Question 1

The flexible budget variance is the difference between the ________.

Accepted Answer

A) actual results and the expected results in the flexible budget for the actual units sold 
B) expected results in the flexible budget for the units expected to be sold and the static budget 
C) flexible budget and actual amounts due to differences in volumes 
D) flexible budget and static budget due to differences in fixed costs 
A) actual results and the expected results in the flexible budget for the actual units sold 
B) expected results in the flexible budget for the units expected to be sold and the static budget 
C) flexible budget and actual amounts due to differences in volumes 
D) flexible budget and static budget due to differences in fixed costs

Question 2

What does the fixed overhead cost variance measure?

Accepted Answer

The fixed overhead cost varian

Question 3

The static budget is used to compute flexible budget variances as well as cost and efficiency variances for direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 4

Allen Company manufactures staplers.The budgeted sales price is $12.00 per stapler,the variable costs are $2.00 per stapler,and budgeted fixed costs are $12,000.What is the budgeted operating income for 5,000 staplers?

Accepted Answer

A) $50,000 
B) $38,000 
C) $60,000 
D) $10,000 
A) $50,000 
B) $38,000 
C) $60,000 
D) $10,000

Question 5

Bridget Company manufactures candles.The standard direct materials quantity required to produce one large candle is 1 pound at a cost of $5 per pound.Every candle requires 2 direct labor hours at a standard cost of $3 per direct labor hour.During November,7,200 large candles were produced using 7,500 pounds costing $45,000.At the end of November,an examination of the labor cost records showed that the company used 15,000 direct labor hours (DLHr)at a cost of $4 per hour.
Using the format below,prepare an analysis of the direct labor cost variances.

Accepted Answer

@#IMG-DLM& 
Note:Standard quan

Question 6

Which of the following should be considered when analyzing manufacturing overhead variances?

Accepted Answer

A) whether costs incurred are product costs or period costs 
B) whether direct materials costs are higher than standard costs 
C) whether certain manufacturing overhead costs are controllable 
D) whether direct labor costs can be reduced 
A) whether costs incurred are product costs or period costs 
B) whether direct materials costs are higher than standard costs 
C) whether certain manufacturing overhead costs are controllable 
D) whether direct labor costs can be reduced

Question 7

A standard cost system helps management set performance standards.

Accepted Answer

A) True 
 B)False

Question 8

What does the variable overhead efficiency variance measure?

Accepted Answer

The variable overhead efficien

Question 9

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

Accepted Answer

A) $6,000 F 
B) $8,000 F 
C) $3,500 F 
D) $11,500 F 
A) $6,000 F 
B) $8,000 F 
C) $3,500 F 
D) $11,500 F

Question 10

The total fixed overhead variance is the total of the variable overhead cost variance and fixed overhead volume variance.

Accepted Answer

A) True 
 B)False

Question 11

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 purchase a higher grade of materials that would be more reliable,but he was worried that the cost of the new materials might negatively affect operating income.This would produce a(n)________.

Accepted Answer

A) favorable direct materials cost variance 
B) unfavorable direct labor cost variance 
C) unfavorable direct labor efficiency variance 
D) favorable direct materials efficiency variance 
A) favorable direct materials cost variance 
B) unfavorable direct labor cost variance 
C) unfavorable direct labor efficiency variance 
D) favorable direct materials efficiency variance

Question 12

To compute the variable overhead cost variance,first compute the difference between actual cost and standard cost.Then,multiple this difference by standard quantity.

Accepted Answer

A) True 
 B)False

Question 13

Under a standard cost system,the journal entry to record direct labor includes ________.

Accepted Answer

A) a debit for standard direct labor quantity for actual production times standard direct labor cost per hour 
B) a credit for standard quantity usage for actual production times actual cost per hour 
C) a debit for actual quantity times standard cost per hour 
D) a credit for standard quantity for actual production times standard cost per hour 
A) a debit for standard direct labor quantity for actual production times standard direct labor cost per hour 
B) a credit for standard quantity usage for actual production times actual cost per hour 
C) a debit for actual quantity times standard cost per hour 
D) a credit for standard quantity for actual production times standard cost per hour

Question 14

The California Fitness 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 variable costs?

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 15

Lewis Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Lewis 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;$6 per pound
Direct labor: 2 hours per unit;$19 per hour
During the first quarter,Lewis produced 5,000 units of this product.Actual direct materials and direct labor costs were $65,000 and $331,000,respectively.
For the purpose of preparing the flexible budget,what is the total standard direct labor cost at a production volume of 5,000 units?

Accepted Answer

A) $95,000 
B) $65,000 
C) $190,000 
D) $331,000 
A) $95,000 
B) $65,000 
C) $190,000 
D) $331,000

Question 16

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

Accepted Answer

A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit 
A) $40 per direct labor hour 
B) 50 square feet per unit 
C) $0.95 per square foot 
D) 6 direct labor hours per unit

Question 17

Horizon Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Horizon 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;$15 per hour
Horizon produced 5,000 units during the quarter.At the end of the quarter,an examination of the labor costs records showed that the direct labor cost variance was $5,000 F.Which of the following is a logical explanation for this variance?

Accepted Answer

A) The company used fewer labor hours than allowed by the standards. 
B) The company paid a lower cost per hour for labor than allowed by the standards. 
C) The company used a lower quantity of direct materials than allowed by the standards. 
D) The company paid a lower cost for the direct materials than allowed by the standards. 
A) The company used fewer labor hours than allowed by the standards. 
B) The company paid a lower cost per hour for labor than allowed by the standards. 
C) The company used a lower quantity of direct materials than allowed by the standards. 
D) The company paid a lower cost for the direct materials than allowed by the standards.

Question 18

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

Accepted Answer

A) True 
 B)False

Question 19

Elite Brands Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.At the beginning of the year,the static budget for variable overhead costs included the following data:
 
At the end of the year,actual data were as follows:
 
How much is the standard cost per direct labor hour for variable overhead? (Round your answer to the nearest cent. )

Accepted Answer

A) $25.00 per direct labor hour 
B) $37.50 per direct labor hour 
C) $30.30 per direct labor hour 
D) $25.67 per direct labor hour 
A) $25.00 per direct labor hour 
B) $37.50 per direct labor hour 
C) $30.30 per direct labor hour 
D) $25.67 per direct labor hour

Question 20

Because it is a volume variance,the fixed overhead volume variance explains why fixed overhead is underallocated or overallocated.

Accepted Answer

A) True 
 B)False

Exam 23: Flexible Budgets and Standard Cost Systems

The flexible budget variance is the difference between the ________.

What does the fixed overhead cost variance measure?

The static budget is used to compute flexible budget variances as well as cost and efficiency variances for direct materials and direct labor.

Allen Company manufactures staplers.The budgeted sales price is $12.00 per stapler,the variable costs are $2.00 per stapler,and budgeted fixed costs are $12,000.What is the budgeted operating income for 5,000 staplers?

Which of the following should be considered when analyzing manufacturing overhead variances?

A standard cost system helps management set performance standards.

What does the variable overhead efficiency variance measure?

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

The total fixed overhead variance is the total of the variable overhead cost variance and fixed overhead volume variance.

To compute the variable overhead cost variance,first compute the difference between actual cost and standard cost.Then,multiple this difference by standard quantity.

Under a standard cost system,the journal entry to record direct labor includes ________.

The California Fitness 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 variable costs?

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

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

Because it is a volume variance,the fixed overhead volume variance explains why fixed overhead is underallocated or overallocated.

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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