Question

Refer to the following information for 8 and 9:

Jasper company produces premium pillows. The material and supplies cost formula is $1,870 per month plus $6 per pillow. For the month of February, the company planned for activity of 82 pillows, but due to increase competition the actual level of activity was 47 pillows. The actual materials and supplies for producing pillows for the month was $2,250.

8. The materials and supplies in the planning budget for February would be closest to:

A. $2,362                  

B. $2,152

C. $3,953

D. $2,250

9. The activity variance for materials and supplies in February would be closest to:

A. $210 U

B. $112 U

C. $112 F

D. $210 F

10. Falcon’s fashion has determined the below labor standards for its hand knit I Heart SPU sweaters:

Standard labor-hours per unit of output		10	hours
Standard labor rate	$	13.80	per hour

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

Actual hours worked		7,800	hours
Actual total labor cost	$	104,520
Actual output		1,050	units

What is the labor efficiency variance for the month?

A. $40,380 F

B. $40,380 U

C. $36,180 F

D. $37,260 F

11. Paint Me Pottery creates hand thrown and hand painted pottery. According to its standard, to produce 1,550 handmade pottery, it calls for 3,100 direct labor-hours. During April, a slow month, the company produced 1,100 pieces of potter and worked 1,100 direct labor-hours. What is the standard hours allowed for April?

A. 3,100 hours

B. 1,450 hours

C. 2,200 hours

D. 2,000 hours

12. Bobbles 4 You creates custom bobble heads. For variable manufacturing overhead, the following standards have been established:

Standard hours per bobble head		7.0	hours
Standard variable overhead rate	$	13.40	per hour

The following data pertain to operations for the last month:

Actual hours		2,725	hours
Actual total variable manufacturing overhead cost	$	37,195
Actual output		150	units

What is the variable overhead efficiency variance for the month?

A. $23,125 U

B. $22,445 U

C. $680 U

D. $14,070 F

13. Sandy’s Squirrels makes squirrel figurines with the following standard costs:

	Standard Quantity/Hours			Standard Price/Rate
Direct materials		8.9	kilos	$	6.40	per kilo
Direct labor		0.4	hours	$	24.00	per hour
Variable overhead		0.4	hours	$	6.40	per hour

The company reported the following results concerning this product in August.

Actual output		3,600	units
Raw materials used in production		29,430	kilos
Purchases of raw materials		32,000	kilos
Actual direct labor-hours		1,100	hours
Actual cost of raw materials purchases	$	199,920
Actual direct labor cost	$	23,136
Actual variable overhead cost	$	7,940

Variable overhead is applied on the basis of labor-hours. What is the variable overhead rate variance for August?

A. $1,178 F

B. $900 U

C. $1,178 U

D. $900 F

Answer 1

8	Materials and supplies in the planning budget=1870+(Pillows planned*6)=1870+(82*6)=$ 2362
	Answer is
	A. $ 2362
9	Activity variance=Materials and supplies cost as per planning budget-Materials and supplies cost as per planning budget
	If the answer is negative,variance is unfavorable.Otherwise favorable.
	Materials and supplies cost as per flexible budget=1870+(Actual pillows*6)=1870+(47*6)=$ 2152
	Activity variance=2362-2152=$ 210 F
	Answer is
	D. $ 210 F
10	Labor efficiency variance=Standard labor rate*(Standard hours-Actual hours worked)
	If the answer is negative,variance is unfavorable.Otherwise favorable.
	Standard hours=Actual output*Standard labor hours per unit of output=1050*10=10500 hours
	Labor efficiency variance=13.80*(10500-7800)=13.80*2700=$ 37260 F
	Answer is
	D. $ 37260 F
11	Standard hours allowed=Actual pieces produced*Standard labor hours per piece
	Standard labor hours per piece=Standard direct labor hours/Standard piece=3100/1550=3100/1550=2
	Standard hours allowed=1100*2=2200 hours
	Answer is
	C. 2200 hours