The following information is for Parma Corporation: $\begin{array}{ll}&\text { Direct Material }\\ \text { Standard price } p \text { er unit of input } & \$ 29 \\ \text { Actual price per unit of input } & \$ 27 \\ \text { Stand ard inputs allowed per unit of output } & 3 \text { pounds } \\ \text { Actual units of input } & 9,300 \text { pounds } \\ \text { Actual units of output } & 2,770 \text { units } \end{array}$ * Direct material is measured in pounds is the direct- material price variance.

A) $18,600 favorable B) $5,540 favorable C) $18,600 unfavorable D) $5,540 unfavorable A) $18,600 favorable B) $5,540 favorable C) $18,600 unfavorable D) $5,540 unfavorable

The Frosty Company makes mugs for which the following standards have been developed: \[\begin{array} { l l l } & \text { Standard Inputs } & \text { Standard Price } \\ & \text { Expected for E ach } & \text { Expected per } \\ & \text { Unit of Output } & \text { Unit of Output } \\ \text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \\ \text { Direct labor } & 2.5 \text { hours } & \$ 10 \text { per hour } \end{array}\] Production of 400 mugs was expected in August, 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 $9.00. _ is the standard labor cost for each mug produced.

A) $25 B) $22.50 C) $1 D) $10 A) $25 B) $22.50 C) $1 D) $10

The Corleone Company makes tables for which the following standards have been developed: \[\begin{array} { l l l } & \text { Standard Inputs } & \text { Standard Price } \\ & \text { Expected for E ach } & \text { Expected per } \\ & \text { Unit of Output } & \text { Unit of Output } \\ \text { Direct materials } & \text { 10 pounds } & \$ 4 \text { per pound } \\ \text { Direct labor } & 3 \text { hours } & \$ 16 \text { per hour } \end{array}\] Production of 200 tables was expected in July, but 220 tables were actually completed. Direct materials purchased and used were 2,000 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- material usage variance for July.

A) $880 favorable B) $800 unfavorable C) $880 unfavorable D) $800 favorable A) $880 favorable B) $800 unfavorable C) $880 unfavorable D) $800 favorable

The Frosty Company makes mugs for which the following standards have been developed: \[\begin{array} { l l l } & \text { Standard Inputs } & \text { Standard Price } \\ & \text { Expected for Each } & \text { Expected per } \\ & \text { Unit of Output } & \text { Unit of Output } \\ \text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \\ \text { Direct labor } & \text { 1.5 hours } & \$ 8 \text { per hour } \end{array}\] 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 $9.00. _ is the direct- material usage variance for July.

A) $220 favorable B) $220 unfavorable C) $200 unfavorable D) $200 favorable A) $220 favorable B) $220 unfavorable C) $200 unfavorable D) $200 favorable

The Foamy Company makes mugs for which the following standards have been developed: \[\begin{array} { l l l } & \text { Standard Inputs } & \text { Standard Price } \\ & \text { Expected for E ach } & \text { Expected per } \\ & \text { Unit of Output } & \text { Unit of Output } \\ \text { Direct materials } & 5 \text { ounc es } & \$ 2 \text { per ounce } \\ \text { Direct labor } & 1.5 \text { hours } & \$ 8 \text { per hour } \end{array}\] Production of 400 mugs was expected in June, 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 $9.00. _ is the direct- labor price variance for the month of June.

A) $590 favorable B) $600 favorable C) $590 unfavorable D) $600 unfavorable A) $590 favorable B) $600 favorable C) $590 unfavorable D) $600 unfavorable

Exam 8: Flexible Budget and Variance Analysis

Best Insurance Company had a static budgeted operating income of $8.6 million; however, actual income was $6.0 million. is the static budget variance of operating income.

(Multiple Choice)

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Question 61

A favorable materials price variance may lead to an unfavorable materials usage variance.

(True/False)

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Question 62

The following information is for Parma Corporation: Direct Material Standard price p er unit of input \ 29 Actual price per unit of input \ 27 Stand ard inputs allowed per unit of output 3 pounds Actual units of input 9,300 pounds Actual units of output 2,770 units * Direct material is measured in pounds is the direct- material price variance.

(Multiple Choice)

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Question 63

The Frosty Company makes mugs 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 5 ounces \ 2 per ounce Direct labor 2.5 hours \ 10 per hour Production of 400 mugs was expected in August, 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 $9.00. _ is the standard labor cost for each mug produced.

(Multiple Choice)

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Question 64

Currently attainable standards do not make allowances for spoilage and waste.

(True/False)

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Question 65

Variances between the flexible budget and actual results

(Short Answer)

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Question 66

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.

(True/False)

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Question 67

A budget that adjusts for changes in sales volume and other cost driver activities

(Short Answer)

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Question 68

The Corleone Company makes tables 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 3 hours \ 16 per hour Production of 200 tables was expected in July, but 220 tables were actually completed. Direct materials purchased and used were 2,000 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- material usage variance for July.

(Multiple Choice)

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Question 69

Corrugated Company currently produces cardboard boxes in an automated process. Expected production per month is 50,000 units. The required direct materials cost is $0.30 per unit. Manufacturing fixed overhead costs are $24,000 per month. Manufacturing overhead is allocated based on units of production. is the budgeted manufacturing fixed overhead rate.

(Multiple Choice)

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Question 70

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

(True/False)

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Question 71

The following data for the Unbreakable Company pertain to the production of 2,000 bottles during July: Standard variable overhead cost: $26.00 per pound of glass. Total actual variable overhead cost: $24,800. Standard variable overhead cost allowed for units produced was $26,000. Variable overhead efficiency variance was $540 unfavorable. Is standard direct material amount per bottle.

(Multiple Choice)

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Question 72

If the flexible- budget variance was $5,500 favorable, and the sales- activity variance was $3,000 favorable, the total master budget variance was:

(Multiple Choice)

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Question 73

The Frosty Company makes mugs 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 5 ounces \ 2 per ounce Direct labor 1.5 hours \ 8 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 $9.00. _ is the direct- material usage variance for July.

(Multiple Choice)

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Question 74

Levels of performance that can be achieved by realistic levels of effort

(Short Answer)

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Question 75

Columbia 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 usage variance.

(Multiple Choice)

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Question 76

What are two possible interpretations of "currently attainable standards"?

(Essay)

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Question 77

Differentiate between a master- budget variance and a flexible- budget variance.

(Essay)

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Question 78

If the actual level of sales significantly exceeds the sales in the master budget, the variances associated with the variable costs will probably be:

(Multiple Choice)

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Question 79

The Foamy Company makes mugs 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 5 ounc es \ 2 per ounce Direct labor 1.5 hours \ 8 per hour Production of 400 mugs was expected in June, 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 $9.00. _ is the direct- labor price variance for the month of June.

(Multiple Choice)

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Question 80

Best Insurance Company had a static budgeted operating income of $8.6 million; however, actual income was $6.0 million. is the static budget variance of operating income.

A favorable materials price variance may lead to an unfavorable materials usage variance.

Currently attainable standards do not make allowances for spoilage and waste.

Variances between the flexible budget and actual results

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 budget that adjusts for changes in sales volume and other cost driver activities

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

If the flexible- budget variance was $5,500 favorable, and the sales- activity variance was $3,000 favorable, the total master budget variance was:

Levels of performance that can be achieved by realistic levels of effort

Columbia 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 usage variance.

What are two possible interpretations of "currently attainable standards"?

Differentiate between a master- budget variance and a flexible- budget variance.

If the actual level of sales significantly exceeds the sales in the master budget, the variances associated with the variable costs will probably be:

Managerial Accounting and the Business Organization

Introduction to Cost Behavior and Cost Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information and Decision-Making: Marketing Decisions

Relevant Information and Decision-Making: Product Decisions

The Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Job-Costing

Process-Costing Systems

Overhead Application: Variable and Absorbtion Costing

Basic Accounting Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

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