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Accnt 2010 Managerial CH 10
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Terms in this set (52)
Labor Efficiency Variance
$4,200 Favorable.
$14.00 x (5,800 - 5,500) = $4,200 Favorable. The labor efficiency variance is calculated using the standard, not the actual, labor rate.
Use the following info to calculate the labor efficiency variance for Adkinson Company
Actual hours used 5,500
Standard hours used 5,800
Actual labor rate $14.75 per hour
Standard rate $14.00 per hour
1. standards provide info for measuring performance
2. when actual results depart significantly from the standard, the reasons why should be investigated
which of the following statements are true?
-standards are only used in managerial accounting
-the purpose of using standards is to assess blame and responsibility
-standards provide info for measuring performance
-when actual results depart significantly from the standard, the reasons why should be investigated
Standard Quantity
material requirements + an allowance for normal inefficiencies are added together to determine the ____ of a direct material per unit of output.
- purchase price of the materials
-purchase discounts- the standard price per unit reflects the final, delivered price of materials
-shipping costs
The calculation of a standard price per unit of direct materials includes:
false
True or False.
the standard hours per unit includes both direct and indirect labor hours
Spending Variance
$300 Unfavorable.
$7,500/500 (total direct labor cost/planning budget called to be produced)
= $15 standard rate per hour x 600
= $9,000 flexible budget - $9,300 actual = $300 U.
a planning budget called for 500 units to be produced and total direct labor cost of $7,500. Actual production was 600 units and actual direct labor cost was $9,300. The spending variance is:
unfavorable
if the actual level of activity is greater than the planned level of activity, the activity variances will be:
standard price per unit of materials
the final, delivered price that should be paid for each unit of direct materials is the ___ price per unit of materials
Spending Variance
The difference between actual results and the flexible budget amount is a(n) ________ variance
1. an undue emphasis on labor efficiency variances can create pressure to build excess inventory
2. the information in the variance reports may be too old to be useful
when using a standard cost system:
- actual price of the input
-actual quantity of the input purchased
-standard price of the input
the materials price variance is calculated using the:
actual price and the standard price x by the actual amount of the input
a price variance is the difference between the:
Responsibility Accounting
standard costs fit naturally into an integrated system of _____ accounting
-insufficient product demand
-faulty equipment
-poorly motivated workers
an unfavorable labor efficiency variance can result from:
-building inventories can reduce unfavorable labor efficiency variances
-excessive inventories contribute to inefficient operations
which of the following statements are correct?
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Verified questions
ACCOUNTING
On December 28, 2016, Tristar Communications sold 10 units of its new satellite uplink system to various customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2017? By how much?
ACCOUNTING
Posting errors are identified in the following table. In column (1), enter the amount of the difference between the two trial balance columns (debit and credit) due to the error. In column (2), identify the trial balance column (debit or credit) with the larger amount if they are not equal. In column (3), identify the account(s) affected by the error. In column (4), indicate the amount by which the account(s) in column (3) is under- or overstated. Item (a) is completed as an example. $$ \begin{matrix} & \text{Description of Posting Error} & \text{(1) Difference between Debit and Credit Columns} & \text{(2) Column with the Larger Total} & \text{(3) Identify Account(s) Incorrectly stated} & \text{(4) Amount That Account(s) Is Over-or Understated}\\ \text{a.} & \text{\$3,600 debit to Rent Expense is posted as a \$1,340 debit.} & \text{\$2,260} & \text{Credit} & \text{Rent Expense} & \text{Rent Expense understated \$2,260}\\ \text{b.} & \text{\$6,500 credit to Cash is posted twice as two credits to Cash.}\\ \text{c.} & \text{\$10,900 debit to the Dividends account is debited to Common Stock.}\\ \text{d.} & \text{\$2,050 debit to Prepaid Insurance is posted as a debit to Insurance Expense.}\\ \text{e.} & \text{\$38,000 debit to Machinery is posted as a debit to Accounts Payable.}\\ \text{f.} & \text{\$5,850 credit to Services Revenue is posted as a \$585 credit.}\\ \text{g.} & \text{\$1,390 debit to Store Supplies is not posted.}\\ \end{matrix} $$
ACCOUNTING
Journalize the following transactions completed during November of the current year. Use page 22 of the journal given in the Working Papers. The abbreviation for check is C. Transactions: Nov. 5. Paid cash to establish a petty cash fund, $300.00. C527. Nov 30. Paid cash to replenish the petty cash fund,$165.00: supplies, $57.00; miscellaneous expense,$58.00; repairs, $40.00; postage (Postage Expense),$10.00. C555
ACCOUNTING
Denver Engineering manufactures small engines that it sells to manufacturers who install them in products such as lawn mowers. The company currently manufactures all the parts used in these engines but is considering a proposal from an external supplier who wishes to supply the starter assemblies used in these engines. The starter assemblies are currently manufactured in Division 3 of Denver Engineering. The costs Relating to the starter assemblies for the past 12 months were as follows: Over the past year, Division 3 manufactured 150,000 starter assemblies. The average cost for each starter assembly is $10($1,500,000 150,000). Further analysis of manufacturing overhead revealed the following information. Of the total manufacturing overhead, only 25% is considered variable. Of the fixed portion, $300,000 is an allocation of general overhead that will remain unchanged for the company as a whole if production of the starter assemblies is discontinued. A further$200,000 of the fixed overhead is avoidable if production of the starter assemblies is discontinued. The balance of the current fixed overhead, $100,000, is the division manager’s salary. If Denver Engineering discontinues production of the starter assemblies, the manager of Division 3 will be transferred to Division 2 at the same salary. This move will allow the company to save the$80,000 salary that would otherwise be paid to attract an outsider to this position. 1. Tutwiler Electronics, a reliable supplier, has offered to supply starter-assembly units at $8 per unit. Because this price is less than the current average cost of$10 per unit, the vice president of manufacturing is eager to accept this offer. On the basis of financial considerations alone, should Denver Engineering accept the outside offer? Show your calculations. (Hint: Production output in the coming year may be different from production output in the past year.) 2. How, if at all, would your response to requirement 1 change if the company could use the vacated plant space for storage and, in so doing, avoid $100,000 of outside storage charges currently incurred? Why is this information relevant or irrelevant?$ $$ \begin{matrix} \text{Direct materials } & \text{\$400,000}\\ \text{Direct manufacturing labor} & \text{300,000}\\ \text{Manufacturing overhead} & \text{800,000}\\ \text{Total} & \text{\$1,500,000}\\ \end{matrix} $$ $
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