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Exam 22: Standard Costing and Variance Analysis

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Question 21

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Underfoot Products uses standard costing.The following information about overhead was generated during May: -Compute the fixed overhead budget variance.

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

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Question 22

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Fantastic Lips Inc.specializes in manufacturing lipstick.Racy Red,one of more than 75 shades produced by the company,is made from castor oil,beeswax,aloe vera,and a base compound.For the next 12 months,the company's purchasing agent believes that the cost of ingredients will be as follows: The direct labor time standard is 4 hours per case at a standard direct labor rate of $11.00 per hour.The standard overhead rates are $15.00 per direct labor hour for the standard variable overhead rate and $13.00 per direct labor hour for the standard fixed overhead rate. a.Using these production standards,compute the standard unit cost of direct materials per case of Racy Red if it takes 0.2 gallon of castor oil,0.5 pound of beeswax,0.3 gallon of aloe vera,and 1 gallon of base compound to produce one case. b.Using the standard unit cost of direct materials per case determined in (a)and the production standards given for direct labor and overhead,compute the standard unit cost of one case of Racy Red lipstick.

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Question 23

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Direct labor time standards express the hourly labor cost per function or job classification that exists during the current accounting period.

Which of the following is true of standard costing?

Corrective action is necessary even if a variance is insignificant.

The direct materials price variance is the difference between the standard price and the actual price,multiplied by the actual quantity.

Sport Runner Inc. ,produces a complete line of men's running apparel.The nylon short set is a very popular item in the southern states.During June,the company's records revealed the following information about the production of the nylon shorts set: Compute the standard unit cost for a nylon shorts set.

Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?

Using the information given below,determine the total standard unit cost. Round your intermediate calculations and final answers to two decimal places.

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

Which of the following is not included in performance reports?

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

Good Sleep Inc.manufactures soft pillows.Its records revealed the following data: -Using the above information provided for Good Sleep,the total fixed overhead variance is

Underfoot Products uses standard costing.The following information about overhead was generated during May: -Compute the fixed overhead variance.

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

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

A flexible budget is a summary of expected costs for a range of activity levels and is geared to changes in the level of productive output.

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

Which of the following yields the standard direct material cost?

Which of the following measures the difference between the quantity of materials actually used to make the product and what the design standard called for?