Exam 8: Flexible Budgets and Standard Costs

The following information describes a company's usage of direct labor in a recent period. The total direct labor cost variance is: Actual hours used 45,000 Actual rate per hour \1 5.00 Standard rate per hour \1 4.50 Standard hours for units produced 47,000

A flexible budget may be prepared:

Gleason Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity. During the current period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.

A volume variance occurs when the company operates at a different capacity level than was expected.

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:

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

In this type of control system, the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur:

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.

Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the following data. Compute the sales price and the sales volume variances for each product. Budget Actual Unit sales price-Classic.... \ 15 \ 16 Unit sales price-Mod ...... \ 20 \ 19 Unit sales-Classic........ 2,400 2,500

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 total sales variance for the month.

Use the following data to find the direct labor efficiency variance if the company produced 3,500 units during the period.

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 ________.

If ending variance account balances are material, they should always be closed directly to Cost of Goods Sold.

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

In the analysis of variances, management commonly focuses on four categories of production costs: ________ cost, ________ cost; ________ cost; and ________ cost.

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

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials quantity variance?

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

Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be: