Exam 13: Budgeting and Standard Cost Systems

A budget performance report compares actual results with the budgeted amounts and reports differences for possible investigation.

If the standard to produce a given amount of product is 2,000 units of direct materials at $12 and the actual was 1,600 units at $13,the direct materials quantity variance was $4,800 favorable.

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead)based on 100% capacity of 80,000 machine hours.The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows:

The sales budget is the starting point for preparation of the direct labor cost budget.

The following data is given for the Walker Company:

If the standard to produce a given amount of product is 12,000 hours at a factory overhead rate of $5 ($3 fixed,$2 variable),actual variable factory overhead was $26,400,actual fixed factory overhead was $45,000,and 100% of productive capacity is 15,000 hours,the volume variance was $9,000 favorable.

Refer to the information provided for Efficient Corporation.The total direct labor variance is:

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:

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

Standards are more widely used for nonmanufacturing expenses than for manufacturing costs.

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

Which of the following would not lend itself to applying direct labor variances?

The capital expenditure budget summarizes future plans for acquisition of fixed assets.

Refer to the information provided for Frogue Company.The direct materials cost variance is:

The master budget of a small manufacturer would normally include all component budgets that impact the financial statements.

If the price paid per unit differs from the standard price per unit for direct materials,the variance is termed:

Budgetary slack can be avoided if lower and mid-level managers are requested to support all of their spending requirements with specific operational plans.

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

Microgen Company static budget for 12,000 units of production includes $48,000 for direct materials,$36,000 for direct labor,utilities of $6,000,and supervisor salaries of $18,000.A flexible budget for 14,000 units of production would show:

Brown Inc.'s production budget for Product X for the year ended December 31 is as follows: 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.