FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 23: Flexible Budgets and Standard Costs

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 111

Essay

Review LaterAdd Note

Review Later

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

Correct Answer

verified

The four steps are: (1) prepar...

View Answer

Show Answer

Question 112

Essay

Review LaterAdd Note

Review Later

Briefly describe the procedure of management by exception.

Correct Answer

verified

Management by exception is an analytical...

View Answer

Show Answer

Question 113

Multiple Choice

Review LaterAdd Note

Regarding overhead costs, as volume increases:

A company provided the following direct materials cost information. Compute the direct materials price variance. $\text {Standard costs assigned:}$ $\begin{array}{llr} \text {Direct materials standard cost (405,000 units @\$2.00/unit) } & \$ 810,000\\ \text { Actual costs:} &\\ \text {Direct Materials costs incurred ( 403,750 units@\$2.20/unit) } &\$ 888,250 \end{array}$

What are some causes of direct labor rate and efficiency variances?

Match the following definitions with the appropriate term

What are sales variances? How are they used?

The following company information is available. The direct materials quantity variance is: Direct materials used for production 36,000 gallons Standard quantity for units produced 34,400 gallons Standard cost per gallon of direct material $ 6.00 Actual cost per gallon of direct material $ 6.10

Claymore Corp. has the following information about its standards and production activity for September. The volume variance is: $\begin{array}{lll} \text { Actual total factory overhead incured } &\$28,175\\ \text {Standard factory overhead: } &\\ \text { Variable overhead } &\$3.10&\text { per unit produced }\\ \text { Fixed overhead } &\\ \text { \$ 12,000 / 6,000 estimated units to be produced } &\$2&\text {per unit}\\ \text { Actual units produced } &4,800&\text { units}\\\end{array}$

While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

Gala Enterprises reports the following information regarding the production on one of its products for the month. Compute the direct labor cost variance, the direct labor rate variance, the direct labor efficiency variance and identify each as either favorable or unfavorable. $\begin{array} { l l } \text { Direct labor standard (2 hrs. @ } \$ 15 / \mathrm { hr } . ) & \$ 30 \text { per finished unit } \\\text { Actual direct labor hours } & 60,800 \mathrm { hrs } . \\\text { Actual finished units produced } & 30,000 \text { units } \\\text { Actual cost of direct labor } & \$ 905,920\end{array}$

A ______________contains relevant information that compares actual results to planned activities.

________ are preset costs for delivering a product or service under normal conditions.

The following information comes from the records of Magno Co. for the current period. a. Compute the overhead controllable and volume variances. In each case, state whether the variance is favorable or unfavorable. b. Prepare the journal entries to charge overhead costs to work in process and the overhead variances to their proper accounts. $\begin{array}{ll}\text { Actual costs and quantities: }\\ \text { Direct materials used} & 38,000 \text { feet @ } \$ 6.20 \text { per foot } \\ \text { Direct labor hours used } & 50,660 \text { hours } \\ \text { Direct labor rate per hour } & \$ 16 \\\text { Factory overhead } & \$ 211,600 \\25,000 \text { units were produced during the period. }\end{array}$ $\text { Standard costs and quantities per unit: }$ $\begin{array}{llr} \text { Direct materials } &\text {1.5 ft. @ \$6.10 per ft.}\\ \text {Direct labor } &\text {2 hours@\$17per hour}\\\end{array}$ Factory overhead (based on budgeted production of 24,500 units) Variable overhead $\$ 2.25$ /direct labor hour Fixed overhead $\$ 1.95 /$ direct labor hour

A flexible budget performance report compares the differences between:

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 flexible budget is also called a ________ budget.

Identify and explain the primary differences between fixed and flexible budgets.

Georgia, Inc. has collected the following data on one of its products. The direct materials price variance is: Direct materials standard (4 lbs. @ $1/lb.) $ 4 per finished unit Total direct materials cost variance-unfavorable $ 13,750 Actual direct materials used 150,000 lbs. ^{Actual finished units produced 30,000} units

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?