1. Discover Motor Company uses a standard cost system to collect costs related t
ID: 2381539 • Letter: 1
Question
1.
Discover Motor Company uses a standard cost system to collect costs related to the production of its toothpick motors. The direct labor standard for each toothpick motor is 1.25 hours at a standard cost of $9.50 per hour.
During the month of May, Discover's toothpick motor production used 5,900 direct labor-hours at a total direct labor cost of $54,575. This resulted in production of 4,800 toothpick motors for May. What is Discover's labor efficiency variance for the month of May?
a. $950 favorable b. $1,475 favorable c. $8,975 unfavorable d. $10,450 unfavorable
2.
Galimba Corporation, which produces commercial windows, has provided the following data:
Budget producttion.........6000 windows
Standard machine-hours per window..... 6.1 machine hours
Budget machine hours (6.1 x 6,000)..... 36,600 machine hours
Standard machine-hours allowed for the actual output (6.1 x 6,2000).... 37,820 machine hours
Actual machine hours........ 38,360 machine hours
Budget variable overhead cost per machine-hour:
Supplies............. $2.70 per machine hour
Actual total variable over head cost:
Supplies........... $108,725
The variable overhead rate variance for supplies is closest to:
a. $5,153 U b. $6,611 U c. $5,153 F d. $6,611 F
3.
The following standards for variable overhead have been established for a company that makes only one product:
Standard hours per unit of output.......... 9.7 hours
Standard variable overhead rate ......... $13.90 per hours
The following data pertain to operations for the last month:
What is the variable overhead rate variance for the month?
Actual Hours....... 8,200 hours
Actual total variable overhead cost........ $116,030
Actual output............ 800 units
a. $6,226 U b. $2,050 U c. $1,940 F d. $8,166 U
4.
Aase Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:
Budget level of Activity.......... 6,400 MHs
Actual level actuvity.... 6,000 MHs
Cost formula for variable overhead cost .........$6.60 per MHs
Budgeted fixed manufacturing overhead cost ........ $66,000
Actual total variable overhead ............$ 40,200
Acctual total fixed manufacturing over head.............. $66,000
What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
a. $2,040 favorable b. $600 unfavorable c. $2,640 favorable d. $600 favorable
5.
Massie Corporation, which produces commercial safes, has provided the following data:
Budget production................... 8,600 safes
Standard machine hour per safe.................9.8 machine hours
Standard supplies cost.............................$7.50 per machine hour
Actual production...................8,900 safes
Actual machine hours...............87,760 machine hours
Actual supplies cost.................... $653,203
The variable overhead efficiency variance for supplies is:
a. $4,050 F b. $18,947 F c. $18,947 U d. $4,050 U
6.
The materials quantity variance is computed based on the amount of materials purchased during the period.
a. TRUE b. FALSE
7.
Nodine Fabrication Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company's cost formula for variable overhead is $7.50 per MH. The company had budgeted its fixed manufacturing overhead cost at $48,000 for the month. During the month, the actual total variable overhead was $59,760 and the actual total fixed manufacturing overhead was $45,000. The actual level of activity for the period was 8,300 MHs. What was the total of the variable overhead rate and fixed manufacturing overhead budget variances for the month?
a. $2,490 favorable b. $5,490 favorable c. $5,490 unfavorable d. $2,490 unfavorable
8.
Cole laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Quantity Standard cost per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Varable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on Jan. 1. Variable overhead is applied to production on the basis of standard direct labor-hours. During January, the following activity was recorded by the company:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on Jan. 31: 3,000 pounds
The materials quantity variance for January is:
a. $800 U b. $300 U c. $300 F d. $750 F
9.
The following data have been provided by Dicus Corporation:
Budget production.................... 1,200 units
standard machine hours per unit.................. 1.7 machine hours
Standard lubricants................ $1.00 per machine
Standard supplies................... $ 1.50 pert machine
Actual production.................... 1,400 units
Actual machine hours (total)...........2,500 machine hours
Actual Lubricant (total).................. $2,387
Actual supplies (total)....................$3,703
The variable overhead rate variance for supplies is closest to:
a. $133 U b. $47 F c. $180 U d. $133 F
10.
The following standards for variable overhead have been established for a company that makes only one product:
Standard hours per unit of output.......3.7 hours
Standard variable overhead rate...........$17.60 per hour
The following data pertain to operations for the last month:
Actual Hours.................... 8,900 hours
Actual total variable overhead cost............. $153,970
Actual output..................... 2,300 units
What is the variable overhead efficiency variance for the month?
a. $2,553 U b. $6,747 U c. $6,747 F d. $6,864 U
Explanation / Answer
1.
Discover Motor Company uses a standard cost system to collect costs related to the production of its toothpick motors. The direct labor standard for each toothpick motor is 1.25 hours at a standard cost of $9.50 per hour.
During the month of May, Discover's toothpick motor production used 5,900 direct labor-hours at a total direct labor cost of $54,575. This resulted in production of 4,800 toothpick motors for May. What is Discover's labor efficiency variance for the month of May?
a. $950 favorable
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