Exam 8: Flexible Budget and Variance Analysis

The following data are for Quick Draw Corporation: Flexible Budget for Master Actual Sales Actual Budget Activity Units S ales \ 360,000 \ 320,000 \ 360,000 Variable costs 234,000 192,000 216,000 Contribution \ 126,000 \ 128,000 \ 144,000 margin Fixed costs 76,000 \ 80,000 \ 80,000 Operating income \ 50,000 \ 48,000 \6 4,000 The total of the master budget variances is:

The following data for the Pull Company pertain to the production of 3,000 clay pigeons during September: Standard variable overhead cost was $5.00 per pound of clay. Total actual variable overhead cost was $11,200. Standard variable overhead cost allowed for units produced was $12,000. Variable overhead efficiency variance was $340 unfavorable. Is the variable overhead rate variance.

The following data for the Recycle Company pertain to the production of 1,000 bottles during August: 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 the variable overhead flexible- budget variance.

Performance report is a generic term that usually means a comparison of actual results with some budget.

(Actual quantity used - standard quantity allowed) x standard price

A budget that is based on only one level of activity

What are some common causes of usage variances?

The reasons that actual results differ from the master budget are independent of one another.

A budget based on budgeted costs for each activity and related cost driver

Doghouse Company had the following information: At a manufacturing level of 5,000 units, variable and fixed manufacturing costs are $30 and $8 per unit, respectively. Selling price is $60 per unit. _ is the total manufacturing cost for 15,000 units.

The labor flexible- budget variance equals the labor price variance plus the labor usage variance.

The following data are for Dexter Corporation: Flexible Budget for Master Actual Sales Actual Budget Activity Units S ales \ 360,000 \ 320,000 \ 360,000 Variable costs 234,000 192,000 216,000 Contribution \ 126,000 \ 128,000 \ 144,000 margin Fixed costs 76,000 \ 80,000 \ 80,000 Operating income \ 50,000 \ 48,000 \6 4,000 The total of the flexible- budget variances is:

Standard cost systems value products according to actual costs.

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

is most likely to be held accountable for price variances.

Jerry Company planned to produce 12,000 units. This level of activities required 20 set- ups at a cost of $18,000 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 master budget variance for set- ups.

The following data are for the month of April for Scott Corporation, a company that makes trophies. Standard Inputs Standard Expected for Each Price per Unit of Output Unit of Input Direct material 5 pounds \ 12 perpound Direct labor 15 hours \ 12 per hour During the month of April the company actually produced 1,000 trophies, which is 100 units less than expected. Direct material purchased and used amounted to 5,500 pounds at a cost of $12.50 per pound. Actual direct labor was 1,450 hours at an actual cost of $13.00 per hour. Required: a. What is the standard cost per statue for direct material and direct labor? b. Compute the price and usage variances for direct material and direct labor.

Actual output in units measured in standard direct labor hours

Why should a budgeted cost not be merely an extension of past experience?

Variances should be investigated if they: