201) Naches Co. assigned direct labor cost to its products in May for 1,300 standard hours of
direct labor at the standard $8 per hour rate. The direct labor rate variance for the month was
$200 favorable and the direct labor efficiency variance was $150 favorable. Prepare the journal
entry to charge Work in Process Inventory for the standard labor cost of the goods manufactured
in May and to record the direct labor variances. Assuming that the direct labor variances are
immaterial, prepare the journal entry that Naches would make to close the variance accounts.
135
202) Firenze Company’s fixed budget for the first quarter of the calendar year appears below.
Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible
budgets for sales volumes of 22,000 and 24,000.
Sales (20,000 units)………………………………
$800,000
Cost of goods sold:
Direct materials………………………………
$160,000
Direct labor…………………………………
150,000
Variable overhead……………………………
100,000
Fixed overhead………………………………
120,000
530,000
Gross profit…………………………………
$ 270,000
Selling expenses:
Sales commissions (all variable)……………
40,000
Advertising (all fixed)………………………
50,000
General and administrative expenses:
Salaries (all fixed)……………………………
80,000
Rent (all fixed)………………………………
30,000
Depreciation (all fixed)………………………
20,000
220,000
Net income from operations……………………
$ 50,000
203) Gala Enterprises reports the following information regarding the production of one of its
products for the month. Compute the total direct materials cost variance, the direct materials
price variance, the direct materials quantity variance and identify each as either favorable or
unfavorable.
Direct materials standard (6 lbs. @ $3/lb.)
$18 per finished unit
Actual direct materials used
179,000 lbs.
Actual finished units produced
30,000 units
Actual cost of direct materials used
$554,900
204) Gala Enterprises reports the following information regarding the production on one of its
products for the month. Compute the total direct labor cost variance, the direct labor rate
variance, the direct labor efficiency variance and identify each as either favorable or unfavorable.
Direct labor standard (2 hrs. @ $15/hr.)
$30 per finished unit
Actual direct labor hours
60,800 hrs.
Actual finished units produced
30,000 units
Actual cost of direct labor
$905,920
205) Gala Enterprises collected the following data regarding production of one of its products.
Compute the variable overhead cost variance, the variable overhead spending variance, the
variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead
spending variance, and the fixed overhead volume variance.
Direct labor standard (2 hrs. @ $15/hr.)
$30.00 per finished unit
Actual direct labor hours
60,800 hrs.
Budgeted units
31,000 units
Actual finished units produced
30,000 units
Standard variable OH rate (2 hrs. @ $14.00/hr.)
$28.00 per finished unit
Standard fixed OH rate ($310,000/31,000 units)
$10.00 per unit
Actual variable overhead costs incurred
$857,600
Actual fixed overhead costs incurred
$312,000
206) ________ are preset costs for delivering a product or service under normal conditions.
207) An ________ standard is based on 100% efficiency without any loss or waste.
208) A standard that takes into account the reality that some loss usually occurs with any process
under normal application of the process is known as a ________ standard.
209) Differences between actual costs and standard costs are known as ________. These
differences may be subdivided into ________ and ________.
210) Direct materials variances are called price and quantity variances. However, when referring
to direct labor, these variances are usually called ________ and ________ variances.
211) In the analysis of variances, management commonly focuses on four categories of
production costs: ________ cost, ________ cost; ________ cost; and ________ cost.
212) A management approach that focuses attention on significant differences from plans and
gives less attention to areas where performance is reasonably close to standards is known as
________.
213) A fixed budget is also called a ________ budget.
214) A favorable variance for a cost means that when compared to the budget, the actual cost is
________ than the budgeted cost.
215) A flexible budget is also called a ________ budget.
216) A ________ contains relevant information that compares actual results to planned activities.
217) The difference between the actual sales and the flexible budget sales is called the ________
variance.
218) The difference between the flexible budget sales and the fixed budget sales is called the
________ variance.
219) In preparing flexible budgets, the costs that remain constant in total are ________ costs.
Those costs that change in total are ________ costs.
220) If actual price per unit of materials is greater than the standard price per unit of materials,
the direct materials price variance is ________.
221) The difference between the total actual overhead cost incurred and the total standard
overhead cost applied is the ________.
222) The sum of the variable overhead spending variance, the variable overhead efficiency
variance, the fixed overhead spending variance is the ________.
223) The fixed overhead variance can be broken down into the ________ variance and the
________ variance.
224) At the end of the accounting period, immaterial variances are closed to ________.