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Standard Costing (Word Scrambles with Coaching)

Author:
Harold Averkamp, CPA, MBA

To see each answer, press or click on the blue "Unscramble" button. For a short description and example, press or click the “View Coaching” button. If you have difficulty answering the following questions, read our In-Depth Explanation for this topic.

1. Differences between standard costs and actual costs.

VARIANCES NIAVARESC
VARIANCES AINRECSVA
Unscramble

Variances are the differences between standard costs and actual costs. They are a key part of standard costing systems used by some manufacturers.

Example: If the standard cost for direct materials is $10 per unit but the actual cost is $11 per unit, there is an unfavorable direct materials price variance of $1 per unit purchased.

2. A word used for the direct materials quantity variance.

USAGE SAUGE
USAGE EAUGS
Unscramble

The direct materials usage variance is often used for the materials quantity variance. It results when the quantity of direct materials used is different from the standard quantity that should have been used for the actual output produced.

Example: If a company should have used 500 pounds of material for the actual output but ended up using 530 pounds, there is an unfavorable direct materials usage (or quantity) variance of 30 pounds.

3. This direct materials variance is often calculated at the time the materials are received.

PRICE RCPIE
PRICE EPRIC
Unscramble

The direct materials price variance is preferably calculated when materials are received by comparing the actual unit cost to the standard unit cost.

Example: If the standard cost for a raw material is $3 per pound, but a purchase of 1,000 pounds is made at $2.90 per pound, there is a favorable direct materials price variance of $100 (1,000 pounds x $0.10 per pound).

4. If employees are paid $15 per hour and the standard cost is $14 per hour, there will be a labor _______ variance.

RATE ERAT
RATE RTEA
Unscramble

The direct labor rate variance occurs when the actual labor rate paid is different from the standard rate.

Example: If the actual direct labor rate is $15 per hour but the standard rate is $14 per hour, there will be an unfavorable direct labor rate variance of $1 for every actual direct labor hour worked.

5. The labor quantity variance is often referred to as the labor _______________ variance.

EFFICIENCY EIECNFFIYC
EFFICIENCY ICFICNEFYE
Unscramble

The labor quantity variance is commonly referred to as the direct labor efficiency variance. It arises when the actual direct labor hours are different from the standard hours for the good output produced.

Example: If a company’s actual direct labor hours were 10,400 compared to a standard of 10,000 hours for the output, there is an unfavorable direct labor efficiency variance of 400 hours.

6. When the standard cost is less than the actual cost, the variance is _______________.

UNFAVORABLE VOULRANAEFB
UNFAVORABLE EAUFNBOVLRA
Unscramble

When actual costs are higher than standard costs, the variance is considered to be unfavorable. Unfavorable variances can result in less profit compared to the planned amounts.

Example: Purchasing materials at $5.20 per unit compared to a standard cost of $5.00 per unit results in an unfavorable materials price variance of $0.20 per unit.

7. The standard unit cost is applied to the units of good __________.

OUTPUT TOUPTU
OUTPUT PUTTOU
Unscramble

In a standard costing system, the standard quantity of an input is applied to the actual good output to calculate variances.

Example: If 1,000 units were produced and each has a standard of 2 direct labor hours, then 2,000 standard direct labor hours are compared to the actual direct labor hours.

8. This variance is associated with fixed manufacturing overhead.

VOLUME OEMVLU
VOLUME LVUEOM
Unscramble

The fixed manufacturing overhead volume variance arises when the amount of fixed overhead that was assigned to the good output is different from the budgeted amount.

Example: If more units are produced than budgeted, there will be a favorable fixed overhead volume variance since more overhead was applied/assigned than originally planned.

9. A budget that changes with the volume of good output is a ___________ budget.

FLEXIBLE LEFXBLEI
FLEXIBLE LEXBLIFE
Unscramble

A flexible budget adjusts the budgeted amounts according to the actual volume of output. The budget for the fixed costs remains constant, but the budget for the variable costs will “flex” (will change) with production levels.

Example: The budget for indirect materials (a variable cost) will flex from $30,000 to $39,000 if the actual production level of 30,000 units is 30% higher than the original budgeted volume of 23,000 units.

10. The fixed manufacturing overhead __________ variance should not be affected by a reasonable change in the volume of output.

BUDGET UDGTBE
BUDGET BDEUGT
Unscramble

The fixed manufacturing overhead budget variance represents the difference between the actual and budgeted fixed overhead amounts. This budget should not change for reasonable changes in volume.

Example: If the budgeted amount for rent is $60,000 per year and the actual rent ends up being $64,000, there is an unfavorable fixed overhead budget variance of $4,000 for the period.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

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