Name: ID: A Actual $12.25 17,955 9,450 $12.00 Rate Hours Units of Production Cal

Question

Name: ID: A Actual $12.25 17,955 9,450 $12.00 Rate Hours Units of Production Calculate the Total Direct Labor Variance using the above information a. $2,051.25 Favorable b. $2,051.25 Unfavorable c. $2,362.50 Unfavorable d. $2,362.50 Favorable The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Standard: 25,000 hours at $10 $250,000 Variable factory overhead Fixed factory overbead $202,500 60,000 Actual: 6. What is the amount of the factory overhead volume variance? a. $12,500 favorable b. $10,000 unfavorable c. $12,500 unfavorable d. $10,000 favorable The controllable variance measures: a. operating results at less than normal capacity b. the efficiency of using variable overhead resources c. operating results at more than normal capacity d. control over fixed overhead costs All of the following are advantages of decentralization except. a. Managers make better decisions when closer to the operation of the company. b. Expertise in all areas of the business is difficult, decentralization makes it better to delegate certain responsibilities. Each decentralized operation purchases their own assets and pays for operating costs. c. Decentralized managers can respond quickly to customer satisfaction and quality service. d. Which of the following expenses incurred by a department store is an indirect expense? a. Insurance on merchandise inventory b. Sales salaries c. Depreciation on store equipment d. Salary of vice-president of finance

Explanation / Answer

Direct labour variance = Standard cost of labour - actual cost of labour

= 18500*12 - 17955*12.25

= 2051.25 Favorable

B) Factory overhead Variance = 202500+60000-250000

= 12500 unfavorable

C) B. Since the controllable variance measures how much efficient the variable overhead resources are.

D) C. Since even in a decentralised operations, the managers doesn't pay for their assets separately.

E) D. Since salary of VP is not easy to allocate to cost objects, hence indirect cost.

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