ;a'era"e per )atc$< 1.8 +aitin" $ors ;a'era"e per )atc$< 1.8 7o'e time ;a'era"e per )atc$< 1.8

Yo reca%% t$at man!actrin" o'er$ead cost is app%ied to prodction on t$e )asis o! direct %a)or/$ors and t$at a%% o! t$e materia%s prc$ased drin" t$e period ,ere sed in prodction. Since t$e company ses IT to contro% ,or# !%o,s ,or# in process in'entories are insi"ni!icant and can )e i"nored.

217

Standard Costs and Variance Analysis 

0nits per )atc$ T$e man!actrin" cyc%e e!!iciency ;7CE< is:  A. =*.=G &. .G

* nits

mst )e  A. 981 &. 95??

C. 5.G D. =.G

T$ro"$pt time %666'ii . C$oco Company man!actres !ire $ydrants in &%acan. T$e !o%%o,in" in!ormation pertains to operations drin" t$e mont$ o! 7ay: 9rocessin" time ;a'era"e per )atc$< ?. $ors Inspection time ;a'era"e per )atc$< 1.8 $ors +aitin" time ;a'era"e per )atc$< 1.8 $ors 7o'e time ;a'era"e per )atc$< 1.8 $ors 0nits per )atc$ * nits T$e t$ro"$pt time is:  A. 1*.8 $ors C. 5.8 $ors &. ?. $ors D. @.8 $ors De%i'ery cyc%e time %666'iii .A%a)an" Corporation is a $i"$%y atomated man!actrin" !irm. T$e 'ice president o! !inance $as decided t$at traditiona% standards are inappropriate !or per!ormance measres in an atomated en'ironment. La)or is insi"ni!icant in terms o! t$e tota% cost o! prodction and tends to )e !i6ed materia% >a%ity is considered more important t$an minimi(in" materia% cost and cstomer satis!action is t$e nm)er one priority. As a res%t prodction and de%i'ery per!ormance measres $a'e )een c$osen to e'a%ate per!ormance. T$e !o%%o,in" in!ormation is considered typica% o! t$e time in'o%'ed to comp%ete and s$ip orders. +aitin" Time: rom order )ein" p%aced to start o! prodction ?. days rom start o! prodction to comp%etion =. days Inspection time 1.8 days 9rocessin" time . days 7o'e time *.8 days T$e De%i'ery Cyc%e Time is:  A. ** days C. 1 5 da ys &. 11 days D. = days %666i6

. i6ed man!actrin" o'er$ead ,as )d"eted at 98 and *8 direct %a)or $ors ,ere )d"eted. I! t$e !i6ed o'er$ead 'o%me 'ariance ,as 91* !a'ora)%e and t$e !i6ed o'er$ead spendin" 'ariance ,as 91 n!a'ora)%e ! i6ed man!actrin" o'er$ead app%ied

218

i

C. 981* D. 9 5@

Standard Costs and Variance Analysis 

0nits per )atc$ T$e man!actrin" cyc%e e!!iciency ;7CE< is:  A. =*.=G &. .G

* nits

mst )e  A. 981 &. 95??

C. 5.G D. =.G

C. 981* D. 9 5@

T$ro"$pt time %666'ii . C$oco Company man!actres !ire $ydrants in &%acan. T$e !o%%o,in" in!ormation pertains to operations drin" t$e mont$ o! 7ay: 9rocessin" time ;a'era"e per )atc$< ?. $ors Inspection time ;a'era"e per )atc$< 1.8 $ors +aitin" time ;a'era"e per )atc$< 1.8 $ors 7o'e time ;a'era"e per )atc$< 1.8 $ors 0nits per )atc$ * nits T$e t$ro"$pt time is:  A. 1*.8 $ors C. 5.8 $ors &. ?. $ors D. @.8 $ors De%i'ery cyc%e time %666'iii .A%a)an" Corporation is a $i"$%y atomated man!actrin" !irm. T$e 'ice president o! !inance $as decided t$at traditiona% standards are inappropriate !or per!ormance measres in an atomated en'ironment. La)or is insi"ni!icant in terms o! t$e tota% cost o! prodction and tends to )e !i6ed materia% >a%ity is considered more important t$an minimi(in" materia% cost and cstomer satis!action is t$e nm)er one priority. As a res%t prodction and de%i'ery per!ormance measres $a'e )een c$osen to e'a%ate per!ormance. T$e !o%%o,in" in!ormation is considered typica% o! t$e time in'o%'ed to comp%ete and s$ip orders. +aitin" Time: rom order )ein" p%aced to start o! prodction ?. days rom start o! prodction to comp%etion =. days Inspection time 1.8 days 9rocessin" time . days 7o'e time *.8 days T$e De%i'ery Cyc%e Time is:  A. ** days C. 1 5 da ys &. 11 days D. = days %666i6

. i6ed man!actrin" o'er$ead ,as )d"eted at 98 and *8 direct %a)or $ors ,ere )d"eted. I! t$e !i6ed o'er$ead 'o%me 'ariance ,as 91* !a'ora)%e and t$e !i6ed o'er$ead spendin" 'ariance ,as 91 n!a'ora)%e ! i6ed man!actrin" o'er$ead app%ied

218

i

.

ii

iii

Ans,er: D Nyc%yn Sa%e6 9rotet Tota% .

.

;*5 P .? 6 918< ;1@.* P .? 6 9*1< ;1 6 9*?<

9 58. 85. *?. 91*5.

Ans,er: C Re>ired inpts to )e p%aced in process per nit o! prodct: *.*8 P.=8 Standard 7ateria% cost per nit o! prodct: . 6 918 Ans,er: & Re>ired inpts o! ra, materia%s ;in ponds< Standard price per pond

; P .?< ;* 8 6  @?<

. yards 958

=8. 6 * 58

i

.

ii

iii

iv

v

vi

Ans,er: D Nyc%yn Sa%e6 9rotet Tota% .

.

.

.

.

;*5 P .? 6 918< ;1@.* P .? 6 9*1< ;1 6 9*?<

9 58. 85. *?. 91*5.

Ans,er: C Re>ired inpts to )e p%aced in process per nit o! prodct: *.*8 P.=8 Standard 7ateria% cost per nit o! prodct: . 6 918 Ans,er: & Re>ired inpts o! ra, materia%s ;in ponds< Standard price per pond Standard materia%s cost per nit Ans,er: D Net price per yard: 9rc$ase price rei"$t 9rc$ase discont Standard cost per yard Standard >antity per scar! Standard cost per scar!:

; P .?< ;*.8 6 .@?<

=8. 6 *.58 1?.=8

5. 1. ; 1.*< @.? .8 1@.@

. 6 5 .5=8.@8 .8 6 @.?

Ans,er: C Tota% 7intes per ,or#er ;? $ors 6 < Rest Time 9rodcti'e mintes Otpt per day per ,or#er ;5* P 8< in 1/%iter )atc$ 9rodction $or M "ood nits Rest mintes ; P 1*< 7intes sed !or re4ects ;8 Q 8< P 8 "ood nits Tota% standard mintes per 1/"ood %iter )atc$ Ans,er: & +ee#%y ,a"es per ,or#er rin"e )ene!its ;1 6 .*8<

. yards 958

1 *8

5?  5* 1* 8 min 8 min ? min 5? 7in

Tota% ,ee#%y direct %a)or cost per ,or#er La)or cost per $or ;1*8 P 5 $rs< La)or cost per nit ;1.*8 6 *.8 $rs< vii

viii

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1*8 1.*8 9=?.1*8

Ans,er: D Re>ired nm)er o! >arts o! )erries ; P .?< Cost o! )erries ;=.8  9?.< Cost o! ot$er in"redients ;1 6 5.8< Standard materia%s cost per )atc$

=.8  58 18

Ans,er: C 7intes re>ired )y sortin" "ood )erries  >arts   min. 7intes re>ired )y mi6in" Tota% nm)er o! mintes Standard %a)or cost per )atc$ ;.8  98< 9*8

1? 1* 

Ans,er: A 0nit cost o! materia%s: ;De)it to oods in 9rocess Q De)it to 7ateria%s Fantity Variance / Credit to 7ateria%s 9rice Variance<Nm)er o! 0nits Comp%eted Tota% de)its to ,or# in process accont 981@ De)it to materia%s >antity 'ariance 1@= Credit to materia%s price 'ariance ; =5<  Acta% materia%s cost 95@@* 9er nit cost: 95@@*@ 9.8* Ans,er: A  Acta% >antity sed  Add !a'ora)%e >antity ;*@8.8< Standard >antity a%%o,ed

1 ? 115

Ans,er: C  Acta% materia%s price Standard Fantity Standard price  Acta% Fantity sed: 9rice 'ariance )ased on sa"e:

188 1* 6 * *5 *5 Q ;*8*.8< *8 6 ; M *.8<

Ans,er: D  Acta% Fantity sed a'ora)%e Fantity =81.8 Standard Fantity a%%o,ed 9rodction in nits 1=518 Ans,er: A  AF  S9 ;18 6 5< SF  S9 ; 6 8 6 5< 0n!a'ora)%e Fantity Variance

. *5 *.8 *8 1*8

15@1 *5@ 1=5 11

91* 1* 9 

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. Ans,er: & T$e acta% prc$ase price per nit can )e con'enient%y so%'ed )y sin" t$e prc$ase price 'ariance / 79V  AF;A9/ S9< /*5  1 ;A9 M .<

Ans,er: A  Acta% >antity sed ;ponds< *8 Less: E6cess ponds sed ;1 P *< 8 Standard Fantity A%%o,ed *  A%ternati'e So%tion sin" t$e !orm%a !or 0sa"e Variance: 70V  ;AF MSF
 /*5 P 1  A9 M .  .18  A9 M .  A9  .58 -vii

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-viii

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Ans,er: A 70V  ;AF M SF
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Ans,er: C  Acta% materia%s cost  AF  S9 ;** 6 1.*8< a'ora)%e 9rice Variance

Ans,er: C 79V  15;1.1 M 1.<  15

*5 *=8 ; 11<

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Ans,er: A Standard materia%s cost per )atc$ ;* 6 1< Q ;?5 6 .*< Q ;= 6 *< Q ; 6 < 95 E6pected yie%d in )atc$ ;*1 P 18< 1@.*  Acta% yie%d 1?.8 0n!a'ora)%e yie%d in )atc$ .= 0n!a'ora)%e yie%d 'ariance ;.= 6 5< 9 *?

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Ans,er: D 7ateria%s  Acta% cost &d"eted cost ;?8  18< 7ateria%s cost 'ariance La)or   AH  SR ;=8  1*< SH  SR ;?8  .=8  1*< La)or E!!iciency Variance  Acta% 9ayro%%  AH  SR ;=8  1*< La)or Rate Variance

--ii

1*=8 1*=8  =8 =8  ====8 =8 1*=8

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Ans,er: C ;AR / SR< 6 AH  rate 'ariance T$ere!ore t$e tota% 'ariance ;985.8< ,$en di'ided )y t$e $or%y di!!erence ;95.*= / 95.1< ,i%% e>a% t$e acta% $ors.  Acta% $ors ;985.89.1=<  ?8. 9roo!: ;95.*= / 95.1< 6 ?8  985.8

--iii

. Ans,er: A La)orAHStd. 7i6 at AHDi!!SRLa)or 7i6 Variance7588;8<919 ;8<*888*8=8=8/9 ;*8<a' --iv . Ans,er: A La)or Yie%d Variance: E6pected Yie%d 5  Acta% Yie%d  Di!!erence 5 7%tip%y )y Standard %a)or cost per nit 91.8*8 Yie%d Variance 9*80 Standard cost P Standard Yie%d  9*8 P 5  91.8*8 --v

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Ans,er: C Direct %a)or cost at standard rate Standard rate

=18 M =8 5?

Ans,er: A  Acta% cost a'ora)%e Rate Variance  Acta% $ors  standard rate Standard Rate: 11 P * E6pected yie%d ;5 nits  =8 $rs< =8  5 Ans,er: C LEV: ;* M *1<.18  ;18<

5 ?.

1 1 11 8.8

Standard Rate:   1* M *SR 1*  *SR SR  .18 --viii

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Ans,er: C LEV: ;51 6 *< M ?55  ;*5<

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Ans,er: C  Acta% $ors Less 0n!a'ora)%e $ors Standard $ors a%%o,ed Standard rate: @

115?1.5 1*1

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Ans,er: & SR  LEV P ;AH M SH<  /5 P ;*@ M <  95.

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Ans,er: C  AR  SR M ;LRV P AH<  AR  95. M ;8? P *@<  9.?

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Ans,er: & Varia)%e OH rate$r / 9*= P 58 Direct %a)or rate$r  9. P .* Varia)%e OH is app%ied at *G o! direct %a)or cost  Acta% $ors 915= P ;9 M 9.*< 0n!a'ora)%e $ors 981 P 9 SH a%%o,ed

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Ans,er: &  Acta% direct %a)or costs  Acta% $rs at std %a)or rate 0n!a'ora)%e %a)or rate 'ariance Standard %a)or rate: /*  ;58 M 8< SR  *  8SR SR  .5

= =8 *8 1.

9 . 9 . 8*8 1= 5?88

;58 6 9.5<

9*518 **? 9 *=

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Ans,er: &  Acta% $ors  La)or rate 'ariance P;AR/SR< 91* P ;91 M 9@< 1* $ors

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Ans,er: D LRV  AH;AR M SR< /88  1;=.8 M SR< /88 P 1  =.8 M SR /.88  =.8 M SR SR  ?.8

---vi

. Ans,er: D T$e contro%%a)%e 'ariance is t$e sm o! t$e spendin" 'ariances p%s t$e e!!iciency 'ariance. Varia)%e o'er$ead spendin" 'ariance 9; < i6ed o'er$ead spendin" 'ariance 9;1< Varia)%e o'er$ead e!!iciency 'ariance 9  Tota% contro%%a)%e 'ariance 9 = T$e 'o%me 'ariance is not considered a contro%%a)%e 'ariance.

---vii

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---viii

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Ans,er: A 7ont$%y )d"eted !i6ed o'er$ead  App%ied !i6ed o'er$ead 0n!a'ora)%e 'o%me 'ariance

;181*< ;*58 6 * 6 *.8<

Ans,er: A Varia)%e OH per DLH 5?*5  Acta% o'er$ead &d"eted OH at standard $ors:

1*8 1**8 *8

*. 15=

Varia)%e *1 6 * i6ed a'ora)%e contro%%a)%e)d"et 'ariance ---i-

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5* 1?

18 ; <

Ans,er: A &d"eted !i6ed o'er$ead  App%ied !i6ed o'er$ead )ased on ?G ac$ie'ed ;*5 6 < 0n!a'ora)%e 'o%me 'ariance i6ed o'er$ead rate )ased on *= $ors: ;?1 P *=< Ans,er: D  Acta% o'er$ead Less &d"eted OH at standard $ors Varia)%e * 6 8 1 i6ed 5 0n!a'ora)%e )d"et 'ariance Ans,er: C  Acta% o'er$ead &d"et at SH a'ora)%e contro%%a)%e 'ariance

*

;**5< 

15 18 ; 1<

Ans,er: C OH app%ication rate )ased on DL cost  App%ied o'er$ead  Acta% o'er$ead O'erapp%ied O'er$ead

;8 6 < *8 6 *

Ans,er: D  Acta% o'er$ead &d"et at standard $ors: i6ed OH Varia)%e OH ;* 6 8< 0n!a'ora)%e contro%%a)%e 'ariance Ans,er: & &d"eted !i6ed o'er$ead  App%ied OH 0n!a'ora)%e 'o%me 'ariance

?1 =* @ .

*G 8 * 

* 5 1

; 6 *< ;*8 6 *<

**5 

 8 1

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Ans,er: C E!!iciency 'ariance  ;AH M SH< 6 SVOHR ;15 M 18<    0N Standard $ors: 58 6  18

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Ans,er: D E!!iciency Variance  ;18 M < 1 Standard $ors: * nits 6 1.8 $ors

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Ans,er: A i6ed o'er$ead rate per $or Denominator $ors ;pre'ios nm)er<

18 0n!a'ora)%e

?.8 M . 5*.8

Ans,er: &  Acta% OH ;1 Q 1@8< Less: &d"eted OH at acta% $ors ;9* 6 @8 $rs< Q 91 0n!a'ora)%e spendin" 'ariance Ans,er: C EV  ;AH M SH< SVOHR ;15 M 18<  SH ;58 6 <

*.8 1

9*@? *@ 9 ?

0 18

Ans,er: A  Acta% OH &d"eted OH at acta% $ors ;8 6 9*.8< Q 9= a'ora)%e spendin" 'ariance Ans,er: A i6ed OH spendin" 'ariance:  Acta% i6ed OH / &d"eted i6ed OH ;918 M 9<

918 18=8 9; =8<

918 0

i6ed OH 'o%me 'ariance: ;&d"eted 0nits M Acta% 0nits< 6 SOH rate ;8 M 88< 6 9 &d"eted prodction: 9 P 9 P * $ors lii

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Ans,er: A  Acta% 'aria)%e o'er$ead  AH  SVOHR ;*= 6 *< Varia)%e O$ spendin" 'ariance a'ora)%e  AH  SVOHR SH  SVOH ;* 6 *< 0n!a'ora)%e VOH e!!iciency 'ariance Ans,er: D  Acta% &d"et ;58 6 *.5< a'ora)%e &d"et 'ariance

8* 85 ; *< 85 8* *

911 1? 9; =<

Ans,er: C i6ed o'er$ead per $or: 1 6 .=  Anna% !i6ed OH )d"et 8 6 1* 6 11.* Ans,er: &  Acta% 'aria)%e o'er$ead Varia)%e OH app%ied 0n!a'ora)%e 'aria)%e OH 'ariance Ans,er: C  App%ied !i6ed o'er$ead Less: a'ora)%e 'o%me 'ariance &d"eted !i6ed o'er$ead Ans,er: A Standard rate: E6cess rate  Acta% rate

11.* =*

*5 * 5

; 6  6 .8<

85 1?

Ans,er: A  App%ied !i6ed o'er$ead Less !a'ora)%e 'o%me 'ariance &d"eted !i6ed o'er$ead

18 ?=8 *8

1.*8 . 1.*?

5? 1* 

Ans,er: A 0n!a'ora)%e 'o%me 'ariance 0n!a'ora)%e VOH spendin" 'ariance Tota% Net 0n!a'ora)%e 'ariance a'ora)%e !i6ed OH )d"et 'ariance Ans,er: A Net OH 'ariance 0n!a'ora)%e Less: 0n!a'ora)%e 'o%me 'ariance 0n!a'ora)%e spendin" 'ariance a'ora)%e OH )d"et 'ariance

9;<

*8 1? 5 * 51

* ; 1?< ; *8< 51

Ans,er: C &d"eted !i6ed OH  Add: a'ora)%e 'o%me 'ariance  App%ied !i6ed o'er$ead

8 1* 81*

Ans,er: A  App%ied OH ;? 6 < Less: a'ora)%e 'o%me 'ariance &d"eted OH

5? 1* 

Ans,er: A &d"eted !i6ed OH ; P 1* mont$s<  App%ied !i6ed OH ;*  * 6 8< a'ora)%e 'o%me 'ariance i6ed OH rate per $or ; P <

*8 * ; 1< 8.

l-iv

l-v

.

.

Ans,er: & La)or E!!iciency: ;88 M 8*< ? Varia)%e OH E!!iciency ;88 M 8*<   Tota% e!!iciency 'ariance

1* @ *1

Ans,er: D Tota% 'aria)%e o'er$ead 'ariance ;? M @< Varia)%e o'er$ead spendin" 'ariance Varia)%e o'er$ead e!!iciency 'ariance ?? P *

1 !a'ora)%e 1* !a'ora)%e ?? !a'ora)%e 55 a'ora)%e

l-vi

. Ans,er: D i6ed o'er$ead 'o%me 'ariance is a more meanin"!% 'ariance in e'a%atin" t$e se o! t$e capacity.

l-vii

.

Ans,er: &  Acta% 'aria)%e OH &d"eted VOH at acta% $ors ;? 6 9< 0n!a'ora)%e VOH spendin" 'ariance

l-viii

.

Ans,er: A ;? nits M 8 nits< 6 9? 9@

l-i-

.

Ans,er: & Spendin" 918 M ;88 6 9
l--

l--i

l--ii

l--iii

.

.

.

.

Ans,er: & Spendin" 9* M ;97 P 1*
9*8 *5 9 1

9;< 9 @

910 91

Ans,er: C  Acta% !i6ed o'er$ead &d"et !i6ed o'er$ead ;5 $rs  9*< 0n!a'ora)%e !i6ed OH Spendin" 'ariance &d"eted ;denominator< $ors ;5 nits 6  P < Ans,er: & &d"et !i6ed o'er$ead  App%ied !i6ed o'er$ead ;? 6 .1 6 9*< 0n!a'ora)%e 'o%me 'ariance Ans,er: A  Acta% 'aria)%e o'er$ead &d"et at acta% $ors ; 5* 6 95< a'ora)%e 'aria)%e OH spendin" 'ariance

9?? ? 9 ? 5

9? = 9 5

9 15 1? 9 ; 5<

l--iv

.

Ans,er: C 0n!a'ora)%e E!!iciency Variance: ;AH M SH< SVOHR ;5* M ?< 6 95  1 0N SH a%%o,ed ;? nits 6 1 P 1<  ? $ors

l--v

.

Ans,er: A  Acta% 'aria)%e o'er$ead &d"eted VOH at acta% $ors ;1=* 6 < Varia)%e o'er$ead spendin" 'ariance 0N VOH rate per $or ;18 6 .?< P 1? $ors

1?8 1* 8 9.

l--vi

. Ans,er: C T$e comptation o! 'aria)%e o'er$ead e!!iciency 'ariance in'o%'es t$e comparison o! t$e acta% $ors and standard $ors a%%o,ed )y acta% prodction. ;1=* M 1=< 6 9 1* 0N Standard $ors a%%o,ed: ?8 6 * 1=

l--vii

. Ans,er: D T$e amont o! !i6ed o'er$ead )d"et ;spendin"< 'ariance is ca%c%ated )y s)tractin" !rom t$e acta% !i6ed o'er$ead t$e amont o! )d"eted !i6ed o'er$ead.  Acta% !i6ed o'er$ead *? &d"eted !i6ed o'er$ead ;18 6 .*< *=

0n!a'ora)%e !i6ed o'er$ead )d"et 'ariance

1

l--viii

. Ans,er: & T$e amont o! 'o%me 'ariance ;denominator or o'ernderapp%ied !i6ed o'er$ead 'ariance< is ca%c%ated )y comparin" t$e )d"eted !i6ed o'er$ead and !i6ed o'er$ead app%ied to prodction. &d"eted !i6ed o'er$ead ;18 6 .*< *=  App%ied !i6ed o'er$ead ;?8 6 < *88 0nderapp%ied ;n!a'ora)%e< 'o%me 'ariance 18  A%ternati'e ca%c%ation: ;@ M ?8< 6  18 i6ed o'er$ead per nit ;*= P @< 

l--i-

.

l---

l---i

l---ii

Ans,er: C Std nit cost: Varia)%e i6ed OH Std nit cost CS M Std OH Vo%me Variance:

.

.

.

l---iii

.

l---iv

.

l---v

.

l---vi

.

18  1?

Ans,er: C  Acta% >antity prc$ased and sed at standard price ;1? 6 < a'ora)%e price 'ariance  Acta% Fantity  Acta% 9rice  Acta% 9rice ;5=1 P 1?<

515 @ 5=1 9*.@8

Ans,er: C SH  SR E!!iciency Variance  AH  SR  Acta% $ors ;@= P 8<

@ = @= 1@5

Ans,er: D  AH  SR ;1@5 6 < Spendin" 'ariance  Acta% Varia)%e O'er$ead

8?* 1 8@8

1* 15 15

Ans,er: C 7CE  Va%e Added Hors P T$ro"$pt Time 9rocessin" $ors ?. Inspection $ors 1.8 +aitin" time 1.8 7o'e time 1.8 T$ro"$pt time 1*.8 7CE ;?. P 1*.8< 5G

l---viii

.

9 8 98 8 9 = 0N

Ans,er: A SF a%%o,ed ;**8 6 < 0n!a'ora)%e sa"e 'ariance  Acta% >antity o! materia%s

Ans,er: C Denominator or &d"eted Hors: ;15 P =<  *

.

.

;1 6 8< ;1 M 15< 6 8

Ans,er: &  App%ied i6ed OH 0nderapp%ied !i6ed o'er$ead &d"eted !i6ed o'er$ead

l---vii

l---i-

;= 6 .< P 15 ;11* 6 .8< P 1

Ans,er: A Ans,er: A De%i'ery cyc%e time: Tota% ,aitin" time Inspection time 9rocessin" time 7o'e time De%i'ery Cyc%e Time Ans,er: C

18. 1.8 . *.8 **.

 A !a'ora)%e 'o%me 'ariance arises ,$en t$e app%ied !i6ed o'er$ead is $i"$er t$an t$e )d"eted !i6ed o'er$ead. &d"eted !i6ed o'er$ead 8 a'ora)%e 'o%me 'ariance ;o'erapp%ied< 1*  App%ied !i6ed o'er$ead 81*