Exam 23: Flexible Budgets and Standard Costs

The following information describes production activities of the Central Corp.: 30,000 units were completed during the year Budgeted standards for each unit produced: 1/2 lb.of raw material at $4.15 per lb. 10 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

Management by exception allows managers to focus on the most significant variances in performance.

Stanton Co.produces and sells two lines of t-shirts,Deluxe and Mega.Stanton provides the following data.Compute the sales price and the sales volume variances for each product. Unit salesprice - Deluxe \ldots. \1 5 \1 6 Unit sales price-Mega \ldots\ldots \ 20 \ 19 Unit sales-Deluxe \ldots\ldots\ldots. 2,400 2,500 Unit sales-Mega \ldots\ldots\ldots\ldots. 2,000 1,900

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.

The following company information is available.The direct materials quantity variance is:

Gates Company reports the following information regarding the production on 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.

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

A planning budget based on a single predicted amount of sales or production volume is called a:

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

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

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

How are unfavorable variances recorded? How are favorable variances recorded?

Cabot Company collected the following data regarding production of one of its products.Compute the fixed overhead cost variance.

Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through 10.Enter the letter of the term with the definition,using the space preceding the definition. (a)Cost variance (b)Volume variance (c)Price variance (d)Quantity variance (e)Standard costs (f)Controllable variance (g)Fixed budget (h)Flexible budget (i)Variance analysis (j)Management by exception __________ (1)The difference between the total budgeted overhead cost and the overhead cost that was allocated to products using the predetermined fixed overhead rate. __________ (2)A planning budget based on a single predicted amount of sales or production volume; unsuitable for evaluations if the actual volume differs from the predicted volume. __________ (3)Preset costs for delivering a product,component,or service under normal conditions. __________ (4)A process of examining the differences between actual and budgeted sales or costs and describing them in terms of the amounts that resulted from price and quantity differences. __________ (5)The difference between actual and budgeted sales or cost caused by the difference between the actual price per unit and the budgeted price per unit. __________ (6)A budget prepared based on predicted amounts of revenues and expenses corresponding to the actual level of output. __________ (7)The difference between actual and budgeted cost caused by the difference between the actual quantity and the budgeted quantity. __________ (8)The combination of both overhead spending variances (variable and fixed) and the variable overhead efficiency variance. __________ (9)A management process to focus on significant variances and give less attention to areas where performance is close to the standard. __________ (10)The difference between actual cost and standard cost,made up of a price variance and a quantity variance.

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

A cost variance equals the sum of the quantity variance and the price variance.

The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are:

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

A direct labor cost variance may be broken down into a controllable variance and a volume variance.

For the current period,Boggs Company's manufacturing operations yield a $5,250 unfavorable price variance on its direct materials usage.The actual price per pound is $56.50 and the standard price per pound is $55.00.How many pounds of material are used in the current period?