Apply Standard Costing And Variance Analysis Practice Test

A manufacturing plant, North Ridge Plastics, applies variable manufacturing overhead based on machine-hours and tracks spending and efficiency variances monthly. The variable overhead standard is $6.00 per machine-hour, and the standard machine-hours allowed are 1.5 hours per unit. In June, the plant produced 8,000 units; actual machine-hours were 13,200 and actual variable overhead was $85,800. Management wants to address the overhead variance to improve budget accuracy, focusing on variable overhead spending rather than efficiency. How should the overhead variance be addressed to improve budget accuracy?

A manufacturing company, Apex Tools, uses a standard costing system with variance tracking by purchase order and production batch. The standard for Alloy A is $5.00 per pound, and 2.0 pounds are allowed per finished unit. During May, Apex produced 10,000 units; it purchased and used 20,500 pounds of Alloy A at $5.30 per pound. The materials price variance was flagged as significant versus policy thresholds and management asked for a corrective action focused specifically on the price variance. What corrective action should be taken based on the material price variance analysis?