Exam 23: Flexible Budgets and Standard Costs

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

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.

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. -What is the total labor cost variance?

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

A flexible budget may be prepared:

Flexible budgets may be prepared before or after an actual period of activity. Why would management prepare such budgets at differing time frames?

Define standard costs. How do they assist management?

Gala Enterprises collected the following data regarding production of one of its products. Compute the variable overhead cost variance, the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead spending variance, and the fixed overhead volume variance. Direct labor standard (2 hrs. @ \1 5/hr.) \ 30.00 per finished unit Actual direct labor hours 60,800 hrs. Budgeted units 31,000 units Actual finished units produced 30,000 units Standard variable OH rate (2 hrs. @ \ 14.00/.) \ 28.00 per finished unit Standard fixed OH rate (\ 310,000/31,000 units) \ 10.00 per unit Actual variable overhead costs incurred \ 857,600 Actual fixed overhead costs incurred \ 312,000

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units. Using a contribution margin format: Prepare a fixed budget income statement for the planned level of sales and production.

A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000. The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units. The total controllable cost variance is:

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 price variance?

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance. Direct labor stendard (2 hrs. @ \ 12.75/ .) \ 25.50 per finished unit Actual direct labor hours 81,500 hrs Budgeted units 42,000 units Actual finished units produced 40,000 units Standad variable OH rate (2 hrs. @ \1 4.30/hr) \2 8.60 per finished unit Standard fixed OH rate (\ 336,000 / 42,000 units) \8 .00 per unit Actual cost of variable overhead costs incurred \1 ,140,000 Actual cost of fixed overhead costs incurred \ 338,000

A fixed budget is also called a ________ budget.

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a ________ standard.

Claremont Company specializes in selling refurbished copiers. During the month, the company sold 180 copiers for total sales of $540,000. The budget for the month was to sell 175 copiers at an average price of $3,200. -The sales price variance for the month was:

The following information relating to a company's overhead costs is available. Budgeted tixed overhead rate per machine hour \0 .50 Actual variable overhead \7 3,000 Budgeted variable overhead rate per machine hour \2 .50 Actual fixed overhead \1 7,000 Budgeted hours allowed for actual output achieved 32,000 Based on this information, the total overhead variance is:

Fletcher Company collected the following data regarding production of one of its products. Compute the direct labor efficiency variance. Direct labor standard (2 hrs. @ \1 2.75/hr.) \2 5.50 per finished unit Actual direct labor hours 81,500 hrs. Actual finished units produced 40,000 units Actual cost of direct labor \1 ,100,250

When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.