Exam 9: Flexible Budgets Standard Costs and Variance Analysis

The labor efficiency variance for November is:

The labor rate variance for the month is closest to:

Wytch Corporation bases its budgets on machine-hours.The company's static planning budget for February appears below: Required: Prepare a flexible budget for 6,400 machine-hours per month.

At Jacobson Company, indirect labor is a variable cost that varies with direct labor-hours.Last month's performance report showed that actual indirect labor cost totaled $5,780 for the month and that the associated spending variance was $245 F.If 24,100 direct labor-hours were actually worked last month, then the flexible budget cost formula for indirect labor must be (per direct labor-hour):

In a flexible budget, when the activity declines, the total variable cost also declines.

The net operating income in the flexible budget for January would be closest to:

Sathre Corporation is an oil well service company that measures its output by the number of wells serviced.The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of December, it assumed that 34 wells would have been serviced.However, 32 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to:

The amount shown for "Other expenses" in the planning budget for November would have been closest to:

If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable (U).

Fixed costs should usually be included in performance reports because fixed costs are generally controllable.

Tuton Memorial Diner is a charity supported by donations that provides free meals to the homeless.The diner's budget for July was based on 3,200 meals.The diner's director has provided the following cost formulas to use in budgets: The director has also provided the diner's statement of actual expenses for the month: Required: Prepare a report showing the spending variances for each of the expenses and for total expenses for July.Label each variance as favorable (F)or unfavorable (U).

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours.If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

The spending variance for supplies cost for the month should be:

What is the variable overhead efficiency variance for the month?

The labor efficiency variance for the month is closest to:

Herrod Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports.The cost formula for catering supplies is $570 per month plus $98 per job plus $24 per meal.A typical job involves serving a number of meals to guests at a corporate function or at a host's home.The company expected its activity in December to be 11 jobs and 98 meals, but the actual activity was 14 jobs and 102 meals.The actual cost for catering supplies in December was $4,500.The spending variance for catering supplies in December would be closest to:

The variable overhead rate variance for lubricants is closest to:

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours?

The spending variance for manufacturing overhead in May would be closest to:

The labor rate variance for January is: