Exam 23: Flexible Budgets and Standard Cost Systems

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

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

When a manufacturing company uses a standard cost system,the direct materials cost variance is recorded at the time direct materials are issued in production.

The static budget,at the beginning of the month,for Assembly Furniture Company follows: Static budget: Sales volume: 1,000 units;Sales price: $70.00 per unit Variable costs: $33.00 per unit;Fixed costs: $36,100 per month Operating income: $900 Actual results,at the end of the month,follows: Actual results: Sales volume: 990 units;Sales price: $74.00 per unit Variable costs: $35.00 per unit;Fixed costs: $34,000 per month Operating income: $4,610 Calculate the sales volume variance for fixed costs.

An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.

Which of the following is the correct formula for measuring a cost variance?

In a standard cost system,the manufacturing overhead allocated to production equals the standard overhead allocation rate multiplied by the standard quantity of the allocation base allowed for expected output.

The static budget,at the beginning of the month,for Keats Company follows: Static budget: Sales volume: 2,000 units;Sales price: $51.00 per unit Variable costs: $12.50 per unit;Fixed costs: $26,500 per month Operating income: $50,500 Actual results,at the end of the month,follows: Actual results: Sales volume: 1,950 units;Sales price: $60.00 per unit Variable costs: $16.00 per unit;Fixed cost: $38,000 per month Operating income: $47,800 Calculate the sales volume variance for operating income.

Sinclair Manufacturing uses a standard cost system.The T-account for manufacturing overhead is shown below: In addition to the above,Sinclair calculated the following overhead variances: Variable overhead cost variance: $5,000 F Variable overhead efficiency variance: $4,850 U Fixed overhead cost variance: $1,200 F Fixed overhead volume variance: $3,350 U Prepare the journal entry to close the manufacturing overhead account and record the overhead variances.

Based on the following,what is the total manufacturing overhead variance for the total production cost flexible budget variance?

Pierce Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Pierce 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 Direct labor: 5 hours per unit;$16 per hour Pierce produced 5,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $381,000.What is the direct labor efficiency variance?

Favorable and unfavorable variances are netted together in the same way debits and credits are.

An efficiency variance measures how well the business uses its materials or human resources.

Rees Manufacturing uses a standard cost system.Standards for direct materials are as follows: Actual purchases of direct materials for the current month are 10,000 pounds for $51,600.Planned and actual production for the month is 3,000 units.Rees has issued 10,000 pounds of direct materials to production.The journal entry to record this transaction is ________.

List the direct labor variances and briefly describe each.

Delicious Food Products is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Delicious purchases by the pound.In addition,the production requires a certain amount of direct labor.Delicious uses a standard cost system,and at the end of the first quarter,there was a favorable direct materials cost variance.Which of the following is a logical explanation for that variance?

Maroon,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 standard net operating income of the company for the year ended December 31?

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

The static budget,at the beginning of the month,for Onyx Décor Company,follows: Static budget: Sales volume: 1,100 units;Sales price: $70.00 per unit Variable costs: $32.00 per unit;Fixed costs: $38,000 per month Operating income: $3,800 Actual results,at the end of the month,follows: Actual results: Sales volume: 980 units;Sales price: $75.00 per unit Variable costs: $35.00 per unit;Fixed costs: $34,200 per month Operating income: $5,000 Calculate the flexible budget variance for sales revenue.

Wood 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 $6.00 per square foot from the supplier.Delivery costs are $0.30 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 materials standard cost per square foot?