Exam 23: Flexible Budgets and Standard Cost Systems

Miami Fashions uses standard costs for their manufacturing division.From the following data,calculate the fixed overhead allocated to production based on direct labor hours (DLHr).

The following information relates to Leonard Manufacturing's overhead costs for the month: Leonard allocates manufacturing overhead to production based on standard direct labor hours. Leonard reported the following actual results for last month: actual variable overhead,$14,500;actual fixed overhead,$5,400;actual production of 4,700 units at 0.22 direct labor hours per unit.The standard direct labor time is 0.20 direct labor hours per unit. Compute the fixed overhead cost variance.

Caterlebe Productions uses a standard cost system.On December 31,the account balances include the following: Sales Revenues: $750,000 Cost of Goods Sold (standard costing): $400,500 Selling & Admin expenses: $150,000 Variances: Prepare a standard cost income statement.

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)________.

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n)________.

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing wastage of valuable direct materials.The production manager decided to recruit some highly skilled production workers from another company to bring down the defect rate but was worried that the higher wages of these workers might negatively affect operating income.This would produce a(n)________.

Companies conduct time-and-motion studies and use benchmarks from other companies when developing standards.

A standard cost system is an accounting system that uses standards for product costs.

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

The management of Drum Lawnmowers has calculated the following variances: When determining the total production cost flexible budget variance,what is the total fixed overhead variance of the company?

What does a favorable direct materials cost variance indicate?

The Carolina Rubber Products Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following would be a correct analysis of the sales volume variance for sales revenue?

Clement Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Clement 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: 4 pounds per unit;$3 per pound Direct labor: 5 hours per unit;$17 per hour Clement produced 4,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 22,000 direct labor hours and actual total direct labor costs were $390,000.The direct labor efficiency variance was $34,000 U.Which of the following is a logical explanation for this variance?

Which of the following is the correct formula for measuring the efficiency variance?

Favorable variances are contra expenses and therefore decrease Cost of Goods Sold.

The fixed overhead volume variance is a cost variance that explains why fixed overhead is overallocated or underallocated.

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $5 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $17 per hour.Payroll taxes are approximately 22% of wages.Benefits amount to $4 per hour.How much is the direct materials cost standard per square foot?

Which of the following amounts of a flexible budget remains constant,within the specified relevant range,when the sales volume changes?

The sales volume variance is the difference between the ________.

The static budget,at the beginning of the month,for Singleton Company follows: Static budget: Sales volume: 1,000 units;Sales price: $70.00 per unit Variable costs: $33.00 per unit;Fixed costs: $36,500 per month Operating income: $500 Actual results,at the end of the month,follows: Actual results: Sales volume: 980 units;Sales price: $74.00 per unit Variable costs: $35.50 per unit;Fixed costs: $34,100 per month Operating income: $3,630 Calculate the flexible budget variance for fixed costs.