Question 1

An unfavorable flexible budget variance in variable costs suggests a(n)________.

Accepted Answer

A) increase in sales price per unit 
B) decrease in sales volume 
C) increase in variable cost per unit 
D) decrease in fixed costs 
A) increase in sales price per unit 
B) decrease in sales volume 
C) increase in variable cost per unit 
D) decrease in fixed costs

Question 2

The Washington Fish Company completed the flexible budget analysis for the second quarter,which is given below.
 
Which of the following statements would be a correct analysis of the sales volume variance for operating income?

Accepted Answer

A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs 
A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs

Question 3

A variance is the difference between an actual amount and the budgeted amount.

Accepted Answer

A) True 
 B)False

Question 4

Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Allen 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: 1 pound per unit;$11 per pound
Direct labor: 2 hours per unit;$18 per hour
Allen produced 2,000 units during the quarter.At the end of the quarter,an examination of the direct materials records showed that the company used 6,500 pounds of direct materials and actual total materials costs were $99,600.
What is the direct materials efficiency variance?

Accepted Answer

A) $22,000 U 
B) $49,500 U 
C) $22,000 F 
D) $49,500 F 
A) $22,000 U 
B) $49,500 U 
C) $22,000 F 
D) $49,500 F

Question 5

Robinson Manufacturing uses a standard cost system.The direct labor cost standard is $18.00 per direct labor hour.The direct labor efficiency standard is 0.5 direct labor hour per unit.Actual direct labor for the month is 1,200 hours for a total cost of $24,000.Production for the month is 3,000 units.Give the journal entry to record direct labor.

Accepted Answer

@#IMG-DLM& 
Direct Labor Cost Variance:(

Question 6

A company is setting its direct materials and direct labor standards for its leading product.Direct material costs from the supplier are $7 per square foot,net of purchase discount.Freight-in amounts to $0.10 per square foot.Basic wages of the assembly line personnel are $19 per hour.Payroll taxes are approximately 25% of wages.How much is the direct labor cost standard per hour? (Round your answer to the nearest cent. )

Accepted Answer

A) $4.75 
B) $19.00 
C) $23.75 
D) $30.75 
A) $4.75 
B) $19.00 
C) $23.75 
D) $30.75

Question 7

For each of the following variances,state which manager is most likely to be responsible for the variance.

Accepted Answer

The answer of For each of the following variances,state which...

Question 8

In a standard cost system,the standard overhead allocation rate replaces the predetermined
overhead allocation rate but the concept is the same.

Accepted Answer

A) True 
 B)False

Question 9

When a manufacturing company uses a standard cost system,an unfavorable variance is a contra expense.

Accepted Answer

A) True 
 B)False

Question 10

The static budget,at the beginning of the month,for Bob's Deep Sea Fishing Company follows:
Static budget:
Sales volume: 2,000 units;Sales price: $50.00 per unit
Variable costs: $13.00 per unit;Fixed costs: $25,200 per month
Operating income: $48,800
Actual results,at the end of the month,follows:
Actual results:
Sales volume: 1,900 units;Sales price: $58.50 per unit
Variable costs: $16.5 per unit;Fixed costs: $33,400 per month
Operating income: $46,400
Calculate the flexible budget variance for operating income.

Accepted Answer

A) $3,700 U 
B) $3,700 F 
C) $1,300 F 
D) $16,150 F 
A) $3,700 U 
B) $3,700 F 
C) $1,300 F 
D) $16,150 F

Question 11

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

Accepted Answer

A) $4,000 F 
B) $12,000 U 
C) $8,000 U 
D) $11,500 F 
A) $4,000 F 
B) $12,000 U 
C) $8,000 U 
D) $11,500 F

Question 12

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

Accepted Answer

A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 0.5 direct labor hours per unit 
A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 0.5 direct labor hours per unit

Question 13

Which of the following best describes a standard?

Accepted Answer

A) a sales price,cost,or quantity that is expected under normal conditions 
B) costs incurred to produce a product 
C) budgeted amount for total product cost 
D) actual sales price,cost,or quantity 
A) a sales price,cost,or quantity that is expected under normal conditions 
B) costs incurred to produce a product 
C) budgeted amount for total product cost 
D) actual sales price,cost,or quantity

Question 14

City Golf Center reported actual operating income for the current year as $66,000.The flexible budget operating income for actual volume is $56,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?

Accepted Answer

A) $10,000 favorable 
B) $10,000 unfavorable 
C) $3,000 unfavorable 
D) $3,000 favorable 
A) $10,000 favorable 
B) $10,000 unfavorable 
C) $3,000 unfavorable 
D) $3,000 favorable

Question 15

The Maryland Cheese Company completed the flexible budget analysis for the second quarter,which is given below.
 
Which of the following statements would be a correct analysis of the flexible budget variance for fixed expenses?

Accepted Answer

A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs 
A) decrease in sales price per unit 
B) increase in variable cost per unit 
C) increase in sales volume 
D) increase in fixed costs

Question 16

Ibis Paper Company prepared the following static budget for November:
 
If a flexible budget is prepared at a volume of 13,500 units,calculate the operating income at 13,500 units of production.The production level is within the relevant range.

Accepted Answer

A) $162,000 
B) $144,000 
C) $130,500 
D) $148,500 
A) $162,000 
B) $144,000 
C) $130,500 
D) $148,500

Question 17

Which of the following is not a flexible budget variance?

Accepted Answer

A) total fixed overhead variance 
B) total variable overhead variance 
C) total direct materials variance 
D) total direct labor variance 
A) total fixed overhead variance 
B) total variable overhead variance 
C) total direct materials variance 
D) total direct labor variance

Question 18

A favorable flexible budget variance in sales revenue suggests a(n)________.

Accepted Answer

A) increase in sales price 
B) increase in volume 
C) decrease in variable cost per unit 
D) decrease in fixed costs 
A) increase in sales price 
B) increase in volume 
C) decrease in variable cost per unit 
D) decrease in fixed costs

Question 19

The management of Chung Fire Alarms has calculated the following variances:
 
What is the total direct labor variance of the company?

Accepted Answer

A) $15,500 F 
B) $11,000 F 
C) $27,500 F 
D) $3,500 F 
A) $15,500 F 
B) $11,000 F 
C) $27,500 F 
D) $3,500 F

Question 20

Bentz Fashions uses standard costs for its manufacturing division.From the following data,calculate the total fixed overhead variance.

Accepted Answer

A) $7,650 U 
B) $7,650 F 
C) $13,500 U 
D) $13,500 F 
A) $7,650 U 
B) $7,650 F 
C) $13,500 U 
D) $13,500 F

Exam 23: Flexible Budgets and Standard Cost Systems

An unfavorable flexible budget variance in variable costs suggests a(n)________.

The Washington Fish Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct analysis of the sales volume variance for operating income?

A variance is the difference between an actual amount and the budgeted amount.

For each of the following variances,state which manager is most likely to be responsible for the variance.

In a standard cost system,the standard overhead allocation rate replaces the predetermined overhead allocation rate but the concept is the same.

When a manufacturing company uses a standard cost system,an unfavorable variance is a contra expense.

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

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

Which of the following best describes a standard?

City Golf Center reported actual operating income for the current year as $66,000.The flexible budget operating income for actual volume is $56,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?

The Maryland Cheese Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct analysis of the flexible budget variance for fixed expenses?

Ibis Paper Company prepared the following static budget for November: If a flexible budget is prepared at a volume of 13,500 units,calculate the operating income at 13,500 units of production.The production level is within the relevant range.

Which of the following is not a flexible budget variance?

A favorable flexible budget variance in sales revenue suggests a(n)________.

The management of Chung Fire Alarms has calculated the following variances: What is the total direct labor variance of the company?

Bentz Fashions uses standard costs for its manufacturing division.From the following data,calculate the total fixed overhead variance.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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