Scribd
Upload
215 views

Standard Costing Exercises

The document provides examples of calculating variances for materials, labor, and overhead. It includes variance calculations for price, quantity, rate, efficiency, budget, and volume variances. The examples use standard costs, actual costs, quantities, and hours to calculate the variances. The variances are identified as favorable or unfavorable.

Uploaded by

Vatchdemon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
215 views

Standard Costing Exercises

The document provides examples of calculating variances for materials, labor, and overhead. It includes variance calculations for price, quantity, rate, efficiency, budget, and volume variances. The examples use standard costs, actual costs, quantities, and hours to calculate the variances. The variances are identified as favorable or unfavorable.

Uploaded by

Vatchdemon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 6

A.

The following materials standards have been established for a particular product:

   

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

   

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month? 

a. Materials price variance = (AQ x AP) - (AQ x SP)


= $139,400 - (8,500 x $15.60) = $6,800 U

b. SQ = Standard quantity per unit x Actual output


= 5.2 x 1,640 = 8,528

Materials quantity variance = SP(AQ - SQ)


= $15.60(8,200 - 8,528) = $5,117 F

B. The following standards have been established for a raw material used to make product N04:

   

The following data pertain to a recent month's operations:

   

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month? 

a. Materials price variance = (AQ x AP) - (AQ x SP)


= $82,680 - (5,200 x $15.50) = $2,080 U

b. Materials quantity variance = SP(AQ - SQ*)


= $15.50(4,600 - 4,752) = $2,356 F

*SQ = Standard quantity per unit x Actual output = 2.7 x 1,760 = 4,752
C. The standards for product J35 call for 1.0 pounds of a raw material that costs $15.60 per
pound. Last month, 5,700 pounds of the raw material were purchased for $90,345. The actual
output of the month was 5,280 units of product J35. A total of 5,200 pounds of the raw material
were used to produce this output.

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month? 

a. Materials price variance = (AQ x AP) - (AQ x SP)


= $90,345 - (5,700 x $15.60) = $1,425 U

b. Materials quantity variance = SP(AQ - SQ*)


= $15.60(5,200 - 5,280) = $1,248 F

*SQ = Standard quantity per unit x Actual output


= 1.0 x 5,280 = 5,280

D. The following direct labor standards have been established for product W88V:

   

The following data pertain to last month's operations:

   

Required:

a. What was the labor rate variance for the month?

b. What was the labor efficiency variance for the month? 

a. Labor rate variance = (AH x AR) - (AH x SR)


= $76,995 - (5,900 x $12.10) = $5,605 U

b. Labor efficiency variance = SR(AH - SH*)


= $12.10 (5,900 - 5,920) = $242 F

*SH = Standard hours per unit x Actual output = 4.0 x 1,480 = 5,920
E. The standards for product M74M specify 2.5 direct labor-hours per unit at $13.20 per direct
labor-hour. Last month 3,160 units of product M74M were produced using 8,100 direct labor-
hours at a total direct labor wage cost of $104,085.

Required:

a. What was the labor rate variance for the month?

b. What was the labor efficiency variance for the month? 

a. Labor rate variance = (AH x AR) - (AH x SR)


= $104,085 - (8,100 x $13.20) = $2,835 F

b. Labor efficiency variance = SR(AH - SH*)


= $13.20 (8,100 - 7,900) = $2,640 U

*SH = Standard hours per unit x Actual output = 2.5 x 3,160 = 7,900

F. Sifford Corporation, which makes landing gears, has provided the following data for a recent
month:

   

Required:

Determine the rate and efficiency variances for the variable overhead item supplies and indicate
whether those variables are favorable or unfavorable. Show your work! 

Standard machine-hours allowed for the actual output = 9.4 x 8,500 = 79,900

Variable overhead rate variance = (AH x AR) - (AH x SR)


= $210,524 - (79,030 x $2.40) = $210,524 - $189,672 = $20,852 U
Variable overhead efficiency variance = (AH x SR) - (SH x SR)
= (79,030 x $2.40) - (79,900 x $2.40) = $189,672 - $191,760 = $2,088 F
G. Huger Corporation makes automotive engines. For the most recent month, budgeted
production was 6,900 engines. The budgeted power cost is $5.10 per machine-hour. The
company's standards indicate that each engine requires 7.5 machine-hours. Actual production
was 7,000 engines. Actual machine-hours were 53,240 machine-hours. Actual power cost totaled
$247,598.

Required:

Determine the rate and efficiency variances for the variable overhead item power cost and
indicate whether those variances are unfavorable or favorable. Show your work! 

Rate Variance= 23,926 F Efficiency Variance= 3,774 U

Standard machine-hours allowed for the actual output = 7.5 x 7,000 = 52,500
Variable overhead rate variance = (AH x AR) - (AH x SR)
= $247,598 - (53,240 x $5.10) = $247,598 - $271,524 = $23,926 F
Variable overhead efficiency variance = (AH x SR) - (SH x SR)
= (53,240 x $5.10) - (52,500 x $5.10) = $271,524 - $267,750 = $3,774 U

H. Karrenberg Corporation keeps careful track of the time required to fill orders. The times
required for a particular order appear below:

   

Required:

a. Determine the throughput time. Show your work!

b. Determine the manufacturing cycle efficiency (MCE), Show your work!

c. Determine the delivery cycle time. Show your work! 

= 0.6 hours + 0.3 hours + 2.1 hours + 8.4 hours


= 11.4 hours

b. MCE = Value-added time/Throughput time = 0.6 hours/11.4 hours = 0.05

c. Delivery cycle time = Wait time + Throughput time


= 14.0 hours + 11.4 hours = 25.4 hours
I. Sucharzewski Corporation's management keeps track of the time it takes to process orders.
During the most recent month, the following average times were recorded per order:

   

Required:

a. Compute the throughput time. 7.1 days

b. Compute the manufacturing cycle efficiency (MCE). 1.1 / 7.1= 15.49%

c. What percentage of the production time is spent in non-value-added activities?

d. Compute the delivery cycle time. 14.9 days

a. Throughput time = Process time + Inspection time + Move time + Queue time
= 1.1 days + 0.4 days + 0.8 days + 4.8 days = 7.1 days

b. MCE = Value-added time (Process time)     Throughput time


= 1.1 days     7.1 days = 0.15

c. Percentage of time spent on non-value-added activities = 100% - MCE%


= 100% - 15% = 85%

d. Delivery cycle time = Wait time + Throughput time = 7.8 days + 7.1 days
= 14.9 days

J. Shiplett Corporation applies overhead to products based on machine-hours. The denominator


level of activity is 8,800 machine-hours. The budgeted fixed manufacturing overhead costs are
$317,680. In March, the actual fixed manufacturing overhead costs were $314,300 and the
standard machine-hours allowed for the actual output were 8,500 machine-hours.

Required:

a. Compute the budget variance for March. Show your work! 3,380F

b. Compute the volume variance for March. Show your work! 317,680 – 306,850= 10,830U

a. Budget variance = Actual fixed manufacturing overhead cost - Budgeted fixed manufacturing
overhead cost = $314,300 - $317,680 = $3,380 F

b. Fixed portion of the predetermined overhead rate = $317,680/8,800 machine-hours = $36.10


per machine-hour
Volume variance = Fixed portion of the predetermined overhead rate x (Denominator hours -
Standard hours allowed) = $36.10 x (8,800 - 8,500) = $10,830 U

 
K. Modine Corporation has provided the following data for September.

   

Required:

a. Compute the budget variance for September. Show your work! 41,740 – 42,400= 660F

b. Compute the volume variance for September. Show your work! 42,400 – 53,000 = 10,600F

a. Budget variance = Actual fixed manufacturing overhead cost - Budgeted fixed manufacturing
overhead cost = $41,740 - $42,400 = $660 F

b. Volume variance = Fixed portion of the predetermined overhead rate x (Denominator hours -
Standard hours allowed) = $26.50 x (1,600 - 2,000) = $10,600 F

You might also like