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Exam 23: Performance Evaluation Using Variances From Standard Costs

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Question 71

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If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed a:

A) variable variance
B) controllable variance
C) price variance
D) volume variance

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Question 72

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

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Question 73

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An example of a nonfinancial measure is the number of customer complaints.

Calculate the Direct Labor Rate Variance using the above information

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.

The controllable variance measures:

The Trumpet Company produced 8,700 units of a product that required 3.25 standard hours per unit. The standard fixed overhead cost per unit is $1.20 per hour at 29,000 hours, which is 100% of normal capacity. Determine the fixed factory overhead volume variance.

Nonfinancial performance output measures are used to improve the input measures.

The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: What is the amount of the factory overhead volume variance?

The total manufacturing cost variance is

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

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the:

The following data relate to direct labor costs for the current period: What is the direct labor rate variance?

Non-financial measures are often lined to the inputs or outputs of an activity or process.

Prepare an income statement (through income before income tax) for presentation to management, using the following data from the records of Greenway Manufacturing Company for November of the current year:

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

Trumpet Company produced 8,700 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 variance factory overhead was $111,000. Determine the variable factory overhead controllable variance.

Principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs.

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material quantity variance.

Tippi Company produces lamps that require 2.25 standard hours per unit at an hourly rate of $15.00 per hour. If 7,700 units required 17,550 hours at an hourly rate of $15.20 per hour, what is the direct labor (a) rate variance, (b) time variance, and (c) cost variance?