Chapter 23: Performance Evaluation Using Variances From Standard Costs

Question 1

Standard cost per unit =

Answer 1

Standard Price * Standard Quantity

Question 2

When a cost variance is favorable, what does it mean?

Answer 2

It means the actual cost is less than the standard cost

Question 3

Occurs when the actual cost exceeds the standard cost

Answer 3

Unfavorable cost variance

Question 4

Total manufacturing cost variance =

Answer 4

Total standard costs - total actual costs 

Question 5

Actual Direct Materials =

Answer 5

Actual Price * Actual Quantity

Question 6

Standard Direct Materials =

Answer 6

Standard Price * Standard Quantity

Question 7

Total Direct Materials Cost Variance=

Answer 7

Price Difference + Quantity Difference

Question 8

 Direct labor cost variance =

Answer 8

Rate difference + Time difference

Question 9

Standard Rate * Standard Time

Answer 9

Standard Direct Labor Cost

Question 10

Actual Rate * Actual Time

Answer 10

= Actual Direct Labor Cost

Question 11

Direct Materials Price Variance =

Answer 11

(Actual Price-Standard Price) * Actual Quantity

Question 12

Direct Materials Quantity Variance=

Answer 12

(Actual Quantity-Standard Quantity) * Standard Price

Question 13

Direct Labor Rate Variance =

Answer 13

(Actual Rate Per Hour-Standard Rate per hour) * Actual Time/Hours

Question 14

Direct Labor Time Variance =

Answer 14

(Actual Time - Standard Time) * Standard Rate per hour

Question 15

Factory overhead costs are budgeted and controlled by what?

Answer 15

 separating factory overhead into fixed and variable components

Question 16

Factory overhead rate =

Answer 16

Budgeted factory overhead at normal capacity / normal productive capacity

Question 17

Variable factory overhead rate =

Answer 17

Budgeted variable overhead at normal capacity / normal productive capacity

Question 18

Fixed factory overhead rate =

Answer 18

Budgeted fixed overhead at normal capacity / normal productive capacity

Question 19

 The variable factory overhead controllable variance is what?

Answer 19

The difference between the actual variable overhead costs and the budgeted variable overhead for actual production.
(Actual Var. Factory Overhead - Budgeted Var. Factory Overhead)

Question 20

What is the budgeted variable factory overhead?

Answer 20

The standard variable overhead for the actual units produced

Question 21

Budget it variable factory overhead =

Answer 21

Standard hours for actual units produced * variable factory overhead rate

Question 22

 Fixed factory overhead volume variance =

Answer 22

(Standard hours for 100% of normal capacity - Standard Hours for Actual Units Produced) * Fixed Factory overhead rate

Question 23

The difference between the actual factory overhead and the applied factory overhead is what?

Answer 23

The total factory overhead cost variance

Question 24

 Total factory overhead cost variance =

Answer 24

variable factory overhead controllable variance + fixed factory overhead volume variance

Question 25

Applied factory overhead =

Answer 25

Standard hours actual units produced × total factory overhead rate

Question 26

 at the end of a period, the factory overhead account typically has what?

Answer 26

A debit or credit balance

Question 27

An ending factory overhead balance mean what?

Answer 27

The overhead is under applied and total factory overhead is unfavorable

Question 28

What does a ending credit balance and factory overhead mean?

Answer 28

Overhead is overapplied and total factory overhead is favorable

Question 29

 Controllable variant =

Answer 29

Actual overhead incurred - budgeted overhead

Question 30

Volume variance =

Answer 30

Applied overhead - budgeted overhead