Chapter 21: Q17DQ (page 967)
List at least two positive and two negative features of standard costing systems.
The standard costing system is considered easy for inventory management. At the same time, it does not present some variances.
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Presented below are terms preceded by letters a through j and a list of definitions 1 through 10. Enter the letter of the term with the definition, using the space preceding the definition.
| 1. The difference between actual and budgeted sales or cost caused by the difference between the actual price per unit and the budgeted price per unit. |
| 2. A planning budget based on a single predicted amount of sales or production volume; unsuitable for evaluations if the actual volume differs from the predicted volume. |
| 3. Preset costs for delivering a product, component, or service under normal conditions. |
| 4. A process of examining the differences between actual and budgeted sales or costs and describing them in terms of the amounts that resulted from price and quantity differences. |
| 5. The difference between the total budgeted overhead cost and the overhead cost that was allocated to products using the predetermined fixed overhead rate. |
| 6. A budget prepared based on predicted amounts of revenues and expenses corresponding to the actual level of output. |
| 7. The difference between actual and budgeted cost caused by the difference between the actual quantity and the budgeted quantity. |
| 8. The combination of both overhead spending variances (variable and fixed) and the variable overhead efficiency variance. |
| 9. A management process to focus on significant variances and give less attention to areas where performance is close to the standard. |
| 10. The difference between actual cost and standard cost, made up of a price variance and a quantity variance. |
Mosaic Company applies overhead using machine hours and reports the following information. Compute the total variable overhead cost variance and classify it as favorable or unfavorable.
Actual machine hours used 4,700 hours
Standard machine hours (for actual production) 5,000 hours
Actual variable overhead rate per hour \(4.15
Standard variable overhead rate per hour \)4.00
Juan Company’s output for the current period was assigned a \(150,000 standard direct materials cost. The direct materials variances included a \)12,000 favorable price variance and a $2,000 favorable quantity variance. What is the actual total direct materials cost for the current period?
In general, variance analysis is said to provide information about __________ and ____________ variances.
AirPro Corp. reports the following for November. Compute the total overhead variance and controllable overhead variance for November and classify each as favorable or unfavorable.
Actual total factory overhead incurred \(28,175
Standard factory overhead:
Variable overhead \)3.10 per unit produced
Fixed overhead
(\(12,000/12,000 predicted units to be produced) \)1 per unit
Predicted units to produce 12,000 units
Actual units produced 9,800 units
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