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    Chapter 08 - Questions

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    gurnoorkaurgilll
    The document contains three short exercises and one long problem about standard costing variances. The exercises ask to calculate direct material, direct labor, and variable manufacturing overhead variances. The long problem asks to complete a table of budgeted, actual, and variance information and explain possible causes of variances.

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    Chapter 08 - Questions

    Uploaded by

    gurnoorkaurgilll
    28 views2 pages
    The document contains three short exercises and one long problem about standard costing variances. The exercises ask to calculate direct material, direct labor, and variable manufacturing overhead variances. The long problem asks to complete a table of budgeted, actual, and variance information and explain possible causes of variances.

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    ACCT 322

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    The document contains three short exercises and one long problem about standard costing variances. The exercises ask to calculate direct material, direct labor, and variable manufacturing overhead variances. The long problem asks to complete a table of budgeted, actual, and variance information and explain possible causes of variances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    28 views2 pages

    Chapter 08 - Questions

    Uploaded by

    gurnoorkaurgilll
    The document contains three short exercises and one long problem about standard costing variances. The exercises ask to calculate direct material, direct labor, and variable manufacturing overhead variances. The long problem asks to complete a table of budgeted, actual, and variance information and explain possible causes of variances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    End of Chapter “A” Chapter 8: Standard Costing Exercises (Short Questions)

    Exercise 8A-1

    Target Industries manufactures a mold-formed dog dish made out of plastic. The standard quantity of
    material input is 2.2 L of a liquified petroleum product with a standard cost of $1.76/L. In 2021 Target
    produced 8,000 dog dishes consuming 16,400 L of the input material at a cost of $30,340.
    Determine
    a. the direct material quantity variance (include U or F)

    b. the direct material price variance (include U or F)

    c. the spending variance (include U or F)

    (301/LO8.2/medium)

    Exercise 8A-2

    On average, Target’s standard is to produce one dog dish for every 15 minutes of labour, with a
    standard labour cost of $24/hour. In 2021, workers logged 2,400 hours at a cost of $50,400 in the
    production of 8,000 dog dishes.
    Determine
    a. the direct labour efficiency variance (include U or F)

    b. the direct labour rate variance (include U or F)

    c. the direct labour spending variance (include U or F)

    (304/LO8.3/medium)

    Exercise 8A-3

    Maximum Machining Company applies manufacturing overhead to its products based on actual machine
    hours used. The standard is based on budgeted variable manufacturing overhead of $400,000 for the
    production of 80,000 units requiring a total of 160,000 machine hours. In 20X2, the actual variable
    manufacturing overhead cost were $394,680 using 171,600 machine hours to produce 78,000 units.
    Determine
    a. the variable manufacturing overhead spending variance (include U or F)

    b. the variable manufacturing overhead efficiency variance (include U or F)

    c. the variable manufacturing overhead total variance (include U or F)

    (307/LO8.4/medium)
    End of Chapter “A” Chapter 8: Standard Costing Problems (Long Questions)

    Problem 8A-1

    Barracuda Industries has the following incomplete information available regarding its budgeted and
    actual variable costs for 20X1 and their variances. Barracuda allocates variable manufacturing overhead
    on the basis of machine hours.

    Required:
    a. Please complete the table based on the information that is provided. The grey-shaded cells
    must be solved first and can be solved based on information that is provided. The second group
    to be solved have green-shaded backgrounds. After these are solved, others will follow.

    Budgeted Values Actual values


    Quantity to produce: 10,000 Quantity produced: 12,000
    Direct Materials Required (kg): 150,000 Direct Materials Used (kg):
    Direct Materials cost/kg: Direct Materials Cost/kg: $16.00
    Direct Labour Hours Required: Direct Labour Hours Used: 32,000
    Direct Labour Rate ($/dlh): $40.00 Direct Labour Rate ($/dlh):
    Machine Hours: 15,000 Machine Hours Used:
    Variable Mfg Overhead Costs: $90,000 Var. Mfg Overhead Incurred: $100,000

    Standard
    Variance costs at
    Actual Costs Name Standard Variance standard
    at actual Amount costs at actual Name amounts
    quantity (F/U) quantity Amount (F/U) (budget)
    Direct Materials

    $3,120,000
    Total Variance: $60,000 U
    Direct Labour
    Rate Efficiency
    Variance Variance
    $64,000 F $80,000 U
    Total Variance:
    Var. Mfg. Ovrhd
    Efficiency
    Variance
    -
    Total Variance:

    b. Based on the information provided, suggest at least one possible explanation for one of the
    variances of each variable cost component.
    (401/LO8.2,3,4/Difficult)

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