1. Standard costs are essentially budgeted amounts on a per-unit basis. Unit standards serve as
inputs in building budgets.
2. Unit standards are used to build flexible budgets. Unit standards for variable costs are the
variable cost component of a flexible budgeting formula.
5. Standard costing systems are adopted because they tend to improve planning and control
and facilitate product costing.
6. By identifying standards and assessing deviations from the standards, managers can locate
areas where change or corrective behavior is needed.
7. Actual costing assigns actual manufacturing costs to products. Normal costing assigns actual
prime costs and budgeted overhead costs to products. Standard costing assigns budgeted
manufacturing costs to products.
9. Managers generally tend to have more control over the quantity of an input used rather than the
price paid per unit of input.
10. A standard cost variance should be investigated if the variance is material and if the benefit
labor of investigating and correcting the deviation is greater than the cost of doing so.
11. Control limits indicate how large a variance must be before it is judged to be material and the
process is out of control. Control limits are usually set by judgment although statistical
approaches are occasionally used.
12.
MPV is often computed at the point of purchase rather than issuance because it provides control
information sooner.
10
STANDARD COSTING AND VARIANCE
ANALYSIS
DISCUSSION QUESTIONS
CHAPTER 10 Standard Costing and Variance Analysis
15. Some possible causes of an unfavorable labor efficiency variance are inefficient labor, machine
downtime, and poor-quality materials.
17.
Target costing is a cost management method that is used to reduce costs to a level that reflects
a product’s functions and market demands and management’s return requirements. Costs are
reduced by such actions as working with suppliers to reduce the cost of parts and improving
(redesigning) the processes that will be used.
18. Part of a variable overhead spending variance can be caused by inefficient use of overhead
resources.
21. The volume variance occurs when the actual volume differs from the expected volume used to
compute the predetermined standard fixed overhead rate. An unfavorable volume variance
occurs when the actual volume is less than the expected volume. Thus, an unfavorable volume
variance means that actual production is less than expected.
22. If the actual volume is different from the expected, then the company has either lost or earned
contribution margin. The volume variance signals this outcome, and if the variance is large,
then the loss or gain is large since the volume variance understates the effect.
CHAPTER 10: Standard Costing and Variance Analysis
10-1. e
10-2. e
10-3. b
10-4. c
10-5. d
10-6. a
10-7. d
10-8. b
10-9. c
10-10. e
10-11. a
10-12. d
10-13. e
10-14. a
10-15. b
10-16. e
10-17. d
10-18. a
10-19. c
10-20. c
MULTIPLE-CHOICE QUESTIONS
CHAPTER 10 Standard Costing and Variance Analysis
BE 10-21
1. Oats allowed: = Unit Quantity Standard × Actual Output
= 16 × 960,000 16
×
960,000
=
←change here, please
= 15,360,000 ounces
= 0.04 × 960,000 0.04
×
=
= 38,400 hours
BE 10-22 Week
1 57,600
←change here, please
2 60,000
Upper control 3 63,000
limit 4 68,400
5 69,000
6 69,500
BE 10-23
change here, please ↓
↓ links ↓ Std. unit qty. (ounBEs) 4.70
AQ × AP: Cans produBEd 450,000
1,875,000
×
0.10
=
187,500 OunBEs of aluminum used 1,875,000
SQ × SP: Act. Cost of aluminum per oz 0.10
450,000
×
4.70
×
0.08
=
169,200 Std priBE 0.08
(AQ × AP) – (SQ × SP):
187,500
–
169,200
=
18,300 U
Actual Costs
Budgeted Costs
Total Variance
15,360,000
$187,500
$169,200
(AQ × AP) – (SQ × SP)
SQ × SP
AQ × AP
1,875,000 × $0.10
$187,500 – $169,200
450,000 × 4.7 × $0.08
$18,300 U
60,000
65,000
70,000
CHAPTER 10: Standard Costing and Variance Analysis
change here, please →
MUV = (AQ – SQ*)SP AP × AQ:
= (1,875,000 – 2,115,000)$0.08 = $19,200 F 0.10 × 1,875,000 = 187,500
SP × AQ: 37,500 U Price
r oz
0.10
0.08 × 1,875,000 = 150,000 Std priBE 0.08
SP × SQ: (19,200) F Usage
0.08 × 2,115,000 = 169,200
*
SQ = 4.7 × 450,000 = 2,115,000
*4.70 × 450,000 = 2,115,000
change here, please →
BE 10-26 ↓ links ↓ links ↓
LRV = (AR – SR)AH LRV 15.00 – 13.50 × 25,200 = 37,800 U
= ($15.00 – $13.50)25,200 = $37,800 U LEV 25,200 – 27,000 × 13.50 = (24,300) F
LEV = (AH – SH*)SR AR × AH:
= (25,200 – 27,000)$13.50 = $24,300 F 15.00 × 25,200 = 378,000
SR × AH: 37,800 U Price
13.50 × 25,200 = 340,200
SR × SH: (24,300) F Usage
13.50 × 27,000 = 364,500
*SH = 0.03 × 900,000 = 27,000 *0.030 × 900,000 = 27,000
$24,300 F
$378,000
SR × AH
$187,500
Price
Usage
$13.50 × 27,000
$13.50 × 25,200
$340,200
AR × AH
$15.00 × 25,200
SR × SH*
AP × AQ
$0.10 × 1,875,000
Price
Usage
SP × AQ
$0.08 × 1,875,000
$150,000
$37,500 U
$19,200 F
SP × SQ*
$37,800 U
$0.08 × 2,115,000
$169,200
$364,500
CHAPTER 10 Standard Costing and Variance Analysis
BE 10-27
1. SH for actual production =
Actual units × SH per unit ↓ links ↓ change here, please ↓
3.
Actual variable overhead……………………………………………………………………………………
$222,816 222,816
Applied variable overhead……………………………………………………………………………………
225,000 900,000
Total variable overhead variance……………………………………………………………………………………
$ (2,184) F (677,184) F
↓ links ↓
BE 10-28 1. AH × AVOR: SVOR 3.75
1. Columnar approach: 57,200 × 3.90 = 222,816 AH 57,200
2. AH × SVOR: 8,316 U Spending SH 60,000
57,200 × 3.75 = 214,500 AVOR 3.90
3. SH × SVOR: (10,500) F Efficiency Actual units 15,000
$10,500 F 60,000 × 3.75 = 225,000
Efficiency
2. Variable Overhead Spending Variance = Actual VOH – (SVOR x AH) ↓ links ↓
3. Variable Overhead Efficiency Variance = (AH – SH) SVOR
4.
Variable overhead spending variance………………………………………………………………………………………..
$ 8,316 U 8,316 U
Variable overhead efficiency variance………………………………………………………………………………………..
(10,500) F (10,500) F
Total variable overhead variance………………………………………………………………………………………..
$ (2,184) F (2,184) F
Rate
2
1.7
281,680
4
14,000
5
$8,316 U
Spending
$214,500
1. Actual VOH
$222,816
$225,000
60,000 × $3.75
3. SH × SVOR
2. AH × SVOR
57,200 × $3.75
Chapter 10 Standard Costing and Variance Analysis
BE 10-29 Variable overhead: Hours Rate
SVOR per direct labor hour 4.07 Inspection 42.20
Overhead Cost Actual
At Standard
Actual variable overhead costs: Power 41.87
Cost Item Formula Hours Hours Inspection 123,300
Inspection…………………………………………………………………………………………..
$2.20 $134,640 $(11,340) F $132,000 $2,640 U Power 104,600 Actual fixed overhead costs 301,680
Power…………………………………………………………………………………………..
Spending
Variance
Budget for
Efficiency
Variance
Budget for
Actual
Cost
$123,300
CHAPTER 10 Standard Costing and Variance Analysis
BE 10-30
1. Standard Hours for Actual Units = SH per Unit × Actual Units Produced ↓ links ↓
= 4 × 15,000 4 × 15,000 = 60,000 Variable overhead: Hours Rate
= 60,000
SVOR per direct labor hour 4.07 Inspection 4 2.20
2. Applied Fixed Overhead = Standard Hours for Actual Units × SFOR 60,000 × 5.00 = 300,000 Actual variable overhead costs: Power 4 1.87
= 60,000 × $5 Inspection 123,300
= $300,000
Power 104,600 Actual fixed overhead costs 301,680
3.
Actual fixed overhead…………………………………………………………………………………………..
$301,680 301,680
← links Actual direct labor hours worked (AH) 61,200 SH allowed per unit 4
Applied fixed overhead…………………………………………………………………………………………..
Total fixed overhead variance…………………………………………………………………………………………..
305,000 AH 62,800 SFOR 5.00
BFOH 5,000 U Spending SH 64,000 AFOH 305,000.00
300,000 BFOH 300,000
$5,000 U
Spending
4.
Fixed overhead spending variance………………………………………………………………………………………………………………………..
$ 5,000 U
Fixed overhead volume variance………………………………………………………………………………………………………………………………..
(20,000) F
Total fixed overhead variance………………………………………………………………………………………………………………………………………..
$(15,000) F
1. Actual FOH
2. BFOH
3. SH × SFOR
64,000 × $5.00
$305,000
$300,000
$320,000
CHAPTER 10: Standard Costing and Variance Analysis
←change here, please
2. Hours Allowed = Unit Quantity Standard × Actual Output
= 0.15 × 480,000 0.15 × 480,000 = 72,000
= 72,000 hours
BE 10-33 Week
1 38,500
←change here, please
2 40,000
3 42,000
4 45,600
The variances that exceed the upper limit of $45,000 should be investigated.
The graph clearly signals some type of process instability.
BE 10-34
change here, please ↓
BRIEF EXERCISES: SET B
$55,000
Control Chart
CHAPTER 10 Standard Costing and Variance Analysis
change here, please →
BE 10-35 ↓ links ↓ links ↓ Std. unit qty. (ozs) 0.45
MPV = (AP – SP)AQ MPV 0.042 – 0.045 × 110,000 = (330) F Bottles produced 240,000
= ($0.042 – $0.045)110,000 oz. = $330 F MUV 110,000 – 108,000 × 0.045 = 90 U Ozs of plastic used 110,000
MUV = (AQ – SQ*)SP AP × AQ:
BE 10-36 AH × AR:
change here, please →
14,000 × 15.00 = 210,000 Std. labor reqd. (hours) per bottle 0.030
SH × SR: cans produced 500,000
500,000 × 0.030 × 14.50 = 217,500 Act. labor hours used 14,000
(AH × AP) – (SH × SR): act labor rate per hour 15.00
210,000 – 217,500 = (7,500) F standard wage rate 14.50
BE 10-37 ↓ links ↓ links ↓
LRV = (AR – SR)AH LRV 15.00 – 14.50 × 14,000 = 7,000 U
= ($15.00 – $14.50)14,000 = $7,000 U LEV 14,000 – 15,000 × 14.50 = (14,500) F
LEV = (AH – SH*)SR AR × AH:
$14.50 × 14,000
$15.00 × 14,000
$7,000 U
$14.50 × 15,000
$210,000
$217,500
$7,500 F
Total Variance
AH × AR
SH × SR
(AH × AR) – (SH × SR)
14,000 hrs. × $15.00
500,000 × 0.03 × $14.50
$210,000 – $217,500
Actual Costs
Budgeted Costs
CHAPTER 10: Standard Costing and Variance Analysis
BE 10-38
1. SH for actual production
=
Actual units × SH per unit ↓ links ↓ change here, please ↓
=
20,000 × 3 20,000 × 3.00 = 60,000 SH allowed per unit 3.00
=
60,000 hours Actual production 20,000
2. Applied Variable Overhead
=
SH × SVOR Actual DLH 61,200
=
=
3.
Actual variable overhead……………………………………………………………………………………
Applied variable overhead……………………………………………………………………………………
Total variable overhead variance……………………………………………………………………………………
BE 10-39 1. AH × AVOR: SVOR 4.70
1. Columnar approach: 69,200 × 4.85 = 335,75 0 AH 69,200
2. AH × SVOR: 10,510 U Spending SH 70,000
69,200 × 4.70 = 325,24 0 AVOH 335,750
3. SH × SVOR: (3,760) F Efficiency Actual units 14,000
2. Variable Overhead Spending Variance = Actual VOH – (SVOR × AH) ↓ links ↓
= $335,750 – ($4.70 × 69,200) 4.85 – 4.70 × 69,200 = 10,510 U
= $(10,510) U 335,750 – 4.70 × 69 ,200
3. Variable Overhead Efficien cy Variance = (AH – SH)SVOR
= (69,200 – 70,000)$4.70 69,200 – 70,000 × 4.70 = (3,76 0) F
= $3,760 F
4.
Variable overhead spending variance………………………………………………………………………………………..
###### U 10,510 U
Variable overhead efficiency variance………………………………………………………………………………………..
(3,760) F (3,760) F
Total variable overhead variance………………………………………………………………………………………..
##### U 6,750 U
Rate
2
1.7
281,680
4
14,000
5
2. AH × SVOR
69,200 × $4.70
$325,240
3. SH × SVOR
70,000 × $4.70
$329,000
1. Actual VOH
$335,750
Chapter 10 Standard Costing and Variance Analysis
BE 10-40 Variable overhead: Hours Rate
SVOR per direct labor hour 5.00 Inspection 3 2.00
Cost Actual Actual At Standard Efficiency Actual variable overhead costs: Power 3 3.00
Form ula Cost Hours Hours Variance Inspection 162,000
Inspection…………………………………………………………………………………………..
$2.00 $162,000 $154,000 $8,000 U$150,000 $4,000 UPower 220,600 Actual fixed overhead costs 985,300
Power…………………………………………………………………………………………..
Overhead
Spending
Budget for
Budget for
Cost Item
Variance
CHAPTER 10: Standard Costing and Variance Analysis
BE 10-41
1. Standard Hours for Actual Units = SH per Unit × Actual Units Produced ↓ links ↓ Variable overhead: Hours Rate
= 6 × 20,000 6 × 20,000 = 120,000
= 120,000 SVOR per direct labor hour 5.00 Inspection 3 2.00
Actual variable overhead costs: Power 3 3.00
2. Applied Fixed Overhead = Standard Hours for Actual Units × SFOR 120,000 × 8.00 = 960,000 Inspection 162,000
= 120,000 × $8
= $960,000 Power 220,600 Actual fixed overhead costs 985,300
Actual direct labor hours worked (AH) 77,000 SH allowedper unit 6
3.
Actual fixed overhead…………………………………………………………………………………………..
$985,300 985,300
← links Actual production inunits 25,000 Actual production 20,000
425,000 AH SFOR 10.00
BFOH (75,000) F Spending SH 42,500 AFOH 425,000
500,000 BFOH 500,000
$75,000 F
$75,000 U 3. SH × SFOR: 75,000 U Volume Actualunits 8,500
Spending
Volume 42,500 × 10.00 = 425,000
2. Fixed Overhead Spending Variance
=
Actual FOH – BFOH
=
3. Fixed Overhead Volume Variance
=
BFOH – SH × SFOR
=
Fixed overhead spending variance………………………………………………………………………………………………………………………..
Fixed overhead volume variance………………………………………………………………………………………………………………………………..
1. Actual FOH
$425,000
$500,000
2. BFOH
3. SH × SFOR
42,500 × $10.00
$425,000
CHAPTER 10 Standard Costing and Variance Analysis
E 10-43 (change here first, please)
1. SH = 5 × 15,000 = 75,000 hours 5 × 15,000 = 75,000
2. SQ = 1 × 15,000 = 15,000 kits 1 × 15,000 = 15,000
SQ = 1 × 15,000 = 15,000 cabinets 1 × 15,000 = 15,000
E 10-44
1. Cases needing investigation:
Week 2: Exceeds the 10% rule. change here, please →
Week 4: Exceeds the $12,000 rule and the 10% rule. Cases to be investigated
Week 5: Exceeds the 10% rule. If the std. cost is exceeded by (%) 10
2. The purchasing agent is responsible. Corrective action would require a return Or
to the purchase of the higher-quality material normally used. If the amount exceeds 12,000
3. Production engineering is responsible. If the relationship of the variances is
standards for materials and labor need to be revised.
E 10-45 ↓ links ↓
change here, please →
1. Materials: 12.00 × 92,000 = 1,104,000 Leather 12.00
Labor: 9.00 × 92,000 = 828,000 DL (0.75 hr. @ $12) 9
2. Actual Cost* Budgeted Cost Belts produced 92,000
Materials………………………………………………………………..
$1,035,000 $1,104,000 1,035,000 – 1,104,000 = (69,000) F Leather strips purchased 287,500
Labor……………………………………………………………..
$977,500 $828,000 977,500 – 828,000 = 149,500 U Actual price/strip 3.60
*$3.60 × 287,500 = $1,035,000; $12.50 × 78,200 = $977,500 *3.60 × 287,500 = 1,035,000 Std. price/strip 4.00
is an underlying ongoing cause, the company could continue losing money Std. hr required/belt 0.75
without corrective action. Actual wage rate 12.50
EXERCISES
Variance
$69,000 F
$149,500 U
$9 × 92,000 = $828,000
$12 × 92,000 = $1,104,000
CHAPTER 10: Standard Costing and Variance Analysis
change here, please →
E 10-46 Leather 12.00
1.
MPV
= (AP – SP)AQ ↓ links ↓ links ↓ DL (0.75 hr. @ $12) 9.00
= ($3.60 – $4.00)287,500 strips = $115,000 F MPV 3.60 – 4.00 × 287,500 = (115,000) F Belts produced 92,000
MUV = (AQ – SQ*)SP MUV 287,500 – 276,000 × 4.00 = 46,000 U Leather strips purchased 287,500
= (287,500 – 276,000)$4.00 = $46,000 U AP × AQ: Actual price/strip 3.60
3.60 × 287,500 = 1,035,000 Std. price/strip 4.00
Usage
$3.60 × 287,500
$4.00 × 287,500
$4.00 × 276,000
2. The suggestion of the purchasing manager is premature. A favorable
materials price can produce an effect on both materials usage and labor
variances. For example, if the quality of the materials is much lower, more
waste and more rework can take place which may more than offset the
favorable materials price variance.
change here, please →
E 10-47 ↓ links ↓ links ↓ Leather 12.00
1. LRV = (AR – SR)AH LRV 12.50 – 12.00 × 78,200 = 39,100 U DL (0.75 hr. @ $12) 9.00
SR × SH*
AR × AH
SR × AH
12.00 × 78,200 = 938,400 Strips required/belt 3
SR × SH: 110,400 U Efficiency Std. wage rate 12.00
12.00 × 69,000 = 828,000 Actual DL hours 78,200
Std. hr reqd. per belt 0.75
Total Variance = $39,100 U + $110,400 U = $149,500 U 39,100 + 110,400 = 149,500 F
*SH = 0.75 × 92,000 = 69,000 *0.75 × 92,000 = 69,000 Actual wage rate 12.50
2. The feedback from the production manager pinpoints the cause of the
variances. The favorable materials variance is apparently due to the
AP × AQ
SP × AQ
SP × SQ*
$12.50 × 78,200
$12.00 × 78,200
$12.00 × 69,000
Rate
Efficiency
$977,500
$938,400
$828,000
$39,100 U
$110,400 U
CHAPTER 10 Standard Costing and Variance Analysis
E 10-48 ↓ links ↓ links ↓
change here, please →
1.
MPV
= (AP – SP)AQ MPV 0.045 – 0.05 × 2,650,000 = (13,250) F gal. units produced 20,000
= ($0.045 – $0.05)2,650,000 = $13,250 F MUV 2,650,000 – 2,560,000 × 0.05 = 4,500 U oz. materials used 2,650,000
3. MUV = (AQ – SQ)SP
$4,000 = [2,000,000 – 128(Quantity Produced)] × $0.05 4,000 = 2,000,000 – 128 × Q × 0.05
80,000 = 2,000,000 – 128(Quantity Produced) 80,000 = 2,000,000 – 128 × Q ?4,000
128(Quantity Produced) = 1,920,000 128 × Q = 1,920,000 ?2,000,000
E 10-49 ↓ links ↓ links ↓
change here, please →
1. LRV = (AR – SR)AH LRV 9.50 – 10.00 × 360,000 = (180,000) F Wheels produced 660,000
= ($9.50 – $10.00)360,000 = $180,000 F Actual labor hours 360,000
CHAPTER 10: Standard Costing and Variance Analysis
E 10-50
change here, please →
1. MPV = (AP – SP)AQ ↓ links ↓ links ↓ Direct materials 20.00
= ($3.95 – $4.00)2,060,000 MPV 3.95 – 4.00 × 2,060,000 = (103,000) F Direct labor 30.00
= $103,000 F Standard Price for materials 4.00
MUV = (AQ – SQ*)SP MUV 2,100,000 – 2,000,000 × 4 = 400,000 U
= (2,100,000 – 2,000,000)$4.00 Material reqd. per unit (Lbs) 5.00
2. LRV = (AR – SR)AH LRV 14.85 – 15.00 × 825,000 = (123,750) F DLH 825,000
= ($14.85 – $15.00)825,000 Act. wage rate 14.85
= $123,750 F
LEV = (AH – SH**)SR LEV 825,000 – 800,000 × 15.00 = 375,000 U
= (825,000 – 800,000)$15.00
= $375,000 U AR × AH:
E 10-51
1. Tom purchased the large quantity to obtain a lower price so that the price
standard could be met. In all likelihood, given the reaction of Jackie Iverson,
encouraging the use of quantity discounts was not an objective of setting price
standards. Usually, material price standards are to encourage the purchasing
agent to search for sources that will supply the quantity and quality of material
desired at the lowest price.
2. It sounds like the price standard may be out of date. Revising the price standard
and implementing a policy concerning quantity purchases would likely prevent
this behavior from reoccurring.
3. Probably not. Tom was recently rewarded for meeting price standards and
perhaps did not realize that the company does not have space for quantity
purchases. It is a common way to save on costs. New price standards and
guidelines regarding limitations on quantity purchases should prevent this
type of situation from recurring.
CHAPTER 10 Standard Costing and Variance Analysis
E 10-52
change here, please →
Materials: DLH 163,385
↓ links ↓ Std material rate 0.95
0.95 × 79,500 = 75,525 Material reqd. per unit (Lbs) 2.40
0.95 × 72,000 = 68,400 Std. hrs reqd reqd. per unit 0.75
MPV 63,000 – 75,525 = (12,525) F Price Batches produced 30,000
MUV 75,525 – 68,400 = 7,125 U Usage Std. wage rate 7.40
7.40 × 22,450 = 166,130 Act. Hrs worked 22,450
7.40 × 22,500 = 166,500 Act. material rate 4.10
$7.40 × 22,450
$7.40 × 22,500
SR × SH**
AR × AH
SR × AH
E 10-53
Debit Credit
1. Materials 75,525 MPV (12,525) ← links to E 10-35 above
MPV 12,525 MUV 7,125
Accounts Payable 63,000 materials 75,525
Accounts Payable 63,000
2.
Work in Process
68,400 Work in Process 68,400
MUV 7,125 LRV (2,745)
Materials 75,525 LEV (370)
3.
Work in Process
Accrued Payroll
Cost of Goods Sold 8,515
$63,000
$75,525
$68,400
SP × SQ*
$0.95 × 79,500
$0.95 × 72,000
AP × AQ
SP × AQ
Journal
Date
Account & Explanation
$7,125 U
$12,525 F
Price
Usage
CHAPTER 10: Standard Costing and Variance Analysis
E 10-54 ↓ links ↓ links ↓
change here, please →
1.
MPV
= (AP – SP)AQ MPV 8.35 – 8.25 × 38,000 = 3,800 U DLH 102,000
= ($8.35 – $8.25)38,000 = $3,800 U Std material rate 8.25
MUV = (AQ – SQ*)SP MUV 37,500 – 38,400 × 8.25 = (7,425) F
Act. material rate
8.35
= (37,500 – 38,400)$8.25 = $7,425 F Material reqd. per unit (Lbs) 12
2. Materials used 37,500
Debit Credit
Materials 313,500 8.25 × 38,000 = 313,500 materials
MPV 3,800
Accounts Payable 317,300
Work in Process
change here, please →
E 10-55 ↓ links ↓ links ↓ Std.DLH per board 2
1. LRV = (AR* – SR)AH LRV 9.80 – 9.65 × 25,040 = 3,756 U Act. wage rate 9.80
= ($9.80 – $9.65)25,040 = $3,756 U LEV 25,040 – 25,600 × 9.65 = (5,404) F Std. wage rate 9.65
LEV = (AH – SH**)SR AR × AH: Boards produced 12,800
= (25,040 – 25,600)$9.65 = $5,404 F 9.80 × 25,040 = 245,392 Act. DLH 25,040
SR × AH: 3,756 U Rate
$9.65 × 25,040
2.
Debit Credit
Work in Process
247,040
LRV 3,756
LEV 5,404
Accrued Payroll 245,392
Journal
Date
Account & Explanation
AR × AH
SR × SH
SR × AH
Date
Account & Explanation
Journal
CHAPTER 10 Standard Costing and Variance Analysis
E 10-56
change here, please →
1.
Standard direct labor
hrs required: ↓ links ↓ Deliveries made 38,600
= 38,600 × 0.80 38,600 × 0.80 = 30,880 Direct labor hours 31,000
= 30,880 direct labor hours wage rate 9.00
no. of restaurants 70
2. Variable overhead analysis: ↓ links ↓ labor standard hrs. 0.80
E 10-57 change here, please ↓
1. Standard Fixed
Overhead Rate (SFOR) ↓ links ↓ Actual FO 403,400
= $400,000/32,000 DLH 400,000 / 32,000 = 12.50 Budgeted FO 400,000
= $12.50 Practical capacity 32,000
2.
Fixed overhead analysis:
↓ links ↓
=
Budgeted Fixed Overhead
Practical Capacity
=
Actual Deliveries × Standard Direct Labor Hours