ACCTG 10A

ASSIGNMENT – STANDARD COSTING

1. The purpose of standard costing is to: Standard unit price $1.75

a. Determine optimal production level for a given period. Actual purchase price per unit $1.65
b. Eliminate the need for subjective decisions by Actual quantity purchased 4,000 units
management. Actual quantity used 3,900 units
c. Control costs. Standard quantity allowed for
d. Allocate cost with more accuracy. actual production 3,800 units

2. When performing input-output variance analysis in What is the materials purchase price variance?
standard costing, "standard hours allowed" is a means of a. $390 favorable
measuring: b. $390 unfavorable
a. Standard output at standard hours. c. $400 favorable
b. Actual output at standard hours. d. $400 unfavorable
c. Standard output at actual hours.
d. Actual output at actual hours. 11. The direct labor costs for Boundary Company follow:

3. Which of the following terms best identifies a function of Standard direct labor hours 34,000
standard costs? Actual direct labor hours 33,000
a. Management by exception Direct labor efficiency variance--favorable $ 12,000
b. Contribution approach Direct labor rate variance--favorable $ 1,650
c. Marginal costing Total payroll $394,350
d. Standardized accounting system
What was Boundary's standard direct labor rate?
4. When computing variances from standard costs, the a. $ 11.95
difference between actual and standard price multiplied by b. $ 11.49
actual quantity yields: c. $ 11.60
a. Combined price--quantity variance. d. $ 12.00
b. Price variance.
c. Volume variance. 12. Information on Shonda Company's factory overhead
d. Mix variance. costs follows:

5. If a company follows a practice of isolating variances at Actual variable factory overhead $95,000
the earliest point in time, what would be the appropriate time Actual fixed factory overhead $28,000
to isolate and recognize a direct material price variance? Standard hours allowed for actual production 30,000
a. When material is purchased Standard variable overhead rate per
b. When material is used in production direct labor hour $3.25
c. When purchase order is originated Standard fixed overhead rate per
d. When material is issued direct labor hour $1.00

6. The materials purchase price variance, in a standard cost What is the total factory overhead variance?
system, is obtained by multiplying the: a. $4,500 unfavorable
a. Actual price by the difference between actual quantity b. $4,500 favorable
purchased and standard quantity used. c. $2,500 unfavorable
b. Actual quantity purchased by the difference between d. $2,500 favorable
actual price and standard price.
c. Standard price by the difference between standard 13. Donellan Company has a standard and flexible
quantity purchased and standard quantity used. budgeting system and uses a two-way analysis of overhead
d. Standard quantity purchased by the difference between variances. Selected data for the February production activity
actual price and standard price. follows:

7. If the total materials variance (actual cost of materials Budgeted fixed factory overhead costs $ 70,000
used compared with the standard cost of the standard Actual factory overhead incurred $250,000
amount of materials required) for a given operation is Variable factory overhead rate per
favorable, why must this variance be further evaluated as to direct labor hour $7
price and usage? Standard direct labor hours 25,000
a. There is no need to further evaluate the total materials Actual direct labor hours 26,000
variance if it is favorable.
b. Generally accepted accounting principles require that all The controllable variance for February is:
variances be analyzed in three stages. a. $5,000 favorable.
c. All variances must appear in the annual report to equity b. $5,000 unfavorable.
owners for proper disclosure. c. $7,000 favorable.
d. It is done so that management can evaluate the efficiency d. $7,000 unfavorable.
of the purchasing and production functions.
14. The data below relate to the month of April for Monroe,
8. What type of direct material variances for price and Inc., which uses a standard cost system and a two-variance
quantity will arise if the actual number of pounds of materials analysis of factory overhead:
used exceeds standard pounds allowed but actual cost was
less than standard cost? Actual total direct labor $54,200
Actual direct labor hours used 16,500
Quantity Price Standard direct labor hours allowed 16,250
Direct labor rate variance—unfavorable $1,400
a. Favorable Favorable Actual total factory overhead $53,200
b. Unfavorable Favorable Budgeted fixed factory overhead $12,000
c. Favorable Unfavorable Budgeted activity in hours 16,000
d. Unfavorable Unfavorable Total overhead application rate per standard
direct labor hour $3.25
9. Woodside Company manufactures tables with vinyl tops. Variable overhead application rate per
The standard material cost for the vinyl used per Style-R standard direct labor hour $2.50
table is $7.20 based on 8 square feet of vinyl at a cost of
$.90 per square foot. A production run of 1,000 tables in What was Monroe's volume variance for April?
January resulted in usage of 8,300 square feet of vinyl at a a. $187.50 favorable
cost of $.85 per square foot, a total cost of $7,055. The b. $187.50 unfavorable
materials quantity variance resulting from the above c. $437.50 favorable
production run was:
a. $255 favorable. 15. The following information is available from the Tomoto
b. $255 unfavorable. Company:
c. $270 unfavorable.
d. $270 favorable. Actual factory overhead $16,500
Actual fixed overhead expenses $ 9,200
10. Thomas Company uses a standard cost system and Budgeted fixed overhead expenses $ 9,000
recognizes the materials purchase price variance at the time Actual hours 3,600
materials are purchased. Information for raw materials for Standard hours 3,800
Product RBI for the month of October follows: Variable overhead rate per direct labor hour $ 2.25
 ACCTG 10A
ASSIGNMENT – STANDARD COSTING

Assuming that Tomoto uses a three-variance analysis of (25) The following information pertains to Genie Company:
overhead variances, what is the budget (spending) Standard materials allowed $12,000
variance? Unfavorable materials price variance 2,000
a. $600 favorable Favorable materials usage variance 1,000
b. $600 unfavorable
c. $450 favorable
Actual payroll $20,000
d. $450 unfavorable
Unfavorable labor rate variance 1,500
Unfavorable labor efficiency variance 500
FOUR-WAY VARIANCE PROBLEM
25. Prepare the entry to record the direct labor cost and
The following information pertains to the Braun Company for
variances.
March:
Standard direct labor hours per unit 0.5 hours
Budgeted production level 20,000 units
Actual units produced 22,000 units
Standard variable rate per
direct labor hour $2.00
Standard fixed rate per
direct labor hour $3.00
Actual direct labor hours worked 10,500 hours
Actual direct labor costs $150,000
Actual fixed factory overhead 31,800
Actual variable factory overhead 22,200

16. Using the four-variance method of factory overhead

variance analysis, what is the spending variance?
a. $1,200 unfavorable
b. $200 unfavorable
c. $1,000 favorable
d. $200 favorable

17. Using the four-variance method of factory overhead

variance analysis, what is the efficiency variance?
a. $1,200 unfavorable
b. $200 unfavorable
c. $1,000 favorable
d. $200 favorable

18. Using the four-variance method of factory overhead

variance analysis, what is the budget variance?
a. $1,200 favorable
b. $1,800 unfavorable
c. $3,000 favorable
d. $1,200 unfavorable

19. Using the four-variance method of factory overhead

variance analysis, what is the volume variance?
a. $1,200 favorable
b. $1,800 unfavorable
c. $3,000 favorable
d. $1,200 unfavorable

JOURNAL ENTRY

(21-22) Thomas Company uses a standard cost system and

recognizes the materials purchase price variance at the time
materials are purchased. Information for raw materials for
Product RBI for the month of October follows:

Standard unit price $1.75

Actual purchase price per unit $1.65
Actual quantity purchased 4,000 units
Actual quantity used 3,900 units
Standard quantity allowed for actual
production 3,800 units

21. Prepare entry for the purchase of materials.

22. Prepare entry to record material usage.

(23) PHI Company began its operations on January 1 and

produces a single product that sells for $35.00 per unit.
5000 units were produced and 4000 units were sold during
the year.

Standard costs per unit follow:

Standard cost
Raw materials $12.50
Direct labor 6.50
Factory overhead 4.00

23. Prepare entry to record finished goods.

(24) Information relating to direct labor for the Newstead

Company follow:

Actual direct labor hours 5,600

Standard direct labor hours 5,400
Total direct labor per payroll $53,200
Standard labor rate per hour $9.00

24. Prepare entry to record the direct labor cost.