COST ACCOUNTING AND COST MANAGEMENT 2

Take Home Quiz on Standard Costing

July 13, 2016
Problem 1 2 points each
Deines, Inc. manufactures one product called tybos. The company uses a standard cost system and sells
each tybo for 8. At the start of monthly production, Deines estimated 8,000 tybos would be produced in
March. Deines has established the following material and labor standards to produce one tybo:
Standard Quantity
Standard Price
Direct materials
2.5 pounds
3 per pound
Direct labor
0.6 hours
10 per hour
During March 2016, the following activity was recorded by the company relating to the production of
tybos:
1.
2.
3.
4.

The company produced 7,500 units during the month.

A total of 20,000 pounds of materials were purchased at a cost of 55,000.
A total of 20,000 pounds of materials were used in production.
4,000 hours of labor were incurred during the month at a total wage cost of 44,000.

Instructions
Calculate the following variances for March for Deines, Inc.
(a) Materials price variance
(b) Materials quantity variance
(c) Labor price variance
(d) Labor quantity variance
Problem 2 2 points each
Hite Company has developed the following standard costs for its product for 2016:
HITE COMPANY
Standard Cost Card
Product A
Cost Element
Standard Quantity
Direct materials
4 pounds
Direct labor
3 hours
Manufacturing overhead
3 hours

Standard Price
3
8
4

Standard Cost
12
24
12
48

The company expected to produce 25,000 units of Product A in 2016 and work 75,000 direct labor hours.
Actual results for 2016 are as follows:
26,000 units of Product A were produced.
Actual direct labor costs were 630,800 for 76,000 direct labor hours worked.
Actual direct materials purchased and used during the year cost 283,500 for 105,000 pounds.
Actual variable overhead incurred was 130,000 and actual fixed overhead incurred was 170,000.
Instructions
Compute the following variances showing all computations to support your answers. Indicate whether the
variances are favorable or unfavorable.
(a) Materials quantity variance.
(b) Total direct labor variance.
(c) Direct labor quantity variance.
(d) Direct materials price variance.
(e) Total overhead variance.

Problem 3 2 points each

Feeney Company developed the following standard costs for its product for 2016:
FEENEY COMPANY
Standard Cost Card
Cost Elements
Direct materials
Direct labor
Variable overhead
Fixed overhead

Standard Quantity
4 pounds
2 hours
2 hours
2 hours

Standard Price
5
10
4
2

Standard Cost
20
20
8
4
52

The company expected to work at the 60,000 direct labor hours level of activity and produce 30,000 units
of product.
Actual results for 2016 were as follows:
28,400 units of product were actually produced.
Direct labor costs were 546,000 for 56,000 direct labor hours actually worked.
Actual direct materials purchased and used during the year cost 554,400 for 115,500 pounds.
Total actual manufacturing overhead costs were 340,000.
Instructions
Compute the following variances for Feeney Company for 2016 and indicate whether the variance is
favorable or unfavorable.
1. Direct materials price variance.
2. Direct materials quantity variance.
3. Direct labor price variance.
4. Direct labor quantity variance.
5. Overhead controllable variance.
6. Overhead volume variance.