Exam 24: Flexible Budgets and Standard Costs

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

A company has established 5 pounds of Material M at $2 per pound as the standard for the material in its Product A. The company has just produced 1,000 units of this product, using 5,200 pounds of Material M that cost $9,880.The direct materials price variance is:

Cost variances are ignored under management by exception.

Whistler Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause of this pattern of variances?

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.

Identify the four steps in the budgetary control process.

When computing a price variance, the price is held constant.

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

Companies promoting continuous improvement strive to achieve _____________ standards by eliminating inefficiencies and waste.

The fixed overhead variance can be broken down into the _________________ variance and the _________________ variance.

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

Explain variance analysis. Describe how variance analysis assists managers.

Another name for a static budget is a variable budget.

The following company information is available for January. The direct materials price variance is:

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

What are sales variances? How are they used?

Regarding overhead costs, as volume increases:

Static budget is another name for:

The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is:

A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.