Exam 8: Flexible Budget and Variance Analysis

The Vito Company makes tables for which the following standards have been developed: Standard Inputs Standard Price Expected for Each Expected per Unit of Output Unit of Output Direct materials 10 pounds \ 4 per pound Direct labor 4 hours \ 20 per hour Production of 200 tables was expected in August, 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 standard labor cost for each table produced.

The following information is for Pepper Pike Corporation: Direct Material Standard price per unit of input \ 25 Actual price p er unit of input \ 24 Standard inputs allowed p er unit of output 3 pounds Actual units of input 8,300 pounds Actual units of output 2,770 units * Direct material is measured in pounds is the direct- material usage variance.

Using standard costs is popular with companies in the United States.

Job set- up costs for Rob Ublind Company are variable costs based on the number of jobs. Rob Ublind Company expected to work 600 jobs at a total cost of $189,000. Rob Ublind Company worked a total of 630 jobs and actual job set- up costs totaled $177,000. Required: Compute the master budget variance, activity- level variance, and flexible- budget variance for job set- up costs.

Materials price variance = (actual price - standard price) x standard quantity allowed.

The Green Company makes chairs for which the following standards have been developed: Standard Inputs Standard Price Expected for E ach Expected per Unit of Output Unit of Output Direct materials 10 pounds \ 4 per pound Direct labor 2 hours \ 23 per hour Production of 250 chairs was expected in March, but 300 chairs were actually completed. Direct materials purchased and used were 2,700 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 $19.00. _ is the standard direct- material cost for each chair produced.

(Actual price - standard price) x actual quantity

If the total sales- activity variance was $7,500 favorable, and the total master budget variance was $10,000 favorable, then the total flexible budget variance must have been:

is most likely to be held directly accountable for a usage variance.

Actual expenses are greater than budgeted expenses

Which of the following is not a true statement?

Identify which statement below would not be a possible reason for a variance between a flexible budget and actual results.

Beachwood Company produces 2,500 units. Each unit was expected to require 2 labor hours at a cost of $10 per hour. Total labor cost was $55,250 for 4,750 hours worked. Direct labor is measured in hours. _ is the direct- labor price variance.

An activity- based budget is based on budgeted costs for every activity and related cost driver.

Most organizations believe that it is not worthwhile to monitor individual overhead to the same extent as labor and material variances.

Efficiency is the degree to which a goal, objective, or target is met.

By using a flexible budget, changes in activity level cannot cause any variances between the flexible budget and actual results.

Identify which of the statements below is not a reason why actual results would differ from those projected in the master budget.

Rockford Company planned to produce 12,000 units. Processing required 16,000 machine hours at a cost of $15,000 + $10.50 per machine hour. Actual sales were 14,000 units requiring 20,000 machine hours. Actual processing cost was $222,000. is the master budget amount for processing.

The Beach Company currently produces sandals in an automated process. Expected production per month is 20,000 units. The required direct materials cost is $1.50 per unit. Manufacturing fixed overhead costs are $30,000 per month. Manufacturing overhead is allocated based on units of production. is the flexible budget for 15,000 and 20,000 units, respectively.