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Exam 8: Evaluating Variances From Standard Costs

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Question 31

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If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a

A) variable variance
B) rate variance
C) quantity variance
D) volume variance

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Question 32

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The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% normal production capacity. Production was budgeted to be 12,000 units. The standard hours for production were 5 hours per unit. The variable overhead rate was $3 per hour. Actual fixed overhead was $360,000 and actual variable overhead was $170,000. Actual production was 11,700 units. The  fixed  factory  overhead volume variance is

A) $9,000 favorable
B) $9,000 unfavorable
C) $5,500 favorable
D) $5,500 unfavorable

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Question 33

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The formula to compute the direct material quantity variance is to calculate the difference between

Favorable volume variances may be harmful when

Standard costs are determined by multiplying expected price by expected quantity.

A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation.

If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a

A variable cost system is an accounting system where standards are set for each manufacturing cost element.

Standard cost variances are usually not reported in reports to stockholders.

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13, the direct materials quantity variance was $5,200 favorable.

Standards are performance goals used to evaluate and control operations.

Standard costs serve as a device for measuring efficiency.

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

The difference between the standard cost of a product and its actual cost is called a variance.

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

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

An unfavorable fixed factory overhead volume variance may be due to a failure of supervisors to maintain an even flow of work.

Tucker Company produced 8,900 units of product that required 3.25 standard hours per unit. The standard variable overhead cost per unit is $4.00 per hour. The actual variable factory overhead was $111,000. Determine the variable factory overhead controllable variance.

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.

The controllable variance measures