Ch8 6) ShipCo. produces storage crates that require 1.2 meters of material at $.
ID: 2473061 • Letter: C
Question
Ch8
6) ShipCo. 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 assigned 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?
$25.02.
$11.52.
$2.40.
$2.52.
$3.42.
7) Levelor Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity). If overhead actually incurred was $11,183 during May, the controllable variance for the month was:
$473 unfavorable.
$473 favorable.
$1,530 favorable.
$1,530 unfavorable.
$1,057 favorable.
8) Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. p unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:
$6,000F.
$6,000U.
$78,000U.
$78,000F.
$0.
9) A flexible budget may be prepared:
Before the operating period only.
After the operating period only.
During the operating period only.
At any time in the planning period.
Only when the company encounters excessive costs.
10) A company provided the following direct materials cost information. Compute the cost variance.
$2,500 Favorable.
$78,250 Favorable.
$78,250 Unfavorable.
$80,750 Favorable.
$80,750 Unfavorable.
Standard costs assigned: Direct materials standard cost (405,000 units @ $2/unit) $810,000 Actual costs: Direct Materials costs incurred (403,750 units @ $2.20/unit) $888,250Explanation / Answer
Answer 6:-
Standard Cost for one unit of product = $3.42
Material Cost per unit = 1.2meter * $0.85 = $1.02
D.Labour Cost per unit= 0.1hr * $15 = $1.5
Overhead cost per unit= 0.1hr * $9 = $0.9
Total Standard cost p.u= $3.42
Answer 7 :- Overhead Cost at 75% Capacity in Budget = $10,710
Standard Overhead Cost at 90% capacity = $2 * 6,120 hrs = $12,240
Actual Overhead incurred = $11,183
Controllable variance for the month at 75% capacity = Budgeted Overhead - Actual overhead
= 10,710 - 11,183
= 473 Unfavorable
Answer 8 :- Standard Variabe OH cost p.u = $6 (2hr * $3/hr)
Actual Variable OH cost p.u = $150,000/24000unit = $6.25
Variable OH Variance = Standard OH Cost - Actual OH cost
= (6 - 6.25) * 24000units
= 6,000 Unfavorable
Answer 9 :- Flexible Budget
Flexible budgets are prepared at the end of the period, when actual output is known. Flexible budget calculates different expenditure levels for variable costs, depending upon changes in actual revenue. The result is a budget that varies, depending on the activity levels experienced. You input the actual revenues or other activity measures into the flexible budget once an accounting period has been completed, and it generates a budget that is specific to the input.
Therefore Flexible budget may be prepared after the operating period only.
Answer 10 :- Cost Variance
Cost Variance = Standard Cost - Actual Cost
= 810,000 - 888,250
=78,250 Unfavorable