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Exam 29: Controlling Manufacturing Costs: Standard Costs

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Question 21

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Direct factory labor is usually considered to be

A) a variable cost.
B) a fixed cost.
C) a semi-variable cost.
D) a mixed cost.

E) A) and B)
F) A) and C)

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Question 22

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The quantity variance for an item is the difference between its actual quantity and its standard quantity multiplied by

A) the standard cost of the item.
B) the actual cost of the item.
C) the price variance.
D) the budgeted amount for the item.

E) B) and D)
F) B) and C)

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Question 23

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As the volume of output increases, the ____________________ cost per unit of output decreases.

Determine the cost behavior for each of the following items as Fixed (F), Variable (V), or Semi-variable (S). $\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Production Level }\\\begin{array}{lll}\\\underline{\quad\quad}1. &\text {Production Supervisor's Salary}\\\underline{\quad\quad}2.&\text { Direct Materials}\\\underline{\quad\quad}3.&\text { Factory Wages}\\\underline{\quad\quad}4.&\text { Utilities for machines}\\\underline{\quad\quad}5.&\text { Lights, Heating \& Cooling}\\\underline{\quad\quad}6.&\text { Repair and Maintenance}\\\underline{\quad\quad}7.&\text { Janitorial Expense}\\\underline{\quad\quad}8. &\text {Property Taxes}\\\underline{\quad\quad}9. &\text {Transportation Expense}\\\underline{\quad\quad}10. &\text {Reengineering Expense}\end{array}\begin{array}{rr}10,000 & 12,500 \\30,000 & 30,000 \\140,000 & 175,000 \\76,000 & 95,000 \\13,500 & 16,875 \\20,000 & 20,000 \\34,000 & 48,000 \\12,500 & 12,500 \\4,256 & 4,256 \\6,000 & 7,000 \\5,000 & 9,000\end{array}\end{array}$

A key purpose of a manufacturing cost budget is to provide a basis for measuring performance.

Match the following descriptions with the appropriate term.

A budget prepared using several differing levels of activity is a

The setting of standard wage rates is usually a function of the personnel department.

An analysis would indicate

An unfavorable price variance for materials means that

Costs that reflect what costs should be for the units of product manufactured during the period under normal efficient operating conditions are known as

Develop the standard costs from the information given. Morlee Corporation makes three models of storage sheds. Model JB102 a 10' by 12' model that looks Victorian with windows, shutters and gingerbread along the roof line, is Morlee's most popular model. Direct materials for the JB102 consists of $66.00 for 7 sheets of pressed board, $59.00 for 2 x 4's for framing, $22.00 for roofing shingles, and $17.00 for aluminum siding. The nails, glue and other indirect materials for the company total $38,880 per year and are applied based on direct labor hours. The total direct labor hours for Morlee for one year are estimated to be 8,000 per year. Direct labor for each JB 102 is estimated to be 7 hours. The average hourly rate at Morelee is $14.50. Prepare a standard cost card for Model JB102. Units and per unit amount for material can be omitted.

A budget that shows expected costs at only one level of production activity is called a(n) ____________________ budget.

A simple method used to analyze the fixed and variable components in semivariable costs is called the ____________________ point method.

Costs that reflect what costs should be for the units of product manufactured during the period under normal efficient operating conditions are called ____________________ costs.

As the level of activity increases, the total fixed costs for the period

As the volume of output decreases, the fixed cost per unit of output increases.

In order to analyze the differences between actual costs and standard costs, it is necessary to identify the fixed and variable components of semi-variable costs.

A fixed budget is a meaningful way to evaluate manufacturing performance if the activity level used for the budget is

Which of the following costs are generally semi-variable?