STANDARD COSTING AND VARIANCE ANALYSIS

What is standard cost?

• The average unit cost of product produced by other companies.

• The average unit cost of product produced in the current period.

• The budgeted unit cost of product produced in a particular period.

• The average unit cost of product produced in the previous period.

The estimated expenses of budgeted production refers to the:

• Production cost

• Budgeted cost

• Standard cost

• Actual cost

A document that records the standard cost of a single unit of product is known as

• Materials cost card

• Standard cost card

• Product expense card

Sarah Sweet Enterprise produces a candy known as Yummy. The company uses a standard costing system. To produce 1 (one) unit of Yummy, the company require direct materials of 6 grams. The standard cost of direct materials is RM10 per grams.

Based on the above information, what is the standard direct materials cost per unit of Yummy? Give your answer in RM (i.e. RM10)

MCO Manufacturer uses a standard costing system and the following information belongs to the company:

Basic wage rate: RM12 per hour

Labor benefits: RM2 per hour

Basic time: 2 hours per unit

Allowance for idle time: 0.5 hours per unit

Based on the above information, what is the standard direct labor cost per unit? Please give your answer in RM (i.e. RM10)

A formula for computing direct materials price variance is

• Actual quantity purchased × (Actual rate - Standard rate)

• Standard quantity purchased × (Actual rate + Standard rate)

• Actual quantity purchased × (Actual rate + Standard rate)

• Standard quantity purchased × (Actual rate - Standard rate)

A favorable direct materials price variance occurs when:

• actual rate of direct materials is equal to standard rate of direct materials

• actual rate of direct materials is less than standard rate of direct materials

• actual rate of direct materials is higher than standard rate of direct materials

• actual rate of direct materials is less than previous year's rate of direct materials

The Tee Shirt Enterprise uses a standard costing system. The company established the following direct materials cost standards for one unit of T-shirt:

Standard Quantity - 4 grams

Standard Rate - RM5/gram

Standard Cost - RM20

During the month of April, Tee Shirt Enterprise purchased 25,000 grams of materials at a cost of RM128,750 and used 10,250 grams of materials to produce 2,500 units of T-shirt. The direct materials price variance for January was:

• RM3,700 Unfavorable

• RM3,700 Favorable

• RM3,750 Unfavorable

• RM3,750 Favorable

SOS Manufacturing uses a standard costing system to produce . The following direct materials cost standards for one unit of Tomato Sauce:

Standard Quantity - 4 grams

Standard Rate - RM5/gram

Standard Cost - RM20

Last month, SOS Manufacturing purchased 40,000 grams of direct materials at a cost of RM199,200 and produced 5,000 units of product X Tomato Sauce using 19,750 grams of direct materials. Calculate the direct materials quantity variance for the last month.

• 800 Favorable

• 1,250 Unfavorable

• 800 Unfavorable

• 1,250 Favorable

Hand Care Manufacturer used the following direct labor cost standards for one unit of hand sanitizer:

Standard hours: 1.5 hours

Standard rate: RM20 / hour

Standard cost: RM30 (1.5 hours @ RM20 / hour)

Last April, the company recorded 20,000 direct labor hours and 12,500 units of hand sanitizer were produced. The total wages of direct labor in April were RM405,000. Calculate the direct labor rate variance for April.

• RM30,000 Unfavorable

• RM25,000 Unfavorable

• RM30,000 Favorable

• RM25,000 Favorable