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Exam 8: Flexible Budgets and Standard Costs

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Question 41

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Variable budget is another name for:

A) Cash budget.
B) Flexible budget.
C) Fixed budget.
D) Manufacturing budget.
E) Rolling budget.

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

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Question 42

Multiple Choice

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

A) $6,125 unfavorable.
B) $7,000 unfavorable.
C) $7,000 favorable.
D) $12,250 favorable.
E) $6,125 favorable.

F) A) and D)
G) A) and C)

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Question 43

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The following information comes from the flexible budget performance report of Jackal Corp. for the current period. 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.

A company uses the following standard costs to produce a single unit of output. $\begin{array} { l l l } \text { Direct materials } & 6 \text { pounds at } \$ 0.90 \text { per pound } & = \$ 5.40 \\\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = \$ 6.00 \\\text { Manufacturing overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40\end{array}$ 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:

Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.) . Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

A fixed budget is also called a ________ budget.

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

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?

Gala Enterprises reports the following information regarding the production of 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.

Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable overhead costs of $190,000, and 23,000 units produced. The total variable overhead variance is:

Firenze Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000.

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Fixed budget performance reports compare actual results with the results expected under a fixed budget.

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

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 sales for 20,000 units would be:

In preparing flexible budgets, the costs that remain constant in total are ________ costs. Those costs that change in total are ________ costs.

Georgia, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is: $\begin{array} { l l c } \text { Direct materials standard (4 lbs. @ \$1/16.) } & \$ 4 \text { per fiinshed unit } \\\text { Total direct materials cost variarne — unfavorable } & \$ 13,750 \\\text { Actual direct materials used } & 150,000 \text { lbs. } \\\text { Actual finished units produced } & 30,000 \text { units }\end{array}$

A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880. The direct materials quantity variance is:

Claymore Corp. has the following information about its standards and production activity for September. The controllable variance is: