ACC 200 Lecture Notes - Lecture 10: Standard Cost Accounting, Weighted Arithmetic Mean, Target Costing

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purplewater-buffalo170

17 Nov 2017

School

NCSU

Department

Accounting

Course

ACC 200

Professor

Christopher Tague Mc Kittrick

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Document Summary

Unit standards and basic concepts of standard costing. Budgets set standards that are used to control and evaluate managerial performance. To determine the unit standard cost for a particular input, two decisions must be made: The quantity decision: the amount of input that should be used per unit of output. The pricing decision: the amount that should be paid per unit of the input to be used. The unit standard cost can be computed by multiplying these two standards: Standard cost per unit = quantity standard price standard. Three potential sources of quantitative standards are as follows: Historical experience: provides an initial guideline for setting standards, but should be used with caution because it can perpetuate existing inefficiencies. Engineering studies: identifies efficient approaches and can provide rigorous guidelines, but engineered standards often are too rigorous. Input from operating personnel: since operating personnel are accountable for meeting standards, they should have significant input in setting standards.

Related Questions

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____________

purplemarten16

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

Diamond Company produces a single product. Thecompany has set the following standards for materials andlabor:

	Standard quantity or hours per unit	Standard price or rate
Direct materials	?pounds per unit	$?per pound
Direct labor	4.0hours per unit	$10per hour

During the past month, the company purchased11,000 pounds of direct materials at a cost of $30,250. All of thismaterial was used in the production of 1,700 units of product.Direct labor cost totaled $69,550 for the month. The followingvariances have been computed:


Materials quantity variance	$	2,360	U
Total materials variance	$	160	U
Labor efficiency variance	$	3,000	F

Required:
1.	Fordirect materials:

a.	Compute the standard price per pound ofmaterials. (Round yourintermediate calculations and final answer to 2 decimal places.Omit the "$" sign in your response.)

Standard price

$per pound

b.	Compute the standard quantity allowed formaterials for the month's production. (Round your intermediate calculations to 2decimal places.)

Standard quantity

pounds

c.	Compute the standard quantity of materialsallowed per unit of product. (Round your intermediate calculations to 2decimal places.)

Standard quantity

pounds per unit

2.	Fordirect labor:

a.	Compute the actual direct labor hours for themonth.

Actual direct labor hours

Compute the labor rate variance. (Input the amount as a positive value. Leaveno cells blank - be certain to enter "0" wherever required.Indicate the effect of each variance by selecting "F" forfavorable, "U" for unfavorable, and "None" for no effect (i.e.,zero variance). Round your intermediate calculations to 2decimal places. Omit the "$" sign in yourresponse.)

Labor rate variance

(Click to select)FUNone

beigealpaca80

ACC 200 Lecture Notes - Lecture 10: Standard Cost Accounting, Weighted Arithmetic Mean, Target Costing

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