Question

Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.7 ounces $ 2.00 per ounce $ 15.40 Direct labor 0.2 hours $ 11.00 per hour $ 2.20 Variable overhead 0.2 hours $ 4.00 per hour $ .80 The company reported the following results concerning this product in June. Originally budgeted output 3,100 units Actual output 2,500 units Raw materials used in production 22,300 ounces Purchases of raw materials 23,400 ounces Actual direct labor-hours 450 hours Actual cost of raw materials purchases $ 45,100 Actual direct labor cost $ 13,100 Actual variable overhead cost $ 3,550 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for June is:

Multiple Choice

$8,150 U

$2,809 F

$2,809 U

$8,150 F

Wadding Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 4,500 machine-hours. Budgeted and actual overhead costs for the month appear below:

	Original Budget Based on 4,500 Machine-Hours			Actual Costs
Variable overhead costs:
Supplies	$	12,000		$	12,730
Indirect labor		38,400			38,700
Fixed overhead costs:
Supervision		20,600			20,240
Utilities		6,800			6,760
Factory depreciation		7,800			8,110
Total overhead cost	$	85,600		$	86,540

The company actually worked 4,520 machine-hours during the month. The standard hours allowed for the actual output were 4,510 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

Garrison 16e Rechecks 2017-10-31

Multiple Choice

$800 Favorable

$270 Favorable

$229 Favorable

$112 Unfavorable

The Fime Corporation uses a standard costing system. The following data have been assembled for December:

Actual direct labor-hours worked		5,700	hours
Standard direct labor rate	$	8	per hour
Labor efficiency variance	$	2,400	Unfavorable

The standard hours allowed for December’s production is:

Multiple Choice

5,100 hours

5,400 hours

6,000 hours

5,700 hours

Miguez Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		4.2	liters	$	8.90	per liter	$	37.38
Direct labor		0.3	hours	$	41.00	per hour	$	12.30
Variable overhead		0.3	hours	$	3.90	per hour	$	1.17

The company budgeted for production of 4,500 units in September, but actual production was 4,400 units. The company used 7,340 liters of direct material and 1,870 direct labor-hours to produce this output. The company purchased 7,700 liters of the direct material at $9.10 per liter. The actual direct labor rate was $43.10 per hour and the actual variable overhead rate was $3.70 per hour.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The variable overhead rate variance for September is:

Multiple Choice

$374 F

$264 F

$264 U

$374 U

The following labor standards have been established for a particular product:

Standard labor-hours per unit of output		9.1	hours
Standard labor rate	$	12.90	per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked		6,900	hours
Actual total labor cost	$	86,250
Actual output		900	units

What is the labor efficiency variance for the month?

Multiple Choice

$19,401 F

$16,125 F

$19,401 U

$16,641 F

At Eady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for July showed that actual maintenance costs totaled $10,480 and that the associated rate variance was $330 unfavorable. If 5,800 machine-hours were actually worked during July, the standard maintenance cost per machine-hour was:

Multiple Choice

$1.75 per MH

$1.86 per MH

$1.92 per MH

$1.81 per MH

The following standards for variable manufacturing overhead have been established for a company that makes only one product:

Standard hours per unit of output		5.4	hours
Standard variable overhead rate	$	11.80	per hour

The following data pertain to operations for the last month:

Actual hours		2,525	hours
Actual total variable manufacturing overhead cost	$	30,395
Actual output		250	units

What is the variable overhead efficiency variance for the month?

Multiple Choice

$600 U

$15,930 F

$13,865 U

$14,465 U

Answer 1

1) Labor rate variance = (AH × AR) − (AH × SR)=

($13,100) − (450 hours × $11.00 per hour)= $ 8,150 U

2)

Variable overhead costs:	Machine	Per machine	Per hour
Supplies	12000	4500	2.67
Indirect labor	38400	4500	8.53

Overhead Costs		Budget Based on Cost 4520 Formula MHs (per (AH × MH) SR)	Budget Based on 4,510 MHs (SH × SR)
Variable overhead costs:
Supplies	2.67	12,053.33	12,026.67	26.67
Indirect labor	8.53	38,570.67	38,485.33	85.33
				112.00	U

3)Labor efficiency variance = (AH − SH) × SR

2,400=(5,700-SH)*8

SH=6,000 Hours

4)Variable overhead rate variance = AH × (AR − SR)

=1,870*(3.70-3.90)

=374 F

5)labor efficiency variance= (900*9.1 - 6,900)12.9

=16,641F

6)standard maintenance cost per machine-hour= 10,480/(5800-330)

=1.92 Per MH

7) variable overhead efficiency variance= 11.8*(2,525-250*5.40)

=13,865 U