Exam 23: Flexible Budgets and Standard Cost Systems

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the month,the actual sales volume was lower than the expected sales volume as per the static budget.This difference results in an unfavorable ________.

The static budget,at the beginning of the month,for Jabari Company follows: Static budget: Sales volume: 2100 units; Sales price: $52.00 per unit Variable costs: $12.00 per unit; Fixed costs: $26,500 per month Operating income: $57,500 Actual results,at the end of the month,follows: Actual results: Sales volume: 1900 units; Sales price: $58.00 per unit Variable costs: $17.00 per unit; Fixed cost: $37,000 per month Operating income: $40,900 Calculate the sales volume variance for operating income.

Infinity Clock Company prepared the following static budget for the year: Static Budget Units/Volume 5000 Per Unit Sales Revenue \ 7.00 \ 35,000 Variable Costs 1.00 Contribution Margin 30,000 Fixed Costs Operating Income/(Loss) \2 7,000 If a flexible budget is prepared at a volume of 7800 units,calculate the amount of operating income.The production level is within the relevant range.

When a manufacturing company uses a standard cost system,Work-in-Process Inventory is debited at standard input quantities and standard costs.

Reflector Glass Company prepared the following static budget for the year: Static Budget Units/Volume 5000 Per Unit Sales Revenue \ 7,00 \ 35,000 Variable Costs 1.50 Contribution Margin 27,500 Fixed Costs Operating Income/(Loss) If a flexible budget is prepared at a volume of 8400 units,calculate the amount of operating income.The production level is within the relevant range.

Developing efficiency standards based on best practices is called benchmarking.

Which of the following best describes a standard?

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)________.

Judd Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.The allocation base for variable overhead costs is direct labor hours.At the beginning of the year,the static budget for variable overhead costs included the following data: Production volume 6300 units Budgeted variable overhead costs \ 15,000 Budgeted direct labor hours 630 hours At the end of the year,actual data were as follows: Production volume 4200 units Actual variable overhead costs \ 15,000 Actual direct labor hours 480 hours What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

The static budget,at the beginning of the month,for Amira Company follows: Static budget: Sales volume: 1000 units; Sales price: $70.00 per unit Variable costs: $32.00 per unit; Fixed costs: $36,800 per month Operating income: $1200 Actual results,at the end of the month,follows: Actual results: Sales volume: 980 units; Sales price: $74.00 per unit Variable costs: $35.00 per unit; Fixed costs: $34,600 per month Operating income: $3620 Calculate the flexible budget variance for fixed costs.

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

List the direct materials variances,and briefly describe each.

The Comfort Foam Products Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following would be a correct factor to explain the sales volume variance for variable costs?

Dixon,Inc.uses a standard cost system.On December 31,the last day of the accounting period,the account balances include the following: What is the net operating income on a standard cost income statement of the company for the year ended December 31?

An unfavorable sales volume variance in operating income suggests a(n)________.

Which of the following is an example of a direct labor efficiency standard?

Cedar 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 $0.20 per square foot.Carpenters' wages are $20.00 per hour.Payroll costs are $3.00 per hour,and benefits are $6.00 per hour.How much is the direct labor standard cost per hour?

The flexible budget variance is the difference between expected results in the flexible budget for the actual units sold and the static budget.

The management of Pamela's Pet Supplies has calculated the following variances: Direct materials cost variance \ 11,000 Direct materials efficiency variance 38,000 Direct labor cost variance 15,500 Direct labor efficiency variance 13,500 Total variable overhead variance 8500 Fixed overhead cost variance 3500 When determining the total product cost flexible budget variance,what is the fixed overhead variance of the company?

The Alaska Fish 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 sales volume variance for operating income?