Standard costing and activity based costing test prep

Baby Company
The following information is for Crichton Company’s July production:

Standards:
Material 3.0 feet per unit @ $4.20 per foot
Labor 2.5 hours per unit @ $7.50 per hour

Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ $4.50 per foot
Labor 7,000 direct labor hours @ $7.90 per hour

(Round all answers to the nearest dollar.)

1. Refer to baby Company. What is the material price variance (calculated at point of purchase)?
a. $2,700 U
b. $2,700 F
c. $2,610 F
d. $2,610 U

2. Refer to baby Company. What is the material quantity variance?

a. $3,105 F
b. $1,050 F
c. $3,105 U
d. $1,890 U

3. Refer to baby Company. What is the labor rate variance?

a. $3,480 U
b. $3,480 F
c. $2,800 U
d. $2,800 F

4. Refer to babyCompany. What is the labor efficiency variance?

a. $1,875 U
b. $938 U
c. $1,875 F
d. $1,125 U

5. Esc Company is a wholesale distributor that uses activity-based costing for all of its overhead
costs. The company has provided the following data concerning its annual overhead costs and
its activity based costing system:

Overhead costs:
Wages and salaries .. P380,000
Standard costing and activity based costing test prep

Other expenses ...... P100,000

Total ............. P480,000
Distribution of resource consumption:

Activity Cost Pools

Filling Customer
Orders Support Other Total
Wages and salaries .. 30% 60% 10% 100%
Other expenses ...... 35% 45% 20% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
The activity measures for the activity cost pools for the year are as follows:

Activity Cost Pool Activity

Filling orders ...... 3,000 orders
Customer support..... 20 customers

What would be the total overhead cost per order according to the activity based
costing system? In other words, what would be the overall activity rate for the
filling orders activity cost pool? (Round to the nearest whole cent.)
a. P56.00
b. P48.00
c. P49.67
d. P52.00

What would be the total overhead cost per customer according to the activity
based costing system? In other words, what would be the overall activity rate
for the customer support activity cost pool? (Round to the nearest whole peso.)
a. P13,650
b. P12,600
c. P14,400
d. P10,800

To the nearest whole peso, how much wages and salaries cost would be
allocated to a customer who made 8 orders in a year?
a. P14,784.
b. P11,704.
c. P7,392.
d. P9,548.
Standard costing and activity based costing test prep

ANS: B
Labor Efficiency Variance = (AQ - SQ) * SP
= (7,000 hr - (2.5 hr/unit * 2,750 units)) * $7.50
= $938 U (rounded)

PTS: 1 DIF: Moderate OBJ: 7-3 NAT: AACSB: Analytical Skills

LOC: AICPA Functional Competencies: Measurement, Reporting