33:010:272 Lecture Notes - Lecture 1: Standard Cost Accounting, Lump Sum

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mauvepanda39

5 May 2016

School

Rutgers University

Department

Accounting

Course

33:010:272

Professor

S A V I T A S A H A Y

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Document Summary

Ames air force base has a bay that specializes in maintenance for aircraft engines. It uses standard costing and flexible budgets to account for this activity. For 2014, budgeted variable overhead at a level of 8,000 standard monthly direct labor-hours was ,000; budgeted total overhead at 10,000 standard monthly direct labor-hours was ,600. The standard cost allocated to repair output included a total overhead rate of 120% of standard direct labor costs. For february, ames incurred total overhead of ,000 and direct labor costs of. The direct labor price variance was ,640 unfavorable. The direct labor flexible-budget variance was ,440 unfavorable. The standard labor price was per hour. Required: compute the direct labor efficiency variance, compute the denominator level and the spending and efficiency variances for total overhead, describe how individual variable overhead items are controlled from day to day. Also, describe how individual fixed overhead items are controlled.

Related Questions

The Clark Company makes a certain product and uses a standard cost system. Some data concerning this product for the month of May are as follows: Labor rate variance $7,000 F Labor efficiency $12,000 F Variable overhead efficiency variance $4,000 F Number of units of finished products made 10,000 Standard labor rate $12/direct labor hour Standard variable overhead rate $ 4/direct labor hour Actual labor hours used 14,000 Actual variable overhead costs incurred $58,290 1. The actual overhead spending variance for May was ________ 2. The actual direct labor rate for May in dollars per hour was ______ 3. The total standard cost for direct labor for May was ______ 4. The total standard cost for variable overhead for May was _____. 5. The standard hours allowed to make one unit of product are _______.

bluebuffalo29

9.the direct labor efficiency variance is thedifference between standard direct labor hours allowed for the goodunit produced in the?
A. standard hours allowed and the standard rate per hour.
B. actual direct labor hours worked multiplied by the standarddirect labor rate
C. direct labor rate per hour
D. none of the above

10. an unfavorable fixed overhead volume varianceexists when?
A. budgeted fixed overhead for the level of production is less thanfixed overhead applied
B. total fixed overhead is less than the predetermined overheadrate
C budgeted fixed overhead for the level of production exceedsstandard fixed overhead applied
D. none of the above obtain

âWonderful! Not only did our salespeople do a good job inmeeting the sales budget this year, but our production people did agood job in controlling costs as well,â said Kim Clark, presidentof Martell Company. âOur $42,400 overall manufacturing costvariance is only 4% of the $1,536,000 standard cost of productsmade during the year. Thatâs well within the 3% parameter set bymanagement for acceptable variances. It looks like everyone will bein line for a bonus this year.â

The company produces and sells a single product. The standardcost card for the product follows:

Standard Cost Cardâper Unit

Direct materials,5.00 feet at $3.50 per foot

17.50

Direct labor, 2.4direct labor-hours at $15 per direct labor-hour

36.00

Variable overhead,2.4 direct labor-hours at $1.50 per direct labor-hour

3.60

Fixed overhead, 2.4direct labor-hours at $7.50 per direct labor-hour

18.00

Standard cost perunit

75.10

The following additional information is available for the yearjust completed:

a.	The company manufactured 30,000units of product during the year.

b.	A total of 147,000 feet of material was purchased during theyear at a cost of $3.70 per foot. All of this material was used tomanufacture the 30,000 units. There were no beginning or endinginventories for the year.

c.	The company worked 75,000 direct labor-hours during the year ata direct labor cost of $14.80 per hour.

Overhead is applied to products on the basis of standard directlabor-hours. Data relating to manufacturing overhead costsfollow:


Denominator activitylevel (direct labor-hours)		70,000
Budgeted fixedoverhead costs	$	525,000
Actual variableoverhead costs incurred	$	120,000
Actual fixedoverhead costs incurred	$	521,500

Required:

Compute the materials price and quantity variances for the year.(Round Standard Price and Actual Price to 2 decimal places.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance).)


	â	Ã	=	Variance
Materials price variance
	â	Ã	=	Variance
Materials quantityvariance

Compute the labor rate and efficiency variances for the year.(Round Standard Rate and Actual Rate to 2 decimal places.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance).)


	â	Ã	=	Variance
Labor rate variance
	â	Ã	=	Variance
Labor efficiency variance

3.	For manufacturing overheadcompute:

The variable overhead rate and efficiency variances for theyear. (Round Standard Rate and Actual Rate to 2 decimalplaces. Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance).)


	â	Ã	=	Variance
Rate variance
	â	Ã	=	Variance
Efficiency variance

The fixed overhead budget and volume variances for the year.(Indicate the effect of each variance by selecting "F"for


Budget variance
Volume variance

favorable, "U" for unfavorable, and "None" for no effect(i.e., zero variance).)

emeraldcaribou978

33:010:272 Lecture Notes - Lecture 1: Standard Cost Accounting, Lump Sum

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