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: 3 pounds per unit;$4 per pound Labor: 5 hours per unit;$24 per hour During the first quarter,Golden produced 4,000 units of this product.At the end of the quarter,an examination of the direct materials records showed that the company used 11,500 pounds of direct materials and the direct materials cost variance was $3,780 U.Which of the following is a logical explanation for this variance?

Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Emerald 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: 5 pounds per unit;$6 per pound Direct labor: 4 hours per unit;$20 per hour During the first quarter,Emerald produced 5,000 units of this product.Actual direct materials and direct labor costs were $66,000 and $331,000,respectively. For the purpose of preparing the flexible budget,calculate the total standard direct materials cost at a production volume of 5,000 units.

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)________.

Atlace Manufacturing uses a standard cost system.Standards for direct materials are as follows: The company plans to produce 3,000 units and has purchased 15,000 pounds of direct materials at a net cost of $42,600.What is the journal entry to record this transaction?

The following information relates to Bloomberg Manufacturing's overhead costs for the month: Bloomberg allocates manufacturing overhead to production based on standard direct labor hours. Bloomberg 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 variable overhead efficiency variance.(round the answer to the nearest dollar)

The management technique whereby managers concentrate on results that are outside the accepted parameters is called management by ________.

A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.

A direct labor cost variance is unfavorable if the employer pays workers more per hour than budgeted.

Kevin Couriers Company prepared the following static budget for the year: If a flexible budget is prepared at a volume of 7,500,calculate the amount of operating income.The production level is within the relevant range.

A favorable variance reflects a decrease in operating income.

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

A favorable sales volume variance in variable costs suggests a(n)________.

The fixed overhead volume variance is a volume variance,not a cost variance.

When favorable variances are added to unfavorable variances,the result is always a total favorable variance.

For each of the following efficiency standards,indicate which parties are responsible for the standard and list one factor that should be used in setting the standard.

The standard cost income statement doesn't alter the actual operating income-it simply emphasizes the variances from standard.

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

Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Oceanside 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 pound per unit;$12 per pound Direct labor: 2 hours per unit;$18 per hour Oceanside 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 7,500 pounds of direct materials and actual total materials costs were $98,700. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

On a standard cost income statement,the variances with debit balances are shown in parentheses because they are contra expenses and therefore decrease the expense Cost of Goods Sold.

The purchasing manager was able to bring down the cost of direct materials by purchasing direct materials of a slightly lower grade quality than the company had used previously.The lower grade of direct materials,however,meant a higher defect rate on the assembly line and higher wastage of direct materials during production,which in turn lowered operating income.This situation would lead to a(n)________.