Exam 23: Flexible Budgets and Standard Costs

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

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

Milltown Company specializes in selling used cars.During the month,the dealership sold 22 cars at an average price of $15,000 each.The budget for the month was to sell 20 cars at an average price of $16,000.Compute the dealership's sales volume variance for the month.

Seafarer Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product.During the past month,actual production was 6,500 units.The material quantity variance was $700 favorable and the material price variance was $470 unfavorable.The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include all of the following except:

Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10 per gram and .25 direct labor hours at $12.00 per hour.Overhead is assigned at the rate of $18 per direct labor hour.What is the total standard cost for one unit of product that would appear on a standard cost card?

Linx Company's output for a period was assigned the standard direct labor cost of $17,160.If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275,what was the total actual cost of direct labor incurred during the period?

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

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:

The difference between the actual overhead cost incurred and the standard overhead applied is the __________________________.

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

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a _______________ standard.

Companies promoting continuous improvement strive to achieve _____________ standards by eliminating inefficiencies and waste.

Georgia,Inc.has collected the following data on one of its products.The direct materials price variance is:

The difference between the actual sales and the flexible budget sales is called the ______________________ variance.

A flexible budget is also called a _______________ budget.

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

A cost variance is the difference between actual cost and standard cost.

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

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

A flexible budget expresses all costs on a per unit basis,regardless of cost behavior.