Exam 23: Flexible Budgets and Standard Costs

A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

How are unfavorable variances recorded? How are favorable variances recorded?

Joseph, Inc., provides the following results of June's operations: Direct materials price variance \ 400 Direct materials quanty variance 2,000 Direct Labor rate variance 100 Direct labor efficiency variance 1,200 Variable overhead spending variance 400 Variable overhead efficiency variance 800 Fixed overhead spending variance 100 Fixed overhead volume variance 600 Required: (a) Determine the total overhead cost variance for June. (b) Applying the management by exception approach, which of the variances shown are of greatest concern? Why?

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 \ldots \ 15 \ 16 Unit sales pric e-Mod \ldots\ldots \ 20 \ 19 Unit sales-Clas sic \ldots\ldots\ldots\ldots 2,400 2,500 Unit sal es-Mod \ldots\ldots\ldots\ldots\ldots 2,000 1,900

A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs, $16,000. The operating income expected if the company produces and sells 15,000 units is:

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:

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 variable costs for 20,000 units would be:

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

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 (6 lbs. @ \2 .00/lb.) \ 12.00 Direct labor (1 hrs. @ \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 Quanty variance Direct labor: Rate variance Efficiency variance

Fletcher Company collected the following data regarding production of one of its products. Compute the standard quantity allowed for the actual output. Direct materrals standard (6 lbs. @ \2 /1b.) \1 2 per finished unit Actual direct materials used 243,000 Ibs. Actual finished units produced 40,000 units Actual cost of direct materials used \4 83,570

Zip-up Company provides the following data developed for its master budget: Sales price \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots \ 11.00 per unit Costs: Direct materials \ldots\ldots\ldots\ldots\ldots\ldots\ldots \ 3.00 per unit Direct labor \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots \ 4.75 per unit Variable overhead \ldots\ldots\ldots\ldots\ldots\ldots \ 0.50 per unit Factory depreciation \ldots\ldots\ldots\ldots\ldots \ 12,000 per month Supervision \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots \ 13,000 per month Selling expense \ldots\ldots\ldots\ldots\ldots\ldots\ldots \ 0.25 per unit Administrative cost \ldots\ldots\ldots\ldots\ldots\ldots. \ 9,000 per month Required: Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10 per gram and .25 direct labor hours at $12.00 per hour. Overhead is applied at the rate of $18 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials quantity variance.

If ending variance account balances are immaterial, they can be closed directly to Cost of Goods Sold.

Claymore Corp. has the following information about its standards and production activity for September. The controllable variance is: Actual total factory overhead incured \2 8,175 Standard factory overhead: Variable overhead \3 .10 per unit produced Fixed overhead \ 12,000 / 6,000 estimated units to be produced \2 per unit Actual units produced 4,800 units

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:

Variable budget is another name for a flexible budget.

Standard costs are used in the calculation of: