Exam 8: Flexible Budgets and Variance Analysis

Peppy Company planned to produce 12,000 units.This level of activities required 20 set-ups at a cost of $22,000 plus $500 per set-up.Actual sales were 10,000 units, requiring 15 set-ups and 12,000 machine hours.Actual set-up cost was $26,000._____ is the flexible budget amount for set-ups.

The unfavorable variances resulting from ideal standards are intended to constantly remind personnel of the continuous need for improvement.

The type of budget that serves as the original benchmark for evaluating performance is called a _____ budget.

A budget that is based on only one level of activity

Actual quantity used - standard quantity allowed) x standard price of material

Blue Company planned to sell 35,000 units.Actual sales were 30,000 units. Based on this information, Blue Company was _____.

Total static-budget variances = activity-level variances + flexible-budget variances.

One cause of a flexible?budget variance might be a difference between expected and actual hourly wages for factory workers.

This is the difference between the quantity of inputs actually used and the quantity of inputs that should have been used to achieve the actual quantity of output multiplied by the expected price of the input

Currently attainable standards are levels of performance that can be achieved, although their achievement is unlikely.

Bond Company's depreciation cost is $63,000 when production is 21,000 units. _____ are the total depreciation expenses for 15,000 and 20,000 units, respectively.

Actual price - standard price) x actual quantity of material

Perfection standards and ideal standards are different.

The Luke Company makes tables for which the following standards have been developed: Standard Inputs Standard Frice Expected for Each Expected per Unit of Output Unit of Output Direct materials 17 pounds \ 5.20 per pound Direct labor 3 hours \ 16 per hour Production of 200 tables was expected in May, but 220 tables were actually completed. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct-labor cost for the month was $10,620, and the actual pay per hour was $18.00._____ is the direct-labor price variance for the month of May.

Ideal standards make no provisions for waste, spoilage, and machine breakdowns.

The variable-overhead spending variance is the difference between the actual variable overhead and the amount of variable overhead budgeted for the actual level of cost-driver activity.

A static budget is prepared for a fixed level of activity.

A quantity variance measures actual deviations from the quantity of inputs that should have been used to achieve the actual output quantity.

Flexible budgets help to measure the _____.

The Snowman Company makes mugs for which the following standards have been developed: Standard Inputs Standard Frice Expected for Each Expected per Unit of Output Unit of Output Direct materials 5 ounces \ 2 per ounce Direct labor 3.2 hours \ 9 per hour Production of 400 mugs was expected in July, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce.Direct-labor cost for the month was $5,310, and the actual pay per hour was $10.00._____ is the standard direct-material cost for each mug produced.