ACC 406 Lecture Notes - Lecture 8: Minivan, Corn Chip

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17 Apr 2016

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Chapter 10 standard costing: a managerial control tool. Budgets set standards that are used to control and evaluate managerial performance. They identify the revenues and costs in total that an organization should experience if plans are executed as expected. By comparing the actual costs and actual revenues with the corresponding budgeted amounts at the same level of activity, a measure of managerial efficiency emerges. Quantity standard: the amount of input that should be used per unit of output. Price standard: the amount that should be paid for the quantity of input to be used, joint responsibility of operations, purchasing, personnel and accounting. Unit standard: quantity standard x price standard, used to enhance cost control, budgeted unit" costs. Types of standards: ideal standards demand maximum efficiency, currently available standards can be achieved under efficient operating conditions and offer the most behavioural benefits. Unit standards are a fundamental requirement for a flexible budgeting system.

Related Questions

1. What is standard cost?
A. The total number of units times the budgeted amount expected
B. Any amount that appears on a budget
C. The total amount that appears on the budget for product costs
D. The amount management thinks should be incurred to produce a good or service

2. A standard cost is
A. the average cost in an industry.
B. a predetermined cost.
C. the historical cost of producing a product last year
D. a cost which is paid for a group of similar products.

3. The difference between a budget and a standard is that
A. a budget expresses what costs were, while a standard expresses what costs should be.
B. a budget expresses a total amount, while a standard expresses a unit amount.
C. a budget expresses management's plans, while a standard reflects what actually happened.
D. standards are excluded from the cost accounting system, whereas budgets are generally incorporated into the cost accounting system.

4. Standard costs may be used by
A. universities.
B. governmental agencies.
C. charitable organizations.
D. all of these answers are correct

5. The final decision as to what standard costs should be is the responsibility of
A. management.
B. the quality control engineer.
C. the purchasing agent.
D. the managerial accountants.

6. The most rigorous of all standards is the
A. normal standard.
B. realistic standard.
C. conceivable standard.
D. ideal standard.

7. An unfavorable materials quantity variance would occur if
A. more materials were purchased than were used.
B. actual pounds of materials used were greater than the standard pounds allowed
C. actual pounds of materials used were less than the standard pounds allowed
D. actual labor hours used were greater than the standard labor hours allowed

8. Which of the following statements is true?
A. Variances are the differences between total actual costs and total standard costs.
B. When actual costs exceed standard costs, the variance is favorable.
C. An unfavorable variance results when actual costs are decreasing but standards are not changed.
D. all of the above are true

10. Labor efficiency is measured by the
A. materials quantity variance.
B. labor quantity variance.
C. labor rate variance.
D. total labor variance.

tanpanda195

Hickory Furniture Company manufactures unfinished oak furniture.Hickory uses a A detailed estimate of what a product shouldcost.standard cost system. The direct labor, direct materials, andfactory overhead Performance goals, often relating to how much aproduct should cost.standards for an unfinished dining room tableare as follows:

Direct labor:	standard rate	$21 per hr.
	standard time per unit	3 hrs.
Direct materials (oak):	standard price	$10 per bd. ft.
	standard quantity	20 bd. ft.
Variable factory overhead:	standard rate	$2.4 per direct labor hr.
Fixed factory overhead:	standard rate	$0.8 per direct labor hr.

a. Determine the standard cost per dining roomtable. If required, round your answer to two decimal places.
$per table

b. A Accounting systems that use standards foreach element of manufacturing cost entering into the finishedproduct.standard cost system provides Hickory Furniture managementa cost control tool using the principle of management byexception

cost control

management by exception

. Using this principle, major < >majorminor costdeviations from standards can be investigated and corrected.

17 A manufacturing company that has only one product hasestablished the following standards for its variable manufacturingoverhead. Variable manufacturing overhead standards are based onmachine-hours.

Standard hours per unit of output	3.90	machine-hours
Standard variable overhead rate	$11.25	per machine-hour

The following data pertain to operations for the last month:

Actual hours	8,800	machine-hours
Actual total variable manufacturing overheadcost	$95,850
Actual output	2,200	units

What is the variable overhead efficiency variance for themonth?

$2,692 U

$7,513 F

$2,475 U

$7,513 U

18 The following materials standards have been established for aparticular product:


Standard quantity per unit of output	4.9	grams
Standard price	$12.00	per grams

The following data pertain to operations concerning the productfor the last month:


Actual materials purchased	3,800	grams
Actual cost of materials purchased	$ 44,270
Actual materials used in production	3,100	grams
Actual output	570	units

The direct materials purchases variance is computed when thematerials are purchased.

Required:
a.	What is the materials price variance for the month?(Input the amount as a positive value. Leave no cells blank- be certain to enter "0" wherever required. Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance.)

Materials Price Variance_______________

b.	What is the materials quantity variance for the month?(Input the amount a as positive value. Leave no cells blank- be certain to enter "0" wherever required. Indicate the effect ofeach variance by selecting "F" for favorable, "U" for unfavorable,and "None" for no effect (i.e., zero variance.)

Materials quantity variance____________

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ACC 406 Lecture Notes - Lecture 8: Minivan, Corn Chip

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