Question 1

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

Accepted Answer

A)  $18,300 favorable. 
B)  $18,000 favorable. 
C)  $18,000 unfavorable. 
D)  $18,300 unfavorable. 
E)  $14,300 unfavorable. 
A)  $18,300 favorable. 
B)  $18,000 favorable. 
C)  $18,000 unfavorable. 
D)  $18,300 unfavorable. 
E)  $14,300 unfavorable.

Question 2

A variable or flexible budget is so named because it only focuses on variable costs.

Accepted Answer

A) True 
 B)False

Question 3

A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

Accepted Answer

A)  $110,500. 
B)  $85,000. 
C)  $133,000. 
D)  $100,000. 
E)  $50,500. 
A)  $110,500. 
B)  $85,000. 
C)  $133,000. 
D)  $100,000. 
E)  $50,500.

Question 4

When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.

Accepted Answer

A) True 
 B)False

Question 5

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 price variance for the month was:

Accepted Answer

A)  $6,000 unfavorable 
B)  $1,800 favorable 
C)  $1,000 favorable 
D)  $5,800 unfavorable 
E)  $1,800 unfavorable 
A)  $6,000 unfavorable 
B)  $1,800 favorable 
C)  $1,000 favorable 
D)  $5,800 unfavorable 
E)  $1,800 unfavorable

Question 6

Differences between actual costs and standard costs are known as __________________. These differences may be subdivided into _________________ and ________________.

Accepted Answer

Cost Variances (or j

Question 7

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.

Accepted Answer

The answer of Perkins Company provides the following data developed...

Question 8

Standard costs are:

Accepted Answer

A)  Actual costs incurred to produce a specific product or perform a service. 
B)  Preset costs for delivering a product or service under normal conditions. 
C)  Established by the IMA. 
D)  Rarely achieved. 
E)  Uniform among companies within an industry. 
A)  Actual costs incurred to produce a specific product or perform a service. 
B)  Preset costs for delivering a product or service under normal conditions. 
C)  Established by the IMA. 
D)  Rarely achieved. 
E)  Uniform among companies within an industry.

Question 9

Bok Company's output for the current period was assigned a $400,000 standard direct labor cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?

Accepted Answer

A)  $414,000. 
B)  $386,000. 
C)  $394,000. 
D)  $406,000. 
E)  $410,000. 
A)  $414,000. 
B)  $386,000. 
C)  $394,000. 
D)  $406,000. 
E)  $410,000.

Question 10

Identify and explain the primary differences between fixed and flexible budgets.

Accepted Answer

A fixed budget is prepared before an ope

Question 11

Identify the situation that will result in a favorable variance.

Accepted Answer

A)  Actual revenue is higher than budgeted revenue. 
B)  Actual revenue is lower than budgeted revenue. 
C)  Actual income is lower than expected. 
D)  Actual costs are higher than budgeted costs. 
E)  Actual expenses are higher than budgeted expenses. 
A)  Actual revenue is higher than budgeted revenue. 
B)  Actual revenue is lower than budgeted revenue. 
C)  Actual income is lower than expected. 
D)  Actual costs are higher than budgeted costs. 
E)  Actual expenses are higher than budgeted expenses.

Question 12

______________________ are preset costs for delivering a product or service under normal conditions.

Accepted Answer

The answer of ______________________ are preset costs for delivering a...

Question 13

The difference between the flexible budget sales and the fixed budget sales is called the __________________________ variance.

Accepted Answer

Sales volu

Question 14

A flexible budget performance report compares the differences between:

Accepted Answer

A)  Actual performance and budgeted performance based on actual sales volume. 
B)  Actual performance over several periods. 
C)  Budgeted performance over several periods. 
D)  Actual performance and budgeted performance based on budgeted sales volume. 
E)  Actual performance and standard costs at the budgeted sales volume. 
A)  Actual performance and budgeted performance based on actual sales volume. 
B)  Actual performance over several periods. 
C)  Budgeted performance over several periods. 
D)  Actual performance and budgeted performance based on budgeted sales volume. 
E)  Actual performance and standard costs at the budgeted sales volume.

Question 15

Kyle, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is:

Accepted Answer

A)  $133,750. 
B)  $150,000. 
C)  $106,250. 
D)  $158,750. 
E)  $120,000. 
A)  $133,750. 
B)  $150,000. 
C)  $106,250. 
D)  $158,750. 
E)  $120,000.

Question 16

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

Accepted Answer

A)  $125,000 fixed and $102,500 variable. 
B)  $125,000 fixed and $123,000 variable. 
C)  $102,500 fixed and $150,000 variable. 
D)  $150,000 fixed and $123,000 variable. 
E)  $150,000 fixed and $102,500 variable. 
A)  $125,000 fixed and $102,500 variable. 
B)  $125,000 fixed and $123,000 variable. 
C)  $102,500 fixed and $150,000 variable. 
D)  $150,000 fixed and $123,000 variable. 
E)  $150,000 fixed and $102,500 variable.

Question 17

Price Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity). If overhead actually incurred was $11,183 during May, the controllable variance for the month was:

Accepted Answer

A)  $473 unfavorable. 
B)  $473 favorable. 
C)  $1,530 favorable. 
D)  $1,530 unfavorable. 
E)  $1,057 favorable. 
A)  $473 unfavorable. 
B)  $473 favorable. 
C)  $1,530 favorable. 
D)  $1,530 unfavorable. 
E)  $1,057 favorable.

Question 18

Based on predicted production of 25,000 units, Best Co. anticipates $175,000 of fixed costs and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

Accepted Answer

At 20,000 units:
($5.50 x 20,0

Question 19

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

Accepted Answer

A)  $6,000 favorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable. 
A)  $6,000 favorable. 
B)  $3,570 unfavorable. 
C)  $2,430 favorable. 
D)  $6,000 unfavorable. 
E)  $3,570 favorable.

Question 20

A product has a sales price of $20. Based on a 15,000-unit production level, the variable costs are $12 per unit and the fixed costs are $6 per unit. Using a flexible budget for an actual production and sales level of 18,000 units, what is the budgeted operating income?

Accepted Answer

Fixed costs = $6 x 15,000 unit

Exam 24: Flexible Budgets and Standard Costs

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

A variable or flexible budget is so named because it only focuses on variable costs.

A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

When the actual cost of direct materials used exceeds the standard cost, the company must have experienced an unfavorable direct materials price variance.

Differences between actual costs and standard costs are known as __________________. These differences may be subdivided into _________________ and ________________.

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.

Standard costs are:

Identify and explain the primary differences between fixed and flexible budgets.

Identify the situation that will result in a favorable variance.

______________________ are preset costs for delivering a product or service under normal conditions.

The difference between the flexible budget sales and the fixed budget sales is called the __________________________ variance.

A flexible budget performance report compares the differences between:

Kyle, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is:

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

Based on predicted production of 25,000 units, Best Co. anticipates $175,000 of fixed costs and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

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

A product has a sales price of $20. Based on a 15,000-unit production level, the variable costs are $12 per unit and the fixed costs are $6 per unit. Using a flexible budget for an actual production and sales level of 18,000 units, what is the budgeted operating income?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Capital Budgeting and Managerial Decisions

Filters

Differences between actual costs and standard costs are known as __________. These differences may be subdivided into _ and ________.