Study Notes 8
(Standard Cost Variance Analysis)
The Concept of Flexible Budgeting
Static Budget
Production Costs
this Period
Mixed Effectiveness and
Efficiency Variances
Expected Production Costs
for
Class Problem 3 SOLUTION
a. The company should use direct labor because it is a labor-intensive firm, with many
skilled craftspeople on the payroll. More than likely, a majority of overhead is driven
Class Problem 22 - Solution
a. Compute the total Actual fixed overhead cost.
Standard Fixed OH Cost per labor hour = Budgeted Fixed OH / Budgeted Production in labor hours
$4.10 = BFOH / 97,000
BFOH =
Class Problem 11 Cost Allocation - Solution
a. 1. Determine the full cost of Producing Department A, using the Direct Method
A
Direct Cost
From C
From D
From E
Full Cost
B
10,500
20/45 x 7,800 = 3,467
Class Problem 19 Standard Costing - Solution
a. Price variance per pound = Dollar Price Variance / Pounds purchased = $4,950 / 165,000 = $0.03 (f)
b. Actual price per pound = $729,300 / 165,000 = $4.4