Standard Costs and Variance Analysis Paper 14

1

Samuel Company provided the following data for June production activity. Samuel uses a two-way analysis of overhead variances.
Actual variable factory overhead incurred $294,000
Variable factory overhead rate per DLH $6.00
Standard DLH allowed 49,500
Actual DLH 48,000
The budget (controllable) variance for June, assuming that budgeted fixed overhead costs equal actual fixed costs, is






2

A company applies variable overhead based upon direct labor hours and has a variable overhead efficiency variance that is $25,000 favorable. A possible cause of this variance is that






3

Brannen Videotronics uses a four-way allocation of overhead, machine hours to allocate overhead, and years of experience as the main determinant for wage increases. The standards are set and revised on an annual basis. Due to a surge in competitive pressures, Brannen’s management decided to undertake downsizing. Brannen offered incentives that permitted a large number of senior employees to opt in the middle of the year for early retirement. As a result, Brannen had to bring in temporary replacements who were paid entry-level wages to see that work deadlines were met. Which one of the following is most likely to result from this situation?






4

Honolee Manufacturing 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






5

Cordell Company uses a standard cost system. On January 1 of the current year, Cordell budgeted fixed manufacturing overhead cost of $600,000 and production at 200,000 units. During the year, the firm produced 190,000 units and incurred fixed manufacturing overhead of $595,000. The production volume variance for the year was






6

Highlight, Inc. uses a standard cost system and applies factory overhead to products on the basis of direct labor hours. If the firm recently reported a favorable direct labor efficiency variance, then the






7

Harper Company’s performance report indicated the following information for the past month.
Actual total overhead $1,600,000
Budgeted fixed overhead 1,500,000
Applied fixed overhead at $3 per labor hour 1,200,000
Applied variable overhead at $.50 per labor hour 200,000
Actual labor hours 430,000
Harper’s total overhead spending variance for the month was






8

The JoyT Company manufactures Maxi Dolls for sale in toy stores. In planning for this year, JoyT estimated variable factory overhead of $600,000 and fixed factory overhead of $400,000. JoyT 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 JoyT 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 JoyT for this year was






9

A company has a fixed overhead volume variance that is $10,000 unfavorable. The most likely cause for this variance is that






10

When using a flexible budgeting system, the computation for the variable overhead spending variance is the difference between






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