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Exam 21: Flexible Budgets and Standard Costs

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Question 61

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A favorable variance for a cost means that when compared to the budget,the actual cost is ________ than the budgeted cost.

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Question 62

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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 materials quantity variance for the month was:

A) $1,800 favorable
B) $5,800 unfavorable
C) $5,800 favorable
D) $1,800 unfavorable
E) $1,000 favorable

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

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Question 63

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A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

A fixed budget is also called a ________ budget.

The process of closing ending variance account balances increases Cost of Goods Sold.

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

The total sales variance can be divided into the sales price variance and the sales volume variance.

A company's flexible budget for 60,000 units of production showed sales of $96,000,variable costs of $36,000,and fixed costs of $26,000.What operating income would be expected if the company produces and sells 70,000 units?

The following information describes production activities of the Midtown Corp.: 30,000 units were completed during the year Budgeted standards for each unit produced: 1/2 lb.of raw material at $4.15 per lb. 10 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

Hassock Corp.produces woven wall hangings.It takes 2 hours of direct labor to produce a single wall hanging.Hassock's standard labor cost is $12 per hour.During August,Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376.What is Hassock's labor rate variance for August?

Based on a predicted level of production and sales of 22,000 units,a company anticipates total variable costs of $99,000,fixed costs of $30,000,and operating income of $36,000.Based on this information,the budgeted amount of contribution margin for 20,000 units would be:

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

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

When using a standard cost accounting system,how are unfavorable variances recorded? How are favorable variances recorded?

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?

An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

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:

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

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 flexible budget income statement for the actual level of sales and production.

Standard costs can be used by management to assess the reasonableness of actual costs incurred.