Question 1

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of variable costs for 20,000 units would be:

Accepted Answer

A)  $99,000. 
B)  $90,000. 
C)  $66,000. 
D)  $30,000. 
E)  $150,000.

Question 2

A company's flexible budget for 60,000 units of production showed sales of $96,000, variable costs of $36,000, and fixed costs of $26,000. What operating income would be expected if the company produces and sells 70,000 units?

Accepted Answer

The answer of A company's flexible budget for 60,000 units...

Question 3

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The fixed costs expected if the company produces and sells 16,000 units is:

Accepted Answer

A)  $16,000. 
B)  $64,000. 
C)  $48,000. 
D)  $24,000. 
E)  $18,000.

Question 4

Variable budget is another name for a flexible budget.

Accepted Answer

A) True 
 B)False

Question 5

Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10 per gram and .25 direct labor hours at $12.00 per hour. Overhead is applied at the rate of $18 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

Accepted Answer

A)  $7.00. 
B)  $8.50. 
C)  $11.50. 
D)  $7.50. 
E)  $25.00.

Question 6

Explain variance analysis. Describe how variance analysis assists managers.

Accepted Answer

The answer of Explain variance analysis. Describe how variance analysis...

Question 7

What are sales variances? How are they used?

Accepted Answer

The answer of What are sales variances? How are they...

Question 8

The usefulness of a flexible budget depends on the valid classification of variable and fixed costs.

Accepted Answer

A) True 
 B)False

Question 9

A favorable variance for a cost means that when compared to the budget, the actual cost is ________ than the budgeted cost.

Accepted Answer

The answer of A favorable variance for a cost means...

Question 10

Linx 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?

Accepted Answer

The answer of Linx Company's output for a period was...

Question 11

A company's flexible budget for 30,000 units of production showed sales of $90,000, variable costs of $36,000, and fixed costs of $23,000. Prepare a flexible budget for 25,000 units assuming it is within the same relevant range of production.

Accepted Answer

The answer of A company's flexible budget for 30,000 units...

Question 12

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The variable costs expected if the company produces and sells 16,000 units is:

Accepted Answer

A)  $48,000. 
B)  $64,000. 
C)  $40,000. 
D)  $24,000. 
E)  $18,000.

Question 13

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the total labor cost variance?

Accepted Answer

A)  $2,000 unfavorable. 
B)  $3,000 unfavorable. 
C)  $6,000 unfavorable. 
D)  $8,000 unfavorable. 
E)  $9,000 unfavorable.

Question 14

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance. $\begin{array}{lrl}
\text { Direct labor standard (2 hrs. @ } \$ 12.75 / \mathrm{hr} .) & \$  25.50&  \text { per finished unit} \
\text { Actual direct labor hours } &  81,500&  \text {  hrs.} \
\text { Budgeted units } & 42,000&  \text { units} \
\text { Actual finished units produced } &  40,000 &  \text { units}\
\text { Standard variable OH rate }(2 \mathrm{hrs} . @ \$ 14.30 / \mathrm{hr} .) & \$  28.60& \text { per finished unit} \
\text { Standard fixed OH rate }(\$ 336,000 / 42,000 \text { units) } & \$  8.00 &  \text { per unit}\
\text { Actual cost of variable overhead costs incurred } & \$ 1,140,000 \
\text { Actual cost of fixed overhead costs incurred } & \$ 338,000
\end{array}$

Accepted Answer

A)  $14,300 unfavorable. 
B)  $21,450 favorable. 
C)  $4,000 unfavorable. 
D)  $4,000 favorable. 
E)  $21,450 unfavorable.

Question 15

A company's flexible budget for 36,000 units of production showed variable overhead costs of $54,000 and fixed overhead costs of $50,000. The company actually incurred total overhead costs of $95,300 while operating at a volume of 32,000 units. What is the controllable variance?

Accepted Answer

The answer of A company's flexible budget for 36,000 units...

Question 16

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the total direct materials cost variance?

Accepted Answer

A)  $48,000 unfavorable. 
B)  $51,000 favorable. 
C)  $51,000 unfavorable. 
D)  $3,000 favorable. 
E)  $3,000 unfavorable.

Question 17

When recording variances in a standard cost system:

Accepted Answer

A)  Only unfavorable material variances are debited. 
B)  Only unfavorable material variances are credited. 
C)  Both unfavorable material and labor variances are credited. 
D)  All unfavorable variances are debited. 
E)  All unfavorable variances are credited.

Question 18

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials price variance?

Accepted Answer

A)  $47,000 unfavorable. 
B)  $47,000 favorable. 
C)  $50,000 unfavorable. 
D)  $50,000 favorable. 
E)  $3,000 favorable.

Question 19

Levelor 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.

Question 20

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

Accepted Answer

A)  $12,250 unfavorable. 
B)  $14,700 unfavorable. 
C)  $14,700 favorable. 
D)  $12,250 favorable. 
E)  $26,950 favorable.

Exam 8: Flexible Budgets and Standard Costs