Exam 23: Flexible Budgets and Standard Cost Systems

Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot. Carpenters' wages are $25.00 per hour. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct labor cost standard (per hour)?

The fixed overhead cost variance measures the difference between actual fixed overhead and allocated fixed overhead.

Western Outfitters projected sales of 75,000 units for the year 2015 at a unit sale price of $12.00. Actual sales in 2015: 72,000 units, at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual variable cost was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the sales volume variance for operating income?

The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to purchase a higher grade of material that would be more reliable, but he was worried that the cost of the new material might negatively affect operating income. This situation would have produced a(n):

Atlace Manufacturers uses standard costing system Standards direct labor hours per unit are 0.5 hour. Standard price per hour is $18.00. Actual direct labor for the month is 1,200 hours for a total cost of $24,000. Planned production for the month: 3,000 units. The journal entry to record the payment of direct labor wages would be:

What does a favorable direct materials cost variance indicate?

The fixed overhead volume variance shows why the fixed overhead is underallocated or overallocated because it is a volume variance.

Which of the following is the correct formula to measure cost variance?

Which of the following is used to charge the cost of direct labor to the production?

Standard costs are developed by the cooperative effort of procurement, production, human resources, and accounting personnel.

A favorable direct materials cost variance occurs when the actual direct materials costs incurred is less than the standard direct materials cost.

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

From the following particulars of Rose Mary Company, calculate the total production cost flexible budget variance.

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 would have produced a(n):

From the following particulars of Rose Mary Company, calculate the total direct labor variance.

Which of the following will result in an unfavorable direct materials efficiency variance?

Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $4 per pound Direct labor: 4 hours per unit; $15 per hour During the first quarter, Emerald produced 5,000 units of this product. Actual direct materials and direct labor costs were $65,000 and $325,000, respectively. For the purposes of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5,000 units.

The management of Alpha Company has calculated the following variances: Calculate the total variable overhead variance of Alpha Company.

Atlace Manufacturers uses standard costing system. Standards for direct materials are as follows: Actual purchases of materials for the current month are 10,000 pounds for $48,000. Planned and actual production for the month is 3,000 units. Atlace has issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:

Which of the following is a key point to investigate while analyzing overhead costs?