Exam 23: Flexible Budgets and Standard Cost Systems

Golden Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Golden uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pounds per unit; $3 per pound Labor: 4 hours per unit; $20 per hour During the first quarter,Golden produced 5000 units of this product.At the end of the quarter,an examination of the direct materials records showed that the company used 9500 pounds of direct materials and the direct materials cost variance was $3750 U.Which of the following is a logical explanation for this variance?

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing a higher waste of valuable direct materials.The production manager decided to recruit some highly skilled production workers from another company to bring down the defect rate.This would produce a(n)________.

Which of the following amounts of a flexible budget changes,within the specified relevant range,with changes in sales volume?

Which of the following is a reason companies use standard costs?

The Dear Dairy Cheese Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct factor to explain the flexible budget variance for fixed costs?

Alphonse Company manufactures staplers.The budgeted sales price is $14.00 per stapler,the variable costs are $3.00 per stapler,and budgeted fixed costs are $10,000.What is the budgeted operating income for 4300 staplers?

Trull Company uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Trull had a favorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Purchase discounts,freight in and receiving costs ________.

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing a higher waste of valuable direct materials.The production manager decided to purchase a higher grade of materials that would be more reliable.This would produce a(n)________.

What does the fixed overhead cost variance measure?

Oak Valley 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 $6.00 per square foot from the supplier.Delivery costs are $0.20 per square foot.Carpenters' wages are $20.00 per hour.Payroll costs are $4.00 per hour,and benefits are $5.00 per hour.How much is the direct materials standard cost per square foot?

Top Half produces and sells two types of t-shirts-Fancy and Plain.The company provides the following data: Budget Actual Unit sales price - Fancy \ 24 \ 25 Unit sales price - Plain \ 18 \ 17 Unit sales - Fancy 1,300 1,250 Unit sales - Plain 900 875 Compute the flexible budget variance for Fancy t-shirts for sales revenue.

Global Engineering's actual operating income for the current year is $56,000.The flexible budget operating income for actual sales volume is $51,000,while the static budget operating income is $54,000.What is the sales volume variance for operating income?

Based on the following,what is the total direct materials variance?

When recording direct materials usage,what does an unfavorable direct materials efficiency variance represent? Will this variance have a debit or credit balance?

The production manager of a company,in an effort to gain a promotion,negotiated a new labor contract with the 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 would produce a(n)________.

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated,and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget.This could produce a(n)________.

To compute the variable overhead cost variance,first compute the difference between actual cost and standard cost.Then,multiply this difference by standard quantity.

Which of the following is an example of a direct materials cost standard?