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Exam 24: Flexible Budgets and Standard Costs

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Question 1

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

A) $53,500 unfavorable.
B) $40,500 favorable.
C) $53,500 favorable.
D) $13,000 unfavorable.
E) $40,500 unfavorable.

F) C) and D)
G) All of the above

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Question 2

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A _______________________ contains relevant information that compares actual results to planned activities.

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Budget report

Question 3

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Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.

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

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

Gates Company reports the following information regarding the production on one of its products for the month. Compute the direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.

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

When standard manufacturing costs are recorded in the accounts and the cost variances are immaterial at the end of the accounting period, the cost variances should be:

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a __________________ standard.

What are the four steps in the effective management of variance analysis?

If cost variances are material, they should always be closed directly to Cost of Goods Sold.

The following information relating to a company's overhead costs is available. Based on this information, the total overhead variance is: Based on this information, the total overhead variance is:

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 operating income expected if the company produces and sells 16,000 units is:

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

A direct labor cost variance may be broken down into a controllable variance and a volume variance.

A company uses the following standard costs to produce a single unit of output. 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 materials quantity variance for the month was:

Standard costs are used in the calculation of:

Tiger, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

A fixed budget performance report never provides useful information for evaluating variances.

If Falcon Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?