1 Accounting As A Tool For Managers 2 Building Blocks Of Managerial Accounting 3 Cost-volume-profit Analysis 4 Job Order Costing 5 Process Costing 6 Activity-based, Variable, And Absorption Costing 7 Budgeting 8 Standard Costs And Variances 9 Responsibility Accounting And Decentralization 10 Short-term Decision Making 11 Capital Budgeting Decisions 12 Balanced Scorecard And Other Performance Measures 13 Sustainability Reporting Chapter8: Standard Costs And Variances
Chapter Questions Section: Chapter Questions
Problem 1MC: Why does a company use a standard costing system? A. to identify variances from actual cost that... Problem 2MC: This standard is set at a level that may be reached with reasonable effort. A. ideal standard B.... Problem 3MC: This standard is set at a level that could be achieved if everything ran perfectly. A. ideal... Problem 4MC: This variance is the difference involving spending more or using more than the standard amount. A.... Problem 5MC: This variance is the difference involving spending less, or using less than the standard amount. A.... Problem 6MC: What are some possible reasons for a material price variance? A. substandard material B. labor rate... Problem 7MC: When is the material price variance unfavorable? A. when the actual quantity used is greater than... Problem 8MC: When is the material price variance favorable? A. when the actual quantity used is greater than the... Problem 9MC: What are some reasons for a material quantity variance? A. building rental charges increase B. labor... Problem 10MC: When is the material quantity variance favorable? A. when the actual quantity used is greater than... Problem 11MC: When is the material quantity unfavorable? A. when the actual quantity used is greater than the... Problem 12MC: What are some possible reasons for a labor rate variance? A. hiring of less qualified workers B. an... Problem 13MC: When is the labor rate variance unfavorable? A. when the actual quantity used is greater than the... Problem 14MC: When is the labor rate variance favorable? A. when the actual quantity used is greater than the... Problem 15MC: What are some possible reasons for a direct labor time variance? A. utility usage decrease B. less... Problem 16MC: When is the direct labor time variance favorable? A. when the actual quantity used is greater than... Problem 17MC: When is the direct labor time variance unfavorable? A. when the actual quantity used is greater than... Problem 18MC: A flexible budget______. A. predicts estimated revenues and costs at varying levels of production B.... Problem 19MC: The variable overhead rate variance is caused by the sum between which of the following? A. actual... Problem 20MC: The variable overhead efficiency variance is caused by the difference between which of the... Problem 21MC: The fixed factory overhead variance is caused by the difference between which of the following? A.... Problem 22MC: Which of the following is a possible cause of an unfavorable material price variance? A. purchasing... Problem 23MC: Which of the following is a possible cause of an unfavorable material quantity variance? A.... Problem 24MC: Which of the following is a possible cause of an unfavorable labor efficiency variance? A. hiring... Problem 25MC: Which of the following is a possible cause of an unfavorable labor rate variance? A. hiring too many... Problem 1Q: What two components are needed to determine a standard for materials? Problem 2Q: What two components are needed to determine a standard for labor? Problem 3Q: What elements require consideration before establishing an overhead standard? Problem 4Q: What is a variance? Problem 5Q: What causes the material price variance? Problem 6Q: What causes the material quantity variance? Problem 7Q: What are some possible causes of a material price variance? Problem 8Q: What are some possible causes of a material quantity variance? Problem 9Q: What is the direct labor rate variance? Problem 10Q: What is the direct labor time variance? Problem 11Q: What are some possible causes of a direct labor rate variance? Problem 12Q: What are some possible causes of a direct labor time variance? Problem 13Q: How is the total direct labor variance calculated? Problem 14Q: What causes the variable overhead rate variance? Problem 15Q: What causes the variable overhead efficiency variance? Problem 16Q: What is the main difference between a flexible budget and a master budget? Problem 17Q: What causes a favorable variance? Problem 18Q: What causes an unfavorable variance? Problem 19Q: When might a favorable variance not be a good outcome? Problem 20Q: When might an unfavorable variance be a good outcome? Problem 21Q: Identify several causes of a favorable material price variance. Problem 22Q: Identify several causes of an unfavorable material price variance. Problem 23Q: Identify several causes of a favorable material quantity variance. Problem 24Q: Identify several causes of an unfavorable material quantity. Problem 25Q: Identify several causes of a favorable labor rate variance. Problem 26Q: Identity several causes of an unfavorable labor rate variance. Problem 27Q: Identify several causes of a favorable labor efficiency variance. Problem 28Q: Identify several causes of an unfavorable labor efficiency variance. Problem 1EA: Moisha is developing material standards for her company. The operations manager wants grade A... Problem 2EA: Rene is working with the operations manager to determine what the standard labor cost is for a spice... Problem 3EA: Fiona cleans offices. She is allowed 5 seconds per square foot. She cleans building A, which is 3000... Problem 4EA: Use the information provided to create a standard cost card for production of one glove box switch.... Problem 5EA: Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The... Problem 6EA: Use the information provided to answer the questions. All material purchased was used in production.... Problem 7EA: Dog Bone Bakery, which bakes dog treats, makes a special biscuit for dogs. Each biscuit uses 0.75... Problem 8EA: Queen Industries uses a standard costing system in the manufacturing of its single product. It... Problem 9EA: Penny Company manufactures only one product and uses a standard cost system. The following... Problem 10EA: ThingOne Company has the following information available for the past year. They use machine hours... Problem 11EA: A manufacturer planned to use $78 of variable overhead per unit produced, but in the most recent... Problem 12EA: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 13EA: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 14EA: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 1EB: Bristol is developing material standards for her company. The operations manager wants grade A... Problem 2EB: Salley is developing material and labor standards for her company. She finds that it costs $0.55 per... Problem 3EB: Use the following information to create a standard cost card for production of one photography drone... Problem 4EB: Mateo makes gizmos. He would like to set up a system to help him manage his business. The gizmos are... Problem 5EB: Smith Industries uses a cost system that carries direct materials inventory at a standard cost. The... Problem 6EB: Lizbeth, Inc., makes ice cream. The toffee coffee ice cream takes 4 quarts of cream, 3 cups of... Problem 7EB: Woodpecker manufactures sawmill equipment. They use a standard Costing system and recognize material... Problem 8EB: Case made 24,500 units during June, using 32,000 direct labor hours. They expected to use 31,450... Problem 9EB: Eagle Inc. uses a standard cost system. During the most recent period, the company manufactured... Problem 10EB: A manufacturer planned to use $45 of variable overhead per unit produced, but in the most recent... Problem 11EB: Fitzgerald Company manufactures sewing machines, and they produced 2,500 this past month. The... Problem 12EB: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 13EB: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 14EB: Acme Inc. has the following information available: A. Compute the material price and quantity, and... Problem 1PA: The comptroller wants to set the standards according to a study done by a consulting firm for a... Problem 2PA: Stan is opening a coffee shop next to Big State University. He knows that controlling his costs will... Problem 3PA: What makes a variance favorable? Give an example of a favorable variance involving materials. What... Problem 4PA: April Industries employs a standard costing system in the manufacturing of its sole product, a park... Problem 5PA: Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but... Problem 6PA: The Whizbang Company makes a special type of toy. Each top takes 6 ounces of a special material that... Problem 7PA: Ellis Companys labor information for September is as follows: A. Compute the standard direct labor... Problem 8PA: Breakaway Companys labor information for May is as follows: A. What is the actual direct labor rate... Problem 9PA: Power Co.s labor information for June is as follows: A. What was the actual labor rate per hour? B.... Problem 10PA: Prepare a flexible budget for overhead based on the following data: Problem 11PA: Reddy Corporation has collected the following data for the month or June: What is the variable... Problem 12PA: ABC Inc. spent a total of $48,000 on factory overhead. Of this, $28,000 was fixed overhead. ABC Inc.... Problem 13PA: Recompute the variances from the second Acme Inc. exercise using $0.0725 as the standard cost of the... Problem 1PB: Sameerah is trying to determine the standard hours to make one unit. She has studied the... Problem 2PB: Carl cleans offices. He has the following buildings to clean every day: building A, which is 12,500... Problem 3PB: Freidrich is working with the operations manager to determine what the standard material cost is for... Problem 4PB: A company bought 45,000 pounds of plastic pellets to make DVDs at a cost of $9,900. The standard... Problem 5PB: Illinois Company is a medium-sized company that makes dresses. During the month of June, 8,575... Problem 6PB: Corolla Manufacturing has a standard cost for steel of $20 per pound for a product that uses 4... Problem 7PB: Marymount Company makes one product. In the month of April, it made 3,500 units. Workers were paid... Problem 8PB: Adam Inc.s records for May include the following information: A. What are Adams standard labor hours... Problem 9PB: Ribcos labor cost information for making its only product for March is as follows: A. What is the... Problem 10PB: Use the following standard cost card for 1 gallon of ice cream to answer the questions. Actual... Problem 11PB: Use the following standard cost card for 1 gallon of ice cream to answer the questions. Actual... Problem 1TP: How do you balance a firms need to succeed and the need for not asking the workers for perfection? Problem 2TP: What type of firm would use standard costing? What type of firm would not use standard costing? Problem 4TP: Is labor a true variable cost? Problem 5TP: Why would managers use a flexible budget? What information does it provide that a regular budget... Problem 6TP: Fill in the blanks in the following flexible budget: Problem 7TP: Before automation became more prevalent, overhead was often calculated and allocated as a function... Problem 8TP: In your opinion, is it important that an organization set standards and measure them monthly? Why or... Problem 9EB: Eagle Inc. uses a standard cost system. During the most recent period, the company manufactured...
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Concept explainers
The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as follows:
Standard Costs
Direct labor
7,500 hours at $11.80
Actual Costs
Direct labor
7,400 hours at $11.40
The direct labor time variance is
a.$1,140 unfavorable
b.$1,140 favorable
c.$1,180 unfavorable
d.$1,180 favorable
Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.
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