ACCTMIS 2300 Lecture 8: Standard Costing Notes

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fuchsiaelk478

29 Oct 2017

School

Ohio State University

Department

Accounting and Management Info

Course

ACCTMIS 2300

Professor

Marc Smith

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Document Summary

How much we should pay for an input. How much input we should use to make product or provide service. Variable manufacturing costs that have standards a) b) c) Detailed list of standards to make a unit of your product. Any differences deemed significant are brought to management. Price variance: difference between actual price and standard. Quantity variance: difference between actual quantity vs standard. Determined separately b/c: different managers responsible for buying and then using these inputs. Also buying and using activities occur at different points in time. Price variance: (aq * ap) - (aq*sp) b) Aq = actual quantity of dm purchased! i) ii) iii) iv) v) Quantity variance: (aq * sp) - (sq * sp) i) ii) iii) Aq = actual quantity of dm used in. Sq = (standard quantity of dm per unit * number of units produced) Rate variance: (ah * ar) - (ah * sr) i) ii) iii) iv)

Related Questions

1)Which of the following represents the correct order for preparing the indicated budget documents for a manufacturing company?

A. Sales budget, cash budget, direct materials budget, direct labor budget

B. Sales budget, cash budget, production budget, direct materials budget

C. Production budget, sales budget, direct materials budget, direct labor budget

D. Production budget, direct labor budget, direct materials budget, cash budget

2). Ideal standards

A. generally provide the best motivation for workers.

B. make allowances for waste, spoilage and machine breakdowns.

C. are better suited for cash budgeting than practical standards.

D. aid the planning of managers seeking continual improvement.

3). ABC Company planned to produce 3,000 cell phone covers during November. The standards for one cell phone cover specify 6 ounces of resin at $0.30 per ounce. Actual production in November was 3,100 cell phone covers. There was an unfavorable materials price variance of $380 and a favorable materials quantity variance of $120. Based on these variances one could conclude

A. more materials were purchased than were used.

B. more materials were used than were purchased.

C. the actual cost per pound for materials was less than the standard cost per pound

D. the actual usage of materials was less than the standard allowed.

4). The following variable overhead standards have been established for a particular product:

Standard variable overhead rate $1.70 per direct labor hour

Standard labor-hours per unit of output .80 hours per unit

Budgeted production 9,800 units

The following data pertain to operations concerning the product for the last month:

Actual hours worked 7,980

Actual total variable overhead cost $14,364

Actual output 9,900 units

What is the variable overhead rate variance?

A. 798 U

B. 792 U

C. 102U

D. 238 U

Milton company produces a product, the company uses a standardcost system.

Standardquantity/hours Standardprice/rate Standard variable cost/unit

DM ? $5/lb ?

DL ? ? ?

VariableOH ? $4/lb ?

During the month 500 items were produced and sold. Selectedinformation is given below.

MaterialUsed DirectLabor Variable Manufacturing OH

Total standardcost $12,800 $8,500 $1,700

for months production

Actual costsincurred $12,000 ? $1,720

Material Pricevariance ?

Material Quantity Variance $2,200 U

The following additional information is available forAugust.

Actual direct labor hours 450 hours

Difference between actual and standard variable cost peritem $0.15 Unfavorable

Assuming all materials purchased have been used in productiondetermine:

Direct labor rate variance:

a. $355U

b.$355F

c. $500F

d. $500U

$1710U

Variable overhead efficiency variance

a. $270U

b. $80F

c. $80U

d. $100F

e. $100U

brownbear692

Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the companyâs products, a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 3,500 helmets, using 2,555 kilograms of plastic. The plastic cost the company $19,418. According to the standard cost card, each helmet should require 0.65 kilograms of plastic, at a cost of $8.00 per kilogram. Required:

PART 1. According to the standards, what cost for plastic should have been incurred to make 3,500 helmets? How much greater or less is this than the cost that was incurred? (Round Standard kilograms of plastic per helmet to 2 decimal places.)


Number of helmets
Standard kilograms of plastic per helmet
Total standard kilograms allowed
Standard cost per kilogram
Total standard cost
Actual cost incurred
Total standard cost
Total material varianceâunfavorable

PART2.

Break down the difference computed in (1) above into a materials price variance and a materials quantity variance. (Round your actual materials price to two decimal places, and round your final answers to the nearest whole dollar. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)


Materials price variance
Materials quantity variance

bluehyena306

ACCTMIS 2300 Lecture 8: Standard Costing Notes

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