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Exam 8: Flexible Budgets and Standard Costs

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Question 81

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The overhead cost variance is calculated as:

A) Standard applied overhead less budgeted overhead.
B) Actual overhead incurred less standard overhead applied.
C) Budgeted overhead less standard overhead applied.
D) Actual overhead incurred less standard applied overhead.
E) Actual fixed cost less budgeted overhead.

F) B) and C)
G) B) and D)

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Question 82

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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 fixed budget income statement for the planned level of sales and production.

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Question 83

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

A cost variance can be further separated into the quantity variance and the price variance.

The following information comes from the records of Barney Co. for the current period. a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable. b. 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.

In producing 700 units of product last period, Azure Company used 5,000 pounds of Material K, costing $34,250. The company has established the standard of using 7.2 pounds of Material K per unit of product, at a price of $7.50 per pound. Calculate the materials price and quantity variances associated with producing the 700 units, and indicate whether they are favorable or unfavorable:

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

Sales variance analysis is used by managers for:

A fixed budget is based on a single predicted amount of sales or other activity measure.

The purchasing department is responsible for the price paid for materials.

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 direct labor rate variance?

A company provided the following direct materials cost information. Compute the direct materials quantity variance.

A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ________.

When the actual price per unit of direct materials used exceeds the standard price per unit, the company has an unfavorable direct materials price variance.

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

Whidbey Co. fixed budget for the year is shown below: Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

Differences between actual costs and standard costs are known as ________. These differences may be subdivided into ________ and ________.

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 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The variable costs expected if the company produces and sells 16,000 units is: