Whidbey Co. fixed budget for the year is shown below: $\begin{array}{|l|r|r|} \hline \text { Sales (50,000 units) } &&\$1,300,000\\ \hline \text {Cost of goods sold: } &\\ \hline\text { Direct materials} &\$150,000\\ \hline \text {Direct labor } &450,000\\ \hline \text { Overhead (includes \( \$ 2 $ per unit variable } &\\ \text {overhead) } &\underline{240,000}&\underline{840,000}\\ \hline \text { Gross profit } &&\$460,000\\ \hline\text { Selling expenses: } &\\ \hline \text {Sales commissions (all variable) } &60,000\\ \hline \text { Rent (all fixed) } &40,000\\ \hline\text {Insurance (all fixed) } &35,000\\ \hline \text {General and administrative expenses: } &\\ \hline \text { Salaries (all fixed). } &72,000\\ \hline \text {Rent (all fixed) } &54,000\\ \hline \text {Depreciation (all fixed) } &\underline{31,000}&\underline{292,000}\\ \hline \text { Net income from operations } &&\underline{\$168,000}\\ \hline \end{array}\) 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.

The answer of Whidbey Co. fixed budget for the year...

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is: \[\begin{array} { l l } \text { Direct materials standard ( } 7 \mathrm {~kg} @ \$ 2 / \mathrm { kg } ) & \$ 14 \text { per finished unit } \\ \text { Actual cost of materials purchased } & \$ 322,500 \\ \text { Actual direct materials purchared and used } & 150,000 \mathrm {~kg} \end{array}\]

A) $27,500 unfavorable. B) $50,000 unfavorable. C) $50,000 favorable. D) $22,500 unfavorable. E) $22,500 favorable. A) $27,500 unfavorable. B) $50,000 unfavorable. C) $50,000 favorable. D) $22,500 unfavorable. E) $22,500 favorable.

Fletcher Company collected the following data regarding production of one of its products. Compute the standard quantity allowed for the actual output. \[\begin{array} { l rl} \text { Direct materlals stardard (6lbs. @ \$2/16.) } & \$ 12 & \text { per finished unit } \\ \text { Actual direct materials used } & 243,000 & \text { lbs. } \\ \text { Actual finished units produced } & 40,000 & \text { units }\\ \text { Actual cost of direct materials used}&\$483,570\\ \end{array}\]

A) 243,000 pounds. B) 240,000 pounds. C) 40,000 pounds. D) 480,000 pounds. E) 80,000 pounds. A) 243,000 pounds. B) 240,000 pounds. C) 40,000 pounds. D) 480,000 pounds. E) 80,000 pounds.

Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance. \[\begin{array} { l rl} \text { Direct materlals stardard (6lbs. @ \$2/16.) } & \$ 12 & \text { per finished unit } \\ \text { Actual direct materials used } & 243,000 & \text { lbs. } \\ \text { Actual finished units produced } & 40,000 & \text { units }\\ \text { Actual cost of direct materials used}&\$483,570\\ \end{array}\]

A) $2,430 unfavorable. B) $3,570 unfavorable. C) $2,430 favorable. D) $6,000 unfavorable. E) $3,570 favorable. A) $2,430 unfavorable. B) $3,570 unfavorable. C) $2,430 favorable. D) $6,000 unfavorable. E) $3,570 favorable.

Lionaire, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. \[\begin{array} { | l | l | } \hline & \text { Per Unit } \\ \hline \text { Direct materials (61bs. @\$2.00/1b.) } & \$ 12.00 \\ \hline \text { Direct labor (1hrs.@\$8.00/hr.) } & 8.00 \\ \hline \end{array}\] During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: \[\begin{array} { | l | l | } \hline \text { Direct materials } ( 760,000 \mathrm { lbs } . ) & \$ 1,558,000 \\ \hline \text { Direct labor } ( 126,000 \mathrm { hrs } . ) & 1,014,300 \\ \hline \end{array}\] Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. \[\begin{array} { | l | l | } \hline \text { Direct materials: } &\quad\quad\quad\quad \\ \hline \text { Price variance } & \\ \hline \text { Quantity variance } & \\ \hline & \\ \hline \text { Direct labor: } & \\ \hline \text { Rate variance } & \\ \hline \text { Efficiency variance } & \\ \hline \end{array}\]

The answer of Lionaire, Inc. has developed the following standard...

Exam 8: Flexible Budgets and Standard Costs

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 contribution margin expected if the company produces and sells 16,000 units is:

(Multiple Choice)

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Question 101

Whidbey Co. fixed budget for the year is shown below: Sales (50,000 units) \1 ,300,000 Cost of goods sold: Direct materials \1 50,000 Direct labor 450,000 Overhead (includes \ 2 per unit variable overhead) Gross profit \4 60,000 Selling expenses: Sales commissions (all variable) 60,000 Rent (all fixed) 40,000 Insurance (all fixed) 35,000 General and administrative expenses: Salaries (all fixed). 72,000 Rent (all fixed) 54,000 Depreciation (all fixed) Net income from operations 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.

(Essay)

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Question 102

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

(True/False)

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Question 103

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is: Direct materials standard ( 7@\ 2/) \ 14 per finished unit Actual cost of materials purchased \ 322,500 Actual direct materials purchared and used 150,000

(Multiple Choice)

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Question 104

A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.

(True/False)

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Question 105

Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $65,000. Based on this information, the budgeted operating income for 28,000 units would be:

(Multiple Choice)

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Question 106

One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

(True/False)

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Question 107

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 efficiency variance for August?

(Multiple Choice)

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Question 108

Another name for a static budget is a variable budget.

(True/False)

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Question 109

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

(Multiple Choice)

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Question 110

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

(Multiple Choice)

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Question 111

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 contribution margin for 20,000 units would be:

(Multiple Choice)

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Question 112

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials quantity variance?

(Multiple Choice)

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Question 113

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 operating income for 20,000 units would be:

(Multiple Choice)

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Question 114

Fletcher Company collected the following data regarding production of one of its products. Compute the standard quantity allowed for the actual output. Direct materlals stardard (6lbs. @ \2 /16.) \ 12 per finished unit Actual direct materials used 243,000 lbs. Actual finished units produced 40,000 units Actual cost of direct materials used \4 83,570

(Multiple Choice)

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Question 115

Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance. Direct materlals stardard (6lbs. @ \2 /16.) \ 12 per finished unit Actual direct materials used 243,000 lbs. Actual finished units produced 40,000 units Actual cost of direct materials used \4 83,570

(Multiple Choice)

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Question 116

Lionaire, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Per Unit Direct materials (61bs. @ \2 .00/1b.) \ 12.00 Direct labor (1hrs.@ \8 .00/hr.) 8.00 During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Direct materials (760,000.) \ 1,558,000 Direct labor (126,000.) 1,014,300 Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable. Direct materials: Price variance Quantity variance Direct labor: Rate variance Efficiency variance

(Essay)

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Question 117

The difference between the actual cost incurred and the standard cost is called the:

(Multiple Choice)

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Question 118

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

(True/False)

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Question 119

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

(True/False)

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Question 120

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 contribution margin expected if the company produces and sells 16,000 units is:

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

A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.

Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $65,000. Based on this information, the budgeted operating income for 28,000 units would be:

One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

Another name for a static budget is a variable budget.

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

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

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 contribution margin for 20,000 units would be:

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials quantity variance?

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 operating income for 20,000 units would be:

The difference between the actual cost incurred and the standard cost is called the:

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

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

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Time Value of Money

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