Exam 13: Budgeting and Standard Cost Systems

The direct labor time variance measures the efficiency of the direct labor force.

The fact that workers are unable to meet a properly determined direct labor standard is sufficient cause to change the standard.

The formula to compute direct labor time variance is:

Production and sales estimates for June are as follows: 8,000 Estimated inventory (units), June 1 9,000 Desired inventory (unit), June 30 Expected sales volume (units): 3,000 Area X 4,000 AreaY 5,500 Area Z \ 25 Unit sales price The budgeted total sales for June is:

The cost of available but unused productive capacity is indicated by the:

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May.

Periodic comparisons between planned objectives and actual performance are reported in:

If the standard to produce a given amount of product is 900 units of direct materials at $11 and the actual was 800 units at $12, the direct materials quantity variance was $1,100 unfavorable.

Standards are designed to evaluate price and quantity variances separately.

A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.

As of January 1 of the current year, the Butner Company had accounts receivables of $50,000. Sales for January, February, and March were as follows: $120,000, $140,000, and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

If the standard to produce certain quantity of product is 16,000 hours at a factory overhead rate of $5 ($3 fixed, $2 variable), actual variable factory overhead is $26,400, actual fixed factory overhead is $45,000, and 100% of productive capacity is 15,000 hours, the volume variance is $3,000 favorable.

Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. Refer to the information provided for Benjamin Corporation. The cash collections from accounts receivable in November are:

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

The first budget to be prepared is usually the sales budget.

Merle Company manufactures two models of Television, TV20 and TV27. Based on the following production data for April of the current year, prepare a production budget for April.

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

Favorable volume variances are never harmful since achieving them encourages managers to run the factory above normal capacity.

Efficient Corporation uses a standard cost system. The following information was provided for the period that just ended: \ 11.75 Actual price per gallon 5,000 Actual gallons of material used \ 17.00 Actual hourly labor rate 24,300 Actual hours of prochuction \ 12.00 Standard price per gallon 1/2 Standard gallons per completed urit \ 12.00 Standard hourly labor rate 3. Standard time per completed urit 9,000 Units completed churingthe period Refer to the information provided for Efficient Corporation. The total direct labor variance is:

The standard factory overhead rate is $12 per machine hour ($10 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 42,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 2,000 units were as follows: 950,500 Actun: Vurable furtary ovehead 84,000 Fired factary overhen ad 420,000 Standard:35,000 hars @ \ 12 Determine the (a) volume variance, (b) controllable variance, and (c) total factory overhead cost variance.