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Exam 8: Flexible Budgets and Standard Costs

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Question 71

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Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?

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It is possible that the production depar...

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Question 72

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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 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 B)
G) A) and C)

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Question 73

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Management by exception means that managers focus on the most significant differences between actual costs and standard costs.

Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance.

The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is:

Job #411 was budgeted to require 3.5 hours of labor at $11.00 per hour. However, it was completed in 3 hours by a person who worked for $14.00 per hour. What is the total labor cost variance for Job #4115?

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

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is:

Standard costs are used in the calculation of:

A company's flexible budget for the range of 35,000 units to 45,000 units of production showed variable overhead costs of $2 per unit and fixed overhead costs of $72,000. The company incurred total overhead costs of $148,800 while operating at a volume of 40,000 units. The total controllable cost variance is:

Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

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?

An unfavorable variance is recorded with a debit because it reflects additional costs higher than the standard cost.

Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials price variance.

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the total labor cost variance?

Identify the situation below that will result in a favorable variance.

Explain variance analysis. Describe how variance analysis assists managers.

When recording the journal entry for labor, the Work in Process Inventory account is

When there is a difference between the actual and the standard capacity, which of the following, based solely on fixed overhead, occurs:

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