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Exam 29: Controlling Manufacturing Costs: Standard Costs

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Question 1

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Two variances associated with analyzing manufacturing overhead costs are the production volume variance and the flexible budget variance.

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B) False

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Question 2

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The Hoatzin Birdhouse Factory produced the following standard cost card. In July, the company had an order for 500 birdhouses (Model: Wren) for Job No. CB32. Manufacturing overhead is based on direct labor hours. The manufacturing overhead cost estimates for the year total $32,400 and total direct labor hours are estimated at 9,000 for the year. Complete the Standard Cost Card an Job Order Cost Sheet. Calculate the total cost variance.

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Manufacturing overhead is $3.60 per hour...

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Question 3

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A simple method used to analyze the fixed and variable components in semi-variable costs is called the---------- point method.

Usually, a well-run manufacturing company prepares only annual manufacturing cost budgets.

A budget prepared using several differing levels of activity is a

If the actual cost of an item is lower than the standard cost, a(n)-----------price variance will be recognized.

If a price variance for materials is unfavorable, the quantity variance for materials also must be unfavorable.

Standard quantity is usually determined by the

A budget that shows expected costs at only one level of production activity is called a(n)-----------budget.

A decrease in the activity level will result in:

The Costmore Company uses standard costing and has established the following standards for direc materials and direct labor for each unit it makes: $\begin{array}{ll}\text { Direct Materials } & 3 \text { gallons at } \$ 5 \text { per gallon } \\\text { Direct Labor } & 1 \text { hour at } \$ 12 \text { per hour }\end{array}$ During July, the company made 4,000 units of product and used 13,000 gallons. The actual price paid for materials was $5.20 per gallon. Direct Labor used was 3,600 hours and workers were paid $11.75 per hour. An analysis would indicate

Reelmates manufactures fishing poles. In a recent month, the company budgeted production of 2,000 poles. Actual production was 2,200. According to the standard cost card, each pole requires 3 feet of fiberglass rod at a cost of $9 per foot. Reelmates used 6,500 feet of rod at a net cost of $65,000 for the period. - The total material variance was:

Material budgets are calculated by multiplying units to be produced by the expected unit cost of direct materials.

SweetBerry Ice-creams uses a standard cost system. The following data is available for June: $\begin{array}{llr}\text { Actual output } & \$ 6,000 \text { gallons } \\\text { Standard material cost } & \$ 8 \text { gallon } \\\text { Standard quantity allowed per gallon } & \$ 1 \text { gallon } \\\text { Material price variance } & \$ 630 \text { Unfavorable } \\\text { Material usage variance } & \$ 2,400 \text { Unfavorable }\end{array}$ The actual material cost for June was:

In order to analyze the differences between actual costs and standard costs, it is necessary to identify the fixed and variable components of semi-variable costs.

Complete the flexible budget for Cullville Industries for April 2019. Overhead is based on direct labor hours. Cullville Industries Budget of Manufacturing Costs Month of April 2019 $\begin{array}{l|r|r|r} & & \text { Activity Level } & \\\hline \text { Number of direct labor hours } & 2,500 & 5,000 & 7,500 \\\hline \text { Percent of expected activity } & (1) & 100 & 150 \\\hline & & & \\\hline\end{array}$

As the level of activity increases, the variable cost per unit of activity

As the volume of output increases, the------- cost per unit of output decreases.

Direct materials and direct labor are examples of costs that tend to vary directly with the volume of output.

Kenwood Company's manufacturing overhead costs for the assembly department are given below. $\begin{array}{lll}\text { Taxes and Insurance } & 450 & -- \\\text { Repairs } & 175 & .15\end{array}$ Using the information provided, prepare a departmental monthly overhead performance report comparing actual costs with the budget allowance for the number of hours worked. Assume that during the month of May actual production was 1,900 hours. Actual costs for the month were as follows: