Standard Costs and variances

Differential Analysis:Relevant Costs for decision making

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A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours. The company’s choice of the denominator level of activity affects the Variable component of the predetermined overhead rate. True False The budget variance represents the difference between the actual fixed manufacturing overhead cost incurred during a period and the budgeted fixed manufacturing overhead cost. True False A volume variance and an efficiency variance are computed for fixed manufacturing overhead costs. True False At the end of the year, actual manufacturing overhead costs were $210,000 and applied manufacturing overhead costs were $146,400. If the denominator activity for the year was 20,000 machine-hours, and if 24,000 standard machine-hours were allowed for the year’s production, the predetermined overhead rate per machine-hour was: (Round your answer to 2 decimal places.) $6.65 $6.10 $9.00 $9.50 Tidd Corporation makes a product with the following standard costs:  Inputs Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit  Direct materials 4.5 grams  $5.00 per gram $22.50  Direct labor 0.7 hours  $11.00 per hour $7.70  Variable overhead 0.7 hours  $5.00 per hour $3.50 The company reported the following results concerning this product in November.  Originally budgeted output 9,600    units  Actual output 9,700    units  Raw materials used in production 44,800    grams  Purchases of raw materials 47,290    grams  Actual direct labor-hours 7,860    hours  Actual cost of raw materials purchases $132,430      Actual direct labor cost $125,123      Actual variable overhead cost $29,896     The company applies variable overhead on the basis of direct labor-hours. The direct materials price variance is computed when the materials are purchased. The variable overhead efficiency variance for November is: $5,350 U $5,350 F…

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