Discuss other potential problems that can occur from the improper use of standard costs.

Question 1

Perform an Internet search using the phrase “reducing overhead costs”. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Summarize the case study or article, and relate the ideas of the article to what you have learned this week in this course.

Citation included

Question 2

There are several potential problems that can occur from the improper use of standard costs. Labor quantity standards and efficiency variances assume that production is labor-paced. However, output in many companies is determined by the processing speed of machines. Also, too much emphasis on meeting the standards may overshadow other important objectives. Discuss other potential problems that can occur from the improper use of standard costs.

Citation Included

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Lion Company’s direct labor costs for the month of January were as follows:

What was Lion’s direct labor efficiency variance? (Points : 2)

$6,000 favorable

$6,150 favorable

$6,300 favorable

$6,450 favorable

Question 2.2. Information on Rex Co.’s direct material costs for May follows:
For the month of May, what was Rex’s direct materials price variance? (Points : 2)

$2,800 favorable

$2,800 unfavorable

$6,000 unfavorable

$6,000 favorable

Question 3.3. Buckler Company manufactures desks with vinyl tops. The standard material cost for the vinyl used per Model S desk is $27.00 based on 12 square feet of vinyl at a cost of $2.25 per square foot. A production run of 1,000 desks in March resulted in usage of 12,600 square feet of vinyl at a cost of $2.00 per square foot, a total cost of $25,200. The materials quantity variance resulting from the above production run was: (Points : 2)
$1,200 unfavorable

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