Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows: \[\begin{array} { l l } \text { Materials: } & 1.5 \text { pounds per unit; } \$ 4.00 \text { per pound } \\ \text { Labor: } & 2.0 \text { hours per unit; } \$ 18.00 \text { per hour } \end{array}\] - During the first quarter, Faas produced 5,000 units of this product. At the end of the quarter, an examination of the labor cost records showed that the company used 11,000 hours of direct labor and actual direct labor costs were $184,800. The direct labor price variance was $13,200 F. Which of the following would be a logical explanation for this variance?

A) The company used fewer labor hours than allowed by standards. B) The company paid a lower rate for labor than allowed by standards. C) The company used a lower quantity of materials than allowed by standards. D) The company paid a lower price for the materials than allowed by standards. A) The company used fewer labor hours than allowed by standards. B) The company paid a lower rate for labor than allowed by standards. C) The company used a lower quantity of materials than allowed by standards. D) The company paid a lower price for the materials than allowed by standards.

Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows: \[\begin{array} { l l l l } \text { Hours per unit } & 0.5 & \text { Price per hour } & \$ 18.00 \end{array}\] Actual purchases of materials for the current month are as follows: 10,000 pounds for $48,000 Planned production for the month: 3,000 units Atlantic has just issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:

A) debit WIP $28,800, credit Materials inventory $30,000, debit Materials efficiency variance $1,200. B) debit WIP $28,800, credit Materials inventory $50,000, debit Materials efficiency variance $28,750. C) debit WIP $30,000, credit Materials inventory $50,000, debit Materials efficiency Variance $20,000. D) debit WIP $50,000, credit Materials inventory $48,000, credit Materials efficiency variance $50,000. A) debit WIP $28,800, credit Materials inventory $30,000, debit Materials efficiency variance $1,200. B) debit WIP $28,800, credit Materials inventory $50,000, debit Materials efficiency variance $28,750. C) debit WIP $30,000, credit Materials inventory $50,000, debit Materials efficiency Variance $20,000. D) debit WIP $50,000, credit Materials inventory $48,000, credit Materials efficiency variance $50,000.

Ibis Company prepared the following static budget for the coming month: $\begin{array}{|l|l|r|} \hline \text { Static Budget } & & \\ \hline \text { Units/volume } & & 12,000 \\ \hline & \text { Per Unit } & \\ \hline \text { Sales revenue } & \$ 20.00 & \$ 240,000 \\ \hline \text { Variable expenses } & \$ 9.00 & 108,000 \\ \hline \text { Contribution margin } & & 132,000 \\ \hline \text { Fixed expenses } & & 130,000 \\ \hline \text { Operating income/(1oss) } & & \$ 2,000 \\ \hline \end{array}$ - If a flexible budget was prepared at a volume of 13,000 units, how much would the operating income be?

A) $22,000 B) $17,500 C) $24,000 D) $13,000 A) $22,000 B) $17,500 C) $24,000 D) $13,000

Zennick Fashion Products uses standard costs for their manufacturing division. Standards specify 3.0 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: \[\begin{array}{l} \begin{array} { l l } \text { Production volume: } & 1,000 \text { units } \\ \text { Estimated variable overhead costs: } & \$ 120,000 \\ \text { Estimated direct labor hours: } & 3,000 \text { hours } \end{array}\\ \text { At the end of the year, actual data were as follows: }\\ \begin{array} { l l } \text { Production volume: } & 1,500 \text { units } \\ \text { Actual variable overhead costs: } & \$ 174,300 \\ \text { Actual direct labor hours: } & 4,200 \text { hours } \end{array} \end{array}\] - How much is the standard price per hour for variable overhead?

A) $35.00 per direct labor hour B) $39.50 per direct labor hour C) $38.00 per direct labor hour D) $40.00 per direct labor hour A) $35.00 per direct labor hour B) $39.50 per direct labor hour C) $38.00 per direct labor hour D) $40.00 per direct labor hour

Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows: \[\begin{array} { l l l l } \text { Hours per unit } & 0.5 & \text { Price per hour } & \$ 18.00 \end{array}\] Pounds per unit 2.0 Price per pound $5.00 Atlantic plans to produce 3,000 units of product, and has just purchased 10,000 pounds of raw materials for a net cost of $48,000. The journal entry to record this transaction would be to:

A) debit Materials inventory $50,000, credit Accounts payable $48,000, credit Materials Price Variance $2,000. B) debit Materials inventory $48,000, credit Accounts payable $48,000. C) debit Materials inventory $50,000, credit Accounts payable $50,000, credit Materials Price Variance $2,000. D) debit Materials price variance $2,000, debit Materials inventory $48,000, credit Accounts payable $50,000. A) debit Materials inventory $50,000, credit Accounts payable $48,000, credit Materials Price Variance $2,000. B) debit Materials inventory $48,000, credit Accounts payable $48,000. C) debit Materials inventory $50,000, credit Accounts payable $50,000, credit Materials Price Variance $2,000. D) debit Materials price variance $2,000, debit Materials inventory $48,000, credit Accounts payable $50,000.

Exam 23: Flexible Budgets and Standard Costs

The production manager of a company, in an effort to gain a promotion, negotiated a new labor contract with her factory employees that required them to bear a greater percentage of benefit costs than before, thus bringing down the cost of direct labor to the company. Shortly afterward, several experienced and highly skilled workers resigned, and were replaced by new employees whose work was very slow during their training period. At the end of the quarter, the company's profits fell 10%. This situation could have produced which of the following variances?

(Multiple Choice)

4.9/5

(75)

Question 41

Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

(Multiple Choice)

4.8/5

(86)

Question 42

Which of the following BEST describes flexible budgets?

(Multiple Choice)

4.8/5

(74)

Question 43

Which of the following is an example of a materials efficiency standard?

(Multiple Choice)

4.8/5

(85)

Question 44

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

(Multiple Choice)

4.8/5

(87)

Question 45

Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows: Materials: 1.5 pounds per unit; \ 4.00 per pound Labor: 2.0 hours per unit; \ 18.00 per hour - During the first quarter, Faas produced 5,000 units of this product. At the end of the quarter, an examination of the labor cost records showed that the company used 11,000 hours of direct labor and actual direct labor costs were $184,800. The direct labor price variance was $13,200 F. Which of the following would be a logical explanation for this variance?

(Multiple Choice)

4.9/5

(91)

Question 46

Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows: Hours per unit 0.5 Price per hour \ 18.00 Actual purchases of materials for the current month are as follows: 10,000 pounds for $48,000 Planned production for the month: 3,000 units Atlantic has just issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:

(Multiple Choice)

4.9/5

(94)

Question 47

Ibis Company prepared the following static budget for the coming month: Static Budget Units/volume 12,000 Per Unit Sales revenue \ 20.00 \ 240,000 Variable expenses \ 9.00 108,000 Contribution margin 132,000 Fixed expenses 130,000 Operating income/(1oss) \ 2,000 - If a flexible budget was prepared at a volume of 13,000 units, how much would the operating income be?

(Multiple Choice)

4.7/5

(83)

Question 48

Atlas Manufacturing is closing the year 2012. Atlas uses standard costing methodology in its accounting system and for internal performance reporting. Atlas's ending balances are shown here: $Atlas Manufacturing is closing the year 2012. Atlas uses standard costing methodology in its accounting system and for internal performance reporting. Atlas's ending balances are shown here: Using the format below, please prepare a statement of operating income. \begin{array} { | l | l | l | l | } \hline \text { Sales revenue (standard) } &\quad\quad & \quad\quad&\quad\quad \\ \hline \text { Sales revenue variance } & & & \\ \hline \text { Sales revenue (actual) } & & & \\ \hline \text { Cost of goods sold (standard) } & & & \\ \hline \text { Manufacturing variances } & & & \\ \hline \text { (Credit balances in parentheses) } & & & \\ \hline \text { Direct materials price variance } & & & \\ \hline \text { Direct materials efficiency variance } & & & \\ \hline \text { Direct labor price variance } & & & \\ \hline \text { Direct labor efficiency variance } & & & \\ \hline \text { Variable overhead spending variance } & & & \\ \hline \text { Variable overhead efficiency variance } & & & \\ \hline \text { Fixed overhead spending variance } & & & \\ \hline \text { Fixed overhead volume variance } & & & \\ \hline \text { Cost of goods sold (actual) } & & & \\ \hline \text { Gross profit } & & & \\ \hline \text { Selling \& admin. expenses } & & & \\ \hline \text { Net operating income/(loss) } & & & \\ \hline \end{array}$ Using the format below, please prepare a statement of operating income. Sales revenue (standard) Sales revenue variance Sales revenue (actual) Cost of goods sold (standard) Manufacturing variances (Credit balances in parentheses) Direct materials price variance Direct materials efficiency variance Direct labor price variance Direct labor efficiency variance Variable overhead spending variance Variable overhead efficiency variance Fixed overhead spending variance Fixed overhead volume variance Cost of goods sold (actual) Gross profit Selling \& admin. expenses Net operating income/(loss)

(Essay)

4.9/5

(69)

Question 49

Which of the following statements is TRUE about price variances and quantity (or efficiency) variances?

(Multiple Choice)

4.8/5

(86)

Question 50

Zennick Fashion Products uses standard costs for their manufacturing division. Standards specify 3.0 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume: 1,000 units Estimated variable overhead costs: \ 120,000 Estimated direct labor hours: 3,000 hours At the end of the year, actual data were as follows: Production volume: 1,500 units Actual variable overhead costs: \ 174,300 Actual direct labor hours: 4,200 hours - How much is the standard price per hour for variable overhead?

(Multiple Choice)

4.8/5

(81)

Question 51

For companies using standard costing accounting procedures, when recording the use of direct materials in the production process, Work in process inventory is debited for which of the following?

(Multiple Choice)

4.7/5

(74)

Question 52

A quantity variance measures how well a company keeps unit prices of material and labor inputs within standards.

(True/False)

4.8/5

(71)

Question 53

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or uncontrollable.

(True/False)

4.9/5

(88)

Question 54

Discount Brand Products uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Discount Brand had a favorable price variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

(Multiple Choice)

4.8/5

(83)

Question 55

Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows: Hours per unit 0.5 Price per hour \ 18.00 Pounds per unit 2.0 Price per pound $5.00 Atlantic plans to produce 3,000 units of product, and has just purchased 10,000 pounds of raw materials for a net cost of $48,000. The journal entry to record this transaction would be to:

(Multiple Choice)

4.9/5

(70)

Question 56

Portobello Company prepared the following static budget for the coming month: Static Budget Units/volume 5,000 Per Unit Sales revenue \ 3.00 \ 15,000 Variable expenses \ 1.80 9,000 Contribution margin 6,000 Fixed expenses 5,000 Operating income/(1oss) \ 1,000 Using the format below, please prepare a flexible budget including data at volumes of 4,000 and 6,000 units. Flexible Budget Units/volume 4,000 5,000 6,000 Per Unit Sales revenue \ 3.00 Variable expenses \ 1.80 Contribution margin rixed expenses Operating income/(loss)

(Essay)

4.9/5

(83)

Question 57

The flexible budget variance arises because the number of units actually sold differs from the static budget units.

(True/False)

4.9/5

(66)

Question 58

Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper, while fixed costs are $75,000 per month. At a volume of 600,000 diapers per month, what operating income would be shown in the flexible budget?

(Multiple Choice)

4.9/5

(87)

Question 59

Ibis Company prepared the following static budget for the coming month: Static Budpgt Units/volume 12,000 Per Unit Sales revenue \ 20.00 \ 240,000 Variable expenses \ 9.00 108,000 Contribution margin 132,000 Fixed Expenses 130,000 Operating income(loss) \ 2,000 Using the format below, please prepare a flexible budget including data at volumes of 13,000 and 14,000 units. Flexible Budget 12,000 13,000 14,000 Per Unit Snits/volume \ 20.00 Sariable expenses \ 9.00 Contribution margin Fixed expenses Operating income/(1oss)

(Essay)

4.8/5

(79)

Question 60

Showing 41 - 60 of 165

Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

Which of the following BEST describes flexible budgets?

Which of the following is an example of a materials efficiency standard?

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

Which of the following statements is TRUE about price variances and quantity (or efficiency) variances?

For companies using standard costing accounting procedures, when recording the use of direct materials in the production process, Work in process inventory is debited for which of the following?

A quantity variance measures how well a company keeps unit prices of material and labor inputs within standards.

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or uncontrollable.

The flexible budget variance arises because the number of units actually sold differs from the static budget units.

Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper, while fixed costs are $75,000 per month. At a volume of 600,000 diapers per month, what operating income would be shown in the flexible budget?

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Performance Evaluation and the Balanced Scorecard

Filters

Exam 23: Flexible Budgets and Standard Costs

Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

Which of the following BEST describes flexible budgets?

Which of the following is an example of a materials efficiency standard?

The Carolina Products Company has just completed a flexible budget analysis of 2nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?

Which of the following statements is TRUE about price variances and quantity (or efficiency) variances?

For companies using standard costing accounting procedures, when recording the use of direct materials in the production process, Work in process inventory is debited for which of the following?

A quantity variance measures how well a company keeps unit prices of material and labor inputs within standards.

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or uncontrollable.

The flexible budget variance arises because the number of units actually sold differs from the static budget units.

Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper, while fixed costs are $75,000 per month. At a volume of 600,000 diapers per month, what operating income would be shown in the flexible budget?

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Performance Evaluation and the Balanced Scorecard

Filters

The Carolina Products Company has just completed a flexible budget analysis of 2^nd quarter operating income, as shown here: - Based on the above data, which of the following statements would be a correct interpretation of the flexible budget variance for sales revenue?