Exam 13: Budgeting and Standard Costs

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

Standard Corporation uses a standard cost system.The following information was provided for the period that just ended: Standard time per completed unit 3 Actual total factory overhead \ 108,000 Fixed factory overhead \ 60,000 Standard fixed factory overhead rate \ 2.00 per labor hour Standard variable factory overhead rate \ 1.50 per labor hour Normal capacity 30,000 hours Plant operated during the period 28,000 hours Units completed during the period 9,000 ? The fixed factory overhead volume variance is

The formula to compute direct labor time variance is:

An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.

Based on the following production and sales data of Jackson Co.for March of the current year, prepare (a) a sales budget and (b) a production budget. Product T Product X Estimated inventory, March 1 26,000 units 18,000 units Desired inventory, March 31 32,000 units 15,000 units Expected sales volume: Area I 320,000 units 260,000 units Area II 190,000 units 130,000 units Unit sales price \ 4 \ 12

Production estimates for July are as follows: Estimated inventory (units), July 1 725 Desired inventory (units), July 31 1,200 Expected sal es volume (units), July 7,500 ? For each unit produced 4 hours of direct labor is required.The labor rate per hour is $15.The number of direct labor hours required for July production is:

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the factory overhead cost budget.

Two major budgets comprising the budgeted balance sheet are:

Brown Inc.'s production budget for Product X for the year ended December 31 is as follows: Sales 640,000 units Plus desired ending inventory Total 725,000 Less estimated beginning inventory, Jan. 1 90,000 Total production ? In Brown's production operations, Materials A, B, and C are required to make Product X.The quantities of direct materials expected to be used for each unit of product are as follows: Product X Material A .50 pound per unit Material B 1.00 pound per unit Material C 1.20 pound per unit The prices of direct materials are as follows: Material A $0.60 per pound Material B $1.70 per pound Material C $1.50 per pound Prepare a direct materials purchases budget for Product X.

Cape Corporation sells a single product.Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units.The quantities of direct materials expected to be used for each unit of finished product are given below. Material A .50 per unit @\ 0.60 per pound Material B 1.00 per unit @\ 1.70 per pound Material C 1.20 per unit @\ 1.00 per pound ? The amount of direct material C purchased during the year is:

Supervisor salaries and indirect factory wages would normally appear in the direct labor cost budget.

Managers plan _____ in a budget in order to provide a cushion for unexpected events or improve the appearance of operations.

The budgeted direct materials purchases are normally computed as the sum of (1) the materials for production and (2) the desired beginning inventory.

The standard fixed factory overhead rate is based on 100% capacity of 50,000 direct labor hours.The standard costs and the actual costs for factory overhead for the production of 8,000 units during the current month were as follows: Standard: 40,000 hours at \ 3 \ 120,000 Actual: Factory overhead (41,000 direct labor hours) 131,200 ? If there was a $9,000 unfavorable volume variance for December, what is the standard fixed factory overhead cost rate?

If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is termed:

The _____ estimates the expected receipts and payments of cash for a period of time.

​Which of the following formulas is used to calculate process yield?

Answer Corporation uses standard cost system.The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: $\text {Standard Costs}$ Direct materials 2,500 kilograms @\ 8 Direct labor 7,500 hours @\ 12 $\text { Actual Costs }$ Direct materials 2,600 kilograms @\ 8.75 Direct labor 7,400 hours @\ 11.40 ? Factory overhead (100% capacity - 10,000 hrs.): Variable cost @ $2 per hour Total variable cost, $18,000 Fixed cost @ $0.80 per hour Total fixed cost, $8,000 ? The amount of the direct labor rate variance is:

As a device for measuring efficiency, standard cost systems enables management to determine the causes of differences between what a product should cost and how much it actually costs to produce.

Flexible budgeting builds the effect of changes in level of activity into the budget system.