142) Fletcher Company collected the following data regarding production of one of its products.
Compute the direct labor rate variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Actual finished units produced
40,000
units
Actual cost of direct labor
$
1,100,250
A) $80,250 unfavorable.
B) $80,250 favorable.
C) $61,125 favorable.
D) $61,125 unfavorable.
E) $19,125 unfavorable.
143) Fletcher Company collected the following data regarding production of one of its products.
Compute the direct labor efficiency variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Actual finished units produced
40,000
units
Actual cost of direct labor
$
1,100,250
A) $19,125 favorable.
B) $80,250 favorable.
C) $61,125 favorable.
D) $19,125 unfavorable.
E) $80,250 unfavorable.
144) Fletcher Company collected the following data regarding production of one of its products.
Compute the variable overhead cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$
28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$
8.00
per unit
Actual cost of variable overhead costs incurred
$
1,140,000
Actual cost of fixed overhead costs incurred
$
338,000
A) $18,000 favorable.
B) $4,000 favorable.
C) $18,000 unfavorable.
D) $18,300 favorable.
E) $14,300 unfavorable.
145) Fletcher Company collected the following data regarding production of one of its products.
Compute the fixed overhead cost variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$
28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$
8.00
per unit
Actual cost of variable overhead costs incurred
$
1,140,000
Actual cost of fixed overhead costs incurred
$
338,000
A) $18,300 favorable.
B) $18,000 favorable.
C) $18,000 unfavorable.
D) $18,300 unfavorable.
E) $14,300 unfavorable.
146) Fletcher Company collected the following data regarding production of one of its products.
Compute the variable overhead spending variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
per finished unit
Actual direct labor hours
81,500
hrs.
Budgeted units
42,000
units
Actual finished units produced
40,000
units
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$
28.60
per finished unit
Standard fixed OH rate ($336,000/42,000 units)
$
8.00
per unit
Actual cost of variable overhead costs incurred
$
1,140,000
Actual cost of fixed overhead costs incurred
$
338,000
A) $25,450 favorable.
B) $4,000 favorable.
C) $4,000 unfavorable.
D) $21,450 unfavorable..
E) $21,450 favorable.
147) Fletcher Company collected the following data regarding production of one of its products.
Compute the variable overhead efficiency variance.
Direct labor standard (2 hrs. @ $12.75/hr.)
$
25.50
Actual direct labor hours
81,500
Budgeted units
42,000
Actual finished units produced
40,000
Standard variable OH rate (2 hrs. @ $14.30/hr.)
$
28.60
Standard fixed OH rate ($336,000/42,000 units)
$
8.00
Actual cost of variable overhead costs incurred
$
1,140,000
Actual cost of fixed overhead costs incurred
$
338,000
A) $14,300 unfavorable.
B) $21,450 favorable.
C) $4,000 unfavorable.
D) $4,000 favorable.
E) $21,450 unfavorable.
148) Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at
$0.10 per gram and 0.25 direct labor hours at $12.00 per hour. Overhead is applied at the rate of
$18 per direct labor hour. What is the total standard cost for one unit of product that would
appear on a standard cost card?
A) $7.00.
B) $8.50.
C) $11.50.
D) $7.50.
E) $25.00.
149) Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and
0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor
hour. What is the total standard cost for one unit of product that would appear on a standard cost
card?
A) $25.02.
B) $11.52.
C) $2.40.
D) $2.52.
E) $3.42.
150) Presented below are terms preceded by letters a through j and followed by a list of
definitions 1 through 10. Enter the letter of the term with the definition, using the space
preceding the definition.
(a) Cost variance
(b) Volume variance
(c) Price variance
(d) Quantity variance
(e) Standard costs
(f) Controllable variance
(g) Fixed budget
(h) Flexible budget
(i) Variance analysis
(j) Management by exception
________ (1) Occurs when the company operates at a different capacity level than was
predicted.
________ (2) A planning budget based on a single predicted amount of sales or other
activity measure.
________ (3) Preset costs for delivering a product, or service under normal conditions.
________ (4) A process of examining differences between actual and budgeted sales or costs
and describing them in terms of the price and quantity differences.
________ (5) The difference between actual price per unit of input and standard price per
unit of input.
________ (6) A budget prepared based on several different amounts of sales, often including
a best-case and worst-case scenario.
________ (7) The difference between actual quantity of input used and standard quantity of
input used.
________ (8) The difference between actual overhead costs incurred and the budgeted
overhead costs based on a flexible budget.
________ (9) A management process to focus on significant differences between actual
costs and standard costs.
________ (10) The difference between actual and standard cost.
151) Presented below are terms preceded by letters a through h and followed by a list of
definitions 1 through 8. Enter the letter of the term with the definition, using the space preceding
the definition.
(a) Unfavorable variance
(b) Fixed budget performance report
(c) Overhead cost variance
(d) Efficiency variance
(e) Spending variance
(f) Flexible budget performance report
(g) Quantity variance
(h) Favorable variance
________(1) Results from a comparison of actual cost or revenue to budget that contributes to a
lower income.
________(2) A report that compares actual results with the results expected under a fixed
budget.
________(3) When management pays an amount different from the standard price to acquire an
item.
________(4) Results from a comparison of actual cost or revenue to budget that contributes to
higher income.
________(5) Difference in variable overhead when the standard allocation base expected for
actual production differs from the actual allocation base.
________(6) Difference between actual quantity of an input and the standard quantity of the
input.
________(7) Difference between the total overhead cost applied to products and the total
overhead cost actually incurred.
________(8) A report that compares actual performance and budgeted performance based on
actual sales volume or other activity level.
152) Define standard costs. How do they assist management?
153) Explain variance analysis. Describe how variance analysis assists managers.
154) What are the four steps in the effective management of variance analysis?
155) Should both favorable and unfavorable variances be investigated, or only the unfavorable
ones? Explain.
156) Briefly describe management by exception.
157) Identify and explain the primary differences between fixed and flexible budgets.
158) Explain how favorable and unfavorable variances impact income.
159) Flexible budgets may be prepared before or after an actual period of activity. Why would
management prepare such budgets at differing time frames?
160) What are sales variances? How are they used?
161) Wren Company determined that in the production of their products last period; they had a
favorable price variance and an unfavorable quantity variance for direct materials. What might
be the cause(s) of this pattern of variances?
162) What are some causes of direct labor rate and efficiency variances?
163) What is the overhead volume variance? What would be the cause of a favorable volume
variance?
164) When using a standard cost accounting system, how are unfavorable variances recorded?
How are favorable variances recorded?
165) Joseph, Inc., provides the following results of June’s operations:
Direct materials price variance …………..
$ 400F
Direct materials quantity variance ……….
2,000U
Direct labor rate variance ………………..
100U
Direct labor efficiency variance ………….
1,200F
Variable overhead spending variance ……
400U
Variable overhead efficiency variance …..
800F
Fixed overhead spending variance ……….
100U
Fixed overhead volume variance …………
600F
Required:
(a) Determine the total overhead cost variance for June.
(b) Applying the management by exception approach, which of the variances shown are of
greatest concern? Why?
Direct materials quantity ………………..
Direct labor efficiency ………………….
Variable overhead efficiency ……………
166) Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the
following data. Compute the sales price and the sales volume variances for each product.
Budget
Actual
Unit sales price – Classic ….
$15
$16
Unit sales price–Mod …….
$20
$19
Unit sales–Classic …………
2,400
2,500
Unit sales–Mod …………..
2,000
1,900
Classic: Units
Selling Price
$16
$15
Sales
Mod: Units
Selling Price
$19
$20
Sales
167) A company’s flexible budget for 60,000 units of production showed sales of $96,000,
variable costs of $36,000, and fixed costs of $26,000. What operating income would be expected
if the company produces and sells 70,000 units?
168) A company’s flexible budget for 30,000 units of production showed sales of $90,000,
variable costs of $36,000, and fixed costs of $23,000. Prepare a flexible budget for 25,000 units
assuming it is within the same relevant range of production.
169) Based on predicted production of 25,000 units, FreshCo. anticipates $175,000 of fixed costs
and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000
and 30,000 units?
170) Based on predicted production of 25,000 units, Marvel Mix Co. anticipates $175,000 of
variable costs and $137,500 of fixed costs. What are the flexible budget amounts of total costs
for 28,000 units?
171) Anniston Co. planned to produce and sell 40,000 units. At that volume level, variable costs
are determined to be $320,000 and fixed costs are $30,000. The planned selling price is $10 per
unit. Anniston actually produced and sold 42,000 units.
Using a contribution margin format:
(a) Prepare a fixed budget income statement for the planned level of sales and production.
(b) Prepare a flexible budget income statement for the actual level of sales and production.
172) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit.
Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000.
Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a fixed budget income statement for the planned level of sales and production.
173) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit.
Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000.
Clevenger actually produced and sold 37,000 units.
Using a contribution margin format:
Prepare a flexible budget income statement for the actual level of sales and production.