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Exam 21: Flexible Budgets and Standard Costs

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Question 111

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A company's flexible budget for 12,000 units of production showed sales,$48,000; variable costs,$18,000; and fixed costs,$16,000.The contribution margin expected if the company produces and sells 16,000 units is:

A) $48,000.
B) $64,000.
C) $40,000.
D) $24,000.
E) $18,000.

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

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Question 112

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The following information comes from the records of Barney Co.for the current period. a.Compute the direct materials price and quantity variances,direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable. b.Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

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Question 113

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The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound.In manufacturing 8,000 units,47,000 pounds of material were used at a cost of $51 per pound.What is the direct materials quantity variance?

Georgia,Inc.has collected the following data on one of its products.The direct materials price variance is:

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

Another name for a static budget is a variable budget.

Clevenger Co.planned to produce and sell 30,000 units with a selling price of $10 per unit.Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000.Clevenger actually produced and sold 37,000 units. Using a contribution margin format: Prepare a fixed budget income statement for the planned level of sales and production.

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

A flexible budget is also called a ________ budget.

Milltown Company sells 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 volume variance for the month.

Selected information from Richards Company's flexible budget is presented below: Richards Company applies overhead to production at a rate of $31.25 per unit based on a normal operating level of 80% of capacity.For the current period,Richards Company produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs.The company used 11,000 labor hours to produce the 5,400 units.Calculate the variable overhead spending and efficiency variances,and the fixed overhead spending and volume variances.Indicate whether each variance is favorable or unfavorable.

Sanchez Company's output for the current period was assigned a $400,000 standard direct labor cost.The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance.What is the actual total direct labor cost for the current period?

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

Direct materials variances are called price and quantity variances.However,when referring to direct labor,these variances are usually called ________ and ________ variances.

A budget performance report shows budgeted amounts,actual amounts,and differences between budgeted and actual amounts.

If actual price per unit of materials is greater than the standard price per unit of materials,the direct materials price variance is ________.

Anniston 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.Anniston 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.

In sales variance analysis,the budgeted amount of unit sales is the predicted activity level and the budgeted cost of the goods sold can be treated as a "standard" price.

What is the overhead volume variance? What would be the cause of a favorable volume variance?

Based on predicted production of 25,000 units,FreshCo.anticipates $175,000 of fixed costs and $137,500 of variable costs.What are the flexible budget amounts of total costs for 20,000 and 30,000 units?