BEC 17

Question 1

What is an efficiency variance

Answer 1

This si designed to measure the extra cost or savings associated with being efficient in the manufacturing process

compare standard hours to actual hours

Question 2

What is the variable overhead efficiency formula

Answer 2

(actual hours * standard variable overhead hourly rate) - (Standard hours * standard variable overhead efficiency variance)

Question 3

What is overhead volume variance and what does it measure

Answer 3

Volume OH variance measures the

efficiency of spreading a fixed amount of overhead over more units due to higher production volume than had been budgeted

the INEFFICIENCY of charging that fixed amount of overhead to fewer units than were budgeted

Question 4

Does a production manager have a lot of control over:

material usage
overhead efficiency
labor efficiency
overhead volume

Answer 4

yes - material usage
yes - labor efficiency
yes - overhead efficiency

no - overhead volume - this is because its a function of fixed overhead and volume of production they do not a have any control over that

Question 5

What is material usage variance

Answer 5

material usage variance measures the efficiency in the manufacturing process - influenced by production manager

Question 6

What is labor efficiency variance

Answer 6

• This measures the efficiency in the manufacturing process

Question 7

What is overhead efficiency variance

Answer 7

This measures the efficiency in the manufacturing process

Question 8

Can you use a standard cost system for either a job order costing system or process costing system?

Answer 8

You can use it for either

Question 9

What is an example of job costing

Answer 9

these are large or unique items - jewelry or a batch of custom t-shirts - one job

Question 10

What is an example of process costing

Answer 10

This is when you assign costs to mass produced items - lego sets

use cost per equivalent units

This is the number of units that could have been produced

multiple nominal units by % complete to get equivalent units

Question 11

What is a standard cost system

Answer 11

This is when you estimate the required costs of a production

Question 12

When would an overtime premium be charged to a specific job

Answer 12

When the customer required an early completion of the job

Question 13

What are the rules for assigning overtime premium to a job in an job order costing system and when is it allocated to all jobs?

Answer 13

When an overtime premium is incurred because of the specific requirements of a particular job, it will be charged to that job in a job order costing system.

Whether it is the result of an increase in the overall level of activity, or due to an action of management, it will be part of manufacturing overhead and allocated to all jobs.

Question 14

what is the difference between standard hours at a standard wage rate and actual hours at a standard wage rate called

Answer 14

labor usage variance

Question 15

When you have ending WIP that is 50% complete what amount of conversion costs are included in the computation for equivalent production

Answer 15

use the 50%

ending WIP * 50% = EQ units included in ending inventory

Question 16

What is a disadvantage of using a process costing system vs job processing

Answer 16

process costing uses equiv units - which require calculations which make it more cumbersome than job costing

Partial shipment are not disadvantaged compared to jobs costing - because the goods are very homogeneous

Process costing usually requires less work because costs are tracked at the department rather than the job level

process costing charges material and labor expenses to departments - not specific jobs

job - order costing requires that materials and expenses be charged accurately to each specific job

Question 17

Under the 2 variance method - the controllable variance is the difference between actual overhead incurred and budgeted overhead based on actual volume produced

Answer 17

Controllable (budgeted) variance therefore has both variable plus fixed overhead elements

volume variance includes fixed overhead only

Question 18

How do you treat normal spoilage and slap costs

Answer 18

these are both normal and expected and therefore are included in the cost of units produced

Question 19

under the FIFO method - of process costing considers what

Answer 19

current period costs only

Question 20

where do you record factory overhead applied in a process cost system

Answer 20

work in process inventory control

Question 21

What are joint products

Answer 21

This is when you have multiple products (joint products) that result from the same process

The costs incurred in that process are called joint costs

These costs are allocated to the various products based on how much it is worth, sales value, at the point as which the joint product are separated.

The net sales value at spilt off is the sales price of the individual item minus costs to complete after the split off