Exam 24: Flexible Budgets and Standard Costs

Prichard Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity. During the current period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.

If actual price per unit of materials is greater than the standard price per unit of materials, the direct materials price variance is ______________________.

The following information describes production activities of the Central Corp.: 30,000 units were completed during the year Budgeted standards for each unit produced: 1/2 lb. of raw material at $4.15 per lb. 10 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Management by exception allows managers to focus on the most significant variances in performance.

In the analysis of variances, management commonly focuses on four categories of production costs: __________________ cost, ___________________ cost; _________________ cost; and _________________ cost.

Montaigne Corp. has the following information about its standards and production activity for November. The controllable variance is:

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity), and which presents the differences between actual and budgeted amounts as variances, is called a(n):

A company uses the following standard costs to produce a single unit of output. During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:

Perkins Company provides the following data developed for its master budget: Required: Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

Woods, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units: The standard cost per unit when operating at this same 80% capacity level is: The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were: Calculate the following variances and indicate whether each is favorable or unfavorable.

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials cost variance.

When recording the journal entry for labor, the Goods in Process Inventory account is

Calais Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000.

Big Bend Co. fixed budget for the year is shown below: Prepare a flexible budget for Big Bend Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials price variance.

The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are:

Brewer Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month.

Cabot Company collected the following data regarding production of one of its products. Compute the direct labor rate variance.

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

Cabot Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance.