Question

The Thanksgiving Costume Factory used budgeted activity as its denominator level for 2018. The company measures its direct materials usage in pounds. The production cost variances for 2018 are as follows: Direct Material Price Variance: $12,000 U Variable Overhead Rate Variance: $8,000 F Direct Material Quantity Variance: $ 7.000 F Variable Overhead Efficiency Variance: $9,000 F Direct Labor Rate Variance: $ 4,000 F Fixed Overhead Budget Variance: $4.000U Direct Labor Efficiency Variance $13,000 U Fixed Overhead Volume Variance $6,000F For the next eight questions, please use the following answer key: If the Statement is True - You should answer A If the Statement is False - You should answer B If it cannot be determined from the information given whether the statement is true or false - You should answer C 18. Thanksgiving Costume paid more than the standard rate per hour for direct labor. 19. The company used less than the standard direct materials allowed to produce the actual costumes. Actual production was more than budgeted production. Thanksgiving Costume paid more than the standard price for direct materials purchased. Thanksgiving Costume may have used direct labor hours to apply overhead to the actual costumes produced. Thanksgiving Costume used less than the standard hours allowed for direct labor to produce the actual units. The actual fixed overhead for 2018 was greater than the budgeted fixed overhead for 2018. The company used more pounds of direct material than it purchased. Refer back to the production variance report for Thanksgiving Costume. Compute the underapplied or overapplied overhead for the company. $27,000 underapplied $27,000 overapplied $19,000 underapplied $19,000 overapplied $6,000 overapplied sos

Answer 1

1. B. False. Direct labour rate variance was Favourable. It means the Actual price of labour was lower than Standard price. Thus, they might have paid less than the standard rate per hour.

2.A. True. The company used lesser Direct material to make the actual costumes because Direct Material Quantity variance is favourable means Actual Quantity is lesser than the standard quantity.

3.A.True. Direct Material variance is unfavourable and so is Labour variance, which means Actual production was higher than budgeted production.

4.A. True. Both DM and Labour rate variances were favourable. Actual cost was lower than the standard price. This means it paid more than standard price while selling.