A manager prepared the following table by which to analyze labor costs for the month

CPA REVIEW SCHOOL OF THE PHILIPPINES Manila MANAGEMENT ADVISORY SERVICES STANDARD COSTING & VARIANCE ANALYSIS

10. A company using very tight standards in a standard cost system should expect that A. Most variances will be unfavorable B. No incentive bonus will be paid C. Costs will be controlled better than if lower standards were used D. Employees will be strongly motivated to attain the standard 11. A predetermined overhead rate for fixed costs is unlike a standard fixed cost per unit in that a predetermined overhead rate is A. based on an input factor like direct labor hours and a standard cost per unit is based on a unit of output. B. based on practical capacity and a standard fixed cost can be based on any level of activity. C. used with variable costing while a standard fixed cost is used with absorption costing. D. likely to be higher than a standard fixed cost per unit.

Nanjones Company manufactures a line of products distributed nationally through wholesalers. Presented below are planned manufacturing data for the year and actual data for November of the current year. The company applies overhead based on planned machine hours using a predetermined annual rate. Planning Data AnnualNovemberFixed overhead$1,200,000$100,000Variable overhead$2,400,000$220,000Direct labor hours48,0004,000Machine hours240,00022,000Data forNovemberDirect labor hours (actual)4,200Direct labor hours (plan based on output)4,000Machine hours (actual)21,600Machine hours (plan based on output)21,000Fixed overhead$101,200Variable overhead$214,000
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The predetermined overhead application rate for Nanjones Company is

Zazoo, Inc. specializes in reviewing and editing technical magazine articles. Zazoo sets the following standards for evaluating the performance of the professional staff:
Annual budgeted fixed overhead costs for normal capacity level of 10,000 articles reviewed and edited
$600,000
Standard professional hours per 10 articles
200
Flexible budget of standard labor costs to process 10,000 articles
$10,000,000
The following data apply to the 9,500 articles that were actually reviewed and edited during the current year.
Total hours used by professional staff
192,000
Flexible costs
$9,120,000
Total cost
$9,738,000
';
Zazoo's labor efficiency variance for the year is

Valyn Corporation employs an absorption costing system for internal reporting purposes; however, the company is considering using variable costing. Data regarding Valyn's planned and actual operations for the calendar year are presented below.PlannedActualActivityActivityBeginning finished goodsinventory in units35,00035,000Sales in units140,000125,000Production in units140,000130,000The planned per-unit cost figures shown in the schedule were based on the estimated production and sale of 140,000 units for the year. Valyn uses a predetermined manufacturing overhead rate for applying manufacturing overhead to its product; thus, a combined manufacturing overhead rate of $9.00 per unit was employed for absorption costing purposes. Any over- or underapplied manufacturing overhead is closed to the cost of goods sold account at the end of the reporting year.
Planned Costs
Incurred
Per Unit
Total
Costs
Direct materials
$12.00
$1,680,000
$1,560,000
Direct labor
9.00
1,260,000
1,170,000
Variable
manufacturing
overhead
4.00
560,000
520,000
Fixed manufacturing
overhead
5.00
700,000
715,000
Variable selling expenses
8.00
1,120,000
1,000,000
Fixed selling expenses
7.00
980,000
980,000
Variable
administrative
expenses
2.00
280,000
250,000
Fixed administrative
expenses
3.00
420,000
425,000
Total
$50.00
$7,000,000
$6,620,000
The beginning finished goods inventory for absorption costing purposes was valued at the previous year's planned unit manufacturing cost, which was the same as the current year's planned unit manufacturing cost. There are no work-in-process inventories at either the beginning or the end of the year. The planned and actual unit selling price for the current year was $70.00 per unit.
';
Valyn Corporation's total fixed costs expensed this year on the absorption costing basis were

Nanjones Company manufactures a line of products distributed nationally through wholesalers. Presented below are planned manufacturing data for the year and actual data for November of the current year. The company applies overhead based on planned machine hours using a predetermined annual rate. Planning Data AnnualNovemberFixed overhead$1,200,000$100,000Variable overhead$2,400,000$220,000Direct labor hours48,0004,000Machine hours240,00022,000Data forNovemberDirect labor hours (actual)4,200Direct labor hours (plan based on output)4,000Machine hours (actual)21,600Machine hours (plan based on output)21,000Fixed overhead$101,200Variable overhead$214,000
';
Nanjones' variable overhead spending variance for November was

A company manufactures dolls for sale in toy stores. In planning for this year, the company estimated variable factory overhead of $600,000 and fixed factory overhead of $400,000. The company uses a standard costing system, and factory overhead is allocated to units produced on the basis of standard direct labor hours. The denominator level of activity budgeted for this year was 10,000 direct labor hours, and the company used 10,300 actual direct labor hours.
Based on the output accomplished during this year, 9,900 standard direct labor hours should have been used. Actual variable factory overhead was $596,000, and actual fixed factory overhead was $410,000 for the year. Based on this information, the variable overhead spending variance for the company for this year was

Blaster, Inc., a manufacturer of portable radios, purchases the components from subcontractors to use to assemble into a complete radio. Each radio requires three units each of Part XBEZ52, which has a standard cost of $1.45 per unit. During May, Blaster experienced the following with respect to Part XBEZ52: UnitsPurchases ($18,000)12,000Consumed in manufacturing10,000Radios manufactured3,000
';
During May, Blaster incurred a materials efficiency variance of

Zazoo, Inc. specializes in reviewing and editing technical magazine articles. Zazoo sets the following standards for evaluating the performance of the professional staff:
Annual budgeted fixed overhead costs for normal capacity level of 10,000 articles reviewed and edited
$600,000
Standard professional hours per 10 articles
200
Flexible budget of standard labor costs to process 10,000 articles
$10,000,000
The following data apply to the 9,500 articles that were actually reviewed and edited during the current year.
Total hours used by professional staff
192,000
Flexible costs
$9,120,000
Total cost
$9,738,000
';
Using a flexible budget, Zazoo's total cost planned for the review and editing of 9,500 articles should be

The following is a standard cost variance analysis report on direct labor cost for a division of a manufacturing company.
Job
Actual Hours at Actual Wages
Actual Hours at Standard Wages
Standard Hours at Standard Wages
213
$ 3,243
$ 3,700
$ 3,100
215
15,345
15,675
15,000
217
6,754
7,000
6,600
219
19,788
18,755
19,250
221
3,370
3,470
2,650
Totals
$48,500
$48,600
$46,600
What is the total static budget direct labor variance for the division?

Nanjones Company manufactures a line of products distributed nationally through wholesalers. Presented below are planned manufacturing data for the year and actual data for November of the current year. The company applies overhead based on planned machine hours using a predetermined annual rate. Planning Data AnnualNovemberFixed overhead$1,200,000$100,000Variable overhead$2,400,000$220,000Direct labor hours48,0004,000Machine hours240,00022,000Data forNovemberDirect labor hours (actual)4,200Direct labor hours (plan based on output)4,000Machine hours (actual)21,600Machine hours (plan based on output)21,000Fixed overhead$101,200Variable overhead$214,000
';
Nanjones' amount of over- or underapplied variable manufacturing overhead for November was

Zazoo, Inc. specializes in reviewing and editing technical magazine articles. Zazoo sets the following standards for evaluating the performance of the professional staff:
Annual budgeted fixed overhead costs for normal capacity level of 10,000 articles reviewed and edited
$600,000
Standard professional hours per 10 articles
200
Flexible budget of standard labor costs to process 10,000 articles
$10,000,000
The following data apply to the 9,500 articles that were actually reviewed and edited during the current year.
Total hours used by professional staff
192,000
Flexible costs
$9,120,000
Total cost
$9,738,000
';
Zazoo's fixed overhead spending variance for the year is

A manufacturer uses a standard cost system with overhead applied based on direct labor hours. The manufacturing budget for the production of 5,000 units for the month of June included 10,000 hours of direct labor at $15 per hour, or $150,000. During June, 4,500 units were produced, using 9,600 direct labor hours, incurring $39,360 of variable overhead, and showing a variable overhead efficiency variance of $2,400 unfavorable. The standard variable overhead rate per direct labor hour was

A manufacturer has an estimated practical capacity of 90,000 machine hours, and each unit requires two machine hours. The following data apply to a recent accounting period:
Actual variable overhead
$240,000
Actual fixed overhead
$442,000
Actual machine hours worked
88,000
Actual finished units produced
42,000
Budgeted variable overhead at 90,000 machine hours
$200,000
Budgeted fixed overhead
$450,000
Of the following factors, the manufacturer's production volume variance is most likely to have been caused by

Nanjones Company manufactures a line of products distributed nationally through wholesalers. Presented below are planned manufacturing data for the year and actual data for November of the current year. The company applies overhead based on planned machine hours using a predetermined annual rate. Planning Data AnnualNovemberFixed overhead$1,200,000$100,000Variable overhead$2,400,000$220,000Direct labor hours48,0004,000Machine hours240,00022,000Data forNovemberDirect labor hours (actual)4,200Direct labor hours (plan based on output)4,000Machine hours (actual)21,600Machine hours (plan based on output)21,000Fixed overhead$101,200Variable overhead$214,000
';
Nanjones' total amount of overhead applied to production for November was

A company that manufactures a product using scarce and costly materials utilizes management by exception. The company's flexible budget indicated $2,000,000 of material costs, $3,000,000 of direct labor, and $5,000,000 of manufacturing overhead to support $20,000,000 of sales. Under this system, which one of the following variances would not be further investigated?

The following forecasted information is available for a manufacturing division for next year:

Amount
Category
(thousands)
Working capital
$ 1,800
Revenue
30,000
Plant and equipment
17,200
To establish a standard of performance for the division's manager using the residual income approach, four scenarios are being considered.
Target
Imputed Interest
Residual Income
1
15%
$2,000,000
2
12%
1,500,000
3
18%
1,250,000
4
10%
2,500,000
Which scenario assumes the lowest maximum cost?

A corporation operates three distinct profit centers, each of which sells a unique product. Each division currently rents its own warehouse with the following characteristics.
Annual Cost
Square Footage Required
Division 1
$325,000
65,000
Division 2
145,000
30,000
Division 3
30,000
5,000
The corporation has the opportunity to rent a warehouse containing 110,000 square feet for $480,700 per year. This facility would be shared by all three divisions with the additional unused space reserved for the anticipated growth of Division 3. If the corporation uses the incremental cost allocation method to assign the $480,700 cost of the large warehouse, the amount allocated to Division 3 would be

Sets with similar terms

Which of the following unfavorable cost variances would be would be the least relevant in evaluating the performance of a production supervisor?

Which of the following is the most probable reason a company would experience an unfavorable labor rate variance and a favorable efficiency variance?

Which of the following overhead variances would be helpful in bringing attention to a potential short term problem in the control of overhead costs?

Which of the following people is most likely responsible for an unfavorable variable overhead?