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Exam 10: Standard Costs and Variances

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Question 41

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Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost.Jackson has established the following standards for one unit of product. During May, Jackson purchased 125, 000 pounds of direct material at a total cost of $475, 000.The total factory wages for May were $364, 000, 90 percent of which were for direct labor.Jackson manufactured 22, 000 units of product during May using 108, 000 pounds of direct material and 28, 000 direct labor-hours. The labor rate variance for May is:

A) $8, 400 Favorable
B) $7, 200 Unfavorable
C) $8, 400 Unfavorable
D) $6, 000 Favorable

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Question 42

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Merle Corporation applies manufacturing overhead to products on the basis of standard machine-hours.For the most recent month, the company based its budget on 4, 000 machine-hours.Budgeted and actual overhead costs for the month appear below: The company actually worked 3, 690 machine-hours during the month.The standard hours allowed for the actual output were 3, 620 machine-hours for the month.What was the overall variable overhead efficiency variance for the month?

A) $721 Unfavorable
B) $467 Favorable
C) $254 Unfavorable
D) $880 Favorable

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Question 43

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Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed: During May, the laboratory performed 1, 500 blood tests.On May 1 there were no direct materials (plates) on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3, 600 plates were purchased for $9, 540 • 3, 200 plates were used for blood tests • 340 actual direct labor-hours were worked at a cost of $5, 550 The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for May is

Gilder Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for June is:

Zee Corporation has developed the following cost standards for the production of its leather backpacks: Variable overhead at Zee is applied on the basis of direct labor hours.The actual results for last month were as follows: The direct materials purchases variance is computed when the materials are purchased. Required: Compute the following variances for Zee. a.Materials price variance. b.Materials quantity variance. c.Labor efficiency variance. d.Variable overhead rate variance.

A materials price variance is unfavorable if the actual price exceeds the standard price.

Longview Hospital performs blood tests in its laboratory.The following standards have been set for each blood test performed: During May, the laboratory performed 1, 500 blood tests.On May 1 there were no direct materials (plates) on hand;after a plate is used for a blood test it is discarded.Variable overhead is assigned to blood tests on the basis of standard direct labor-hours.The following events occurred during May: • 3, 600 plates were purchased for $9, 540 • 3, 200 plates were used for blood tests • 340 actual direct labor-hours were worked at a cost of $5, 550 The direct materials purchases variance is computed when the materials are purchased. The materials price variance for May is:

Moates Corporation makes a product with the following standard costs: In January the company produced 5, 800 units using 38, 740 kilos of the direct material and 1, 110 direct labor-hours.During the month, the company purchased 41, 000 kilos of the direct material at a total cost of $49, 200.The actual direct labor cost for the month was $20, 979 and the actual variable overhead cost was $6, 993.The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. Required: a.Compute the materials quantity variance. b.Compute the materials price variance. c.Compute the labor efficiency variance. d.Compute the labor rate variance. e.Compute the variable overhead efficiency variance. f.Compute the variable overhead rate variance.

Schley Corporation applies manufacturing overhead to products on the basis of standard machine-hours.Budgeted and actual overhead costs for the most recent month appear below: The original budget was based on 3, 200 machine-hours.The company actually worked 3, 510 machine-hours during the month and the standard hours allowed for the actual output were 3, 660 machine-hours.What was the overall variable overhead efficiency variance for the month?

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: • Direct materials: 4 gallons at $8 per gallon • Direct labor: 1 hour at $16 per hour During July, the company made 6, 000 units of product and incurred the following costs: • Direct materials purchased: 26, 800 gallons at $8.20 per gallon • Direct materials used: 25, 200 gallons • Direct labor used: 5, 600 hours at $15.30 per hour The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for July was:

Degregorio Corporation makes a product that uses a material with the following direct material standards: The company produced 5, 600 units in November using 21, 750 kilos of the material.During the month, the company purchased 24, 800 kilos of the direct material at a total cost of $168, 640.The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for November is:

Epley Corporation makes a product with the following standard costs: In July the company produced 3, 300 units using 12, 240 pounds of the direct material and 2, 760 direct labor-hours.During the month, the company purchased 13, 000 pounds of the direct material at a cost of $35, 100.The actual direct labor cost was $51, 612 and the actual variable overhead cost was $20, 148. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for July is:

Biery Corporation makes a product with the following standard costs: The company produced 4, 100 units in April using 5, 380 liters of direct material and 2, 610 direct labor-hours.During the month, the company purchased 6, 000 liters of the direct material at $5.80 per liter.The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 per hour. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for April is:

The following data have been provided by Leason Corporation: Required: Compute the variable overhead rate variances for lubricants and for supplies.Indicate whether each of the variances is favorable (F)or unfavorable (U).Show your work!

Eliezrie Corporation makes a product with the following standard costs: In January the company's budgeted production was 7, 400 units but the actual production was 7, 500 units.The company used 45, 580 kilos of the direct material and 2, 030 direct labor-hours to produce this output.During the month, the company purchased 48, 500 kilos of the direct material at a cost of $53, 350.The actual direct labor cost was $18, 473 and the actual variable overhead cost was $7, 714. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

Ledezma Corporation makes a product with the following standards for direct labor and variable overhead: In May the company produced 2, 500 units using 1, 210 direct labor-hours.The actual variable overhead cost was $9, 922.The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for May is:

Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The materials price variance for May is:

The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used.

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours.If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

Gilder Corporation makes a product with the following standard costs: The company reported the following results concerning this product in June. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The variable overhead efficiency variance for June is: