Chapter 21: Q7DQ (page 967)
What is a price variance? What is a quantity variance?
The price variance denotes the difference between the actual and standard prices. The quantity variance indicates the variations between the actual and standard quantity used.
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Describe the concept of management by exception and explain how standard costs help managers apply this concept to control costs.
Frontera Company’s output for the current period results in a \(20,000 unfavorable direct labor rate variance and a \)10,000 unfavorable direct labor efficiency variance. Production for the current period was assigned a $400,000 standard direct labor cost. What is the actual total direct labor cost for the current period?
Refer to the information in Problem 21-4B.
Required Compute these variances:
(a) variable overhead spending and efficiency,
(b) fixed overhead spending and volume, and
(c) total overhead controllable.
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
Refer to the information in Exercise 21-8 and compute the (1) direct labor rate and (2) direct labor efficiency variances. Indicate whether each variance is favorable or unfavorable.
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