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Exam 23: Flexible Budgets and Standard Costs

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Question 81

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A company uses the following standard costs to produce a single unit of output. $\begin{array} { l l l l } \text { Direct materals } & 6 \text { pourds at } \$ 0.90 \text { per pound } & = & \$ 5.40 \\\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = & \$ 6.00 \\\text { Marufacturing overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40\end{array}$ During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.Based on this information,the direct labor efficiency variance for the month was:

A) $3,650 favorable
B) $2,450 favorable
C) $1,200 unfavorable
D) $1,200 favorable
E) $2,450 unfavorable

F) A) and D)
G) B) and E)

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Question 82

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A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.

A) True
B) False

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Question 83

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Casco Co.planned to produce and sell 40,000 units.At that volume level,variable costs are determined to be $320,000 and fixed costs are $30,000.The planned selling price is $10 per unit.Casco actually produced and sold 42,000 units. Using a contribution margin format: (a)Prepare a fixed budget income statement for the planned level of sales and production. (b)Prepare a flexible budget income statement for the actual level of sales and production.

Which department is often responsible for the direct materials price variance?

A fixed budget is also called a _____________ budget.

One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

Although a fixed budget is only useful over the relevant range of operations,a flexible budget is useful over all possible production levels.

A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000.The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units.The total controllable cost variance is:

Cabot Company collected the following data regarding production of one of its products.Compute the direct labor efficiency variance.

What are sales variances? How are they used?

Static budget is another name for:

Sales variance analysis is useful for:

At the end of the accounting period,immaterial variances are closed to _____________.

A company provided the following direct materials cost information.Compute the cost variance. Stardard costs assigned: Direct materials standard cost $( 405,000$ urits@ $\$ 2 / unit)$        $\$ 810,000$ Actual costs Direct Materials costs incured (403,750urits @ \$2.20/urit)        $\$ 888,250$

Montaigne Corp.has the following information about its standards and production activity for November.The volume variance is:

Perkins Company provides the following data developed for its master budget: Required: Prepare flexible budgets for sales of 20,000,22,000 and 24,000 units.Use a contribution margin format.

Brewer Company specializes in selling used cars.During the month,the dealership sold 22 cars at an average price of $15,000 each.The budget for the month was to sell 20 cars at an average price of $16,000.Compute the dealership's sales price variance for the month.

Falcon Company's output for a period was assigned the standard direct labor cost of $17,160.If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275,what was the total actual cost of direct labor incurred during the period?

An unfavorable variance is recorded with a debit.

Sales variances may be computed in a manner similar to cost variances-that is,computing both price and volume variances.