Exam 24: Flexible Budgets and Standard Costs

DT Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. DT's standard labor cost is $11.00 per hour. During March, DT produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is DT's labor rate variance for March?

Fixed budgets are also known as flexible budgets.

Presented below are terms preceded by letters a through h and followed by a list of definitions 1 through 8. Enter the letter of the term with the definition, using the space preceding the definition.

How are unfavorable variances recorded? How are favorable variances recorded?

Sales variance analysis is useful for:

A budget performance report that includes variances can have variances caused by both price differences and quantity differences.

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?

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.

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 labor efficiency variance for the month was:

Duval, Inc. budgets direct materials at $1/liter and each product requires 4 liters per unit of finished product. April's activities show usage of 832 liters to complete 196 units at a cost of $798.72. Compute the direct materials price and quantity variances. Indicate is the variance is favorable or unfavorable.

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

The difference between the actual overhead cost incurred and the standard overhead applied is the _________________________.

A management approach that emphasizes significant differences from plans is known as _________________________________.

The sum of the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead spending variance is the ___________________________.

Falcon Company's output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275, what was the total actual cost of direct labor incurred during the period?

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

Fixed budget performance reports compare actual results with the expected amounts in the fixed budget.

In producing 700 units of Product CBA last period, Cobalt Company used 5,000 pounds of Material H, costing $34,250. The company has established the standard of using 7.2 pounds of Material H per unit of CBA, at a price of $7.50 per pound. Calculate the materials price and quantity variances associated with producing the 700 units, and indicate whether they are favorable or unfavorable: