Exam 23: Flexible Budgets and Standard Cost Systems

Oak Valley Company,a custom cabinet manufacturing company,is setting standard costs for one of its products.The main material is cedar wood,sold by the square foot.The current cost of cedar wood is $8.00 per square foot from the supplier.Delivery costs are $0.25 per square foot.Carpenters' wages are $25.00 per hour.Payroll costs are $3.60 per hour,and benefits are $6.00 per hour.How much is the direct materials standard cost per square foot?

Family Fashions uses standard costs for its manufacturing division.The allocation base for overhead costs is direct labor hours.From the following data,calculate the fixed overhead volume variance. Actual fixed overhead \ 40,000 Budgeted fixed overhead \ 25,000 Standard overhead allocation rate \ 8 Standard direct labor hours per unit 4 DLHr Actual output 2200 units

Delicious Food Products is famous for its trail mix.The main ingredient of the trail mix is dried fruit,which Delicious purchases by the pound.In addition,the production requires a certain amount of direct labor.Delicious uses a standard cost system,and at the end of the first quarter,there was an unfavorable direct materials efficiency variance.Which of the following is a logical explanation for that variance?

Which of the following is a reason companies use standard costs?

Which of the following is NOT a benefit of a static budget performance report?

Hercules Sports Equipment Company projected sales of 80,000 units at a unit sales price of $12 for the year.Actual sales for the year were 77,000 units at $15 per unit.Variable costs were budgeted at $2 per unit,and the actual amount was $5 per unit.Budgeted fixed costs totaled $388,000,while actual fixed costs amounted to $436,000.What is the flexible budget variance for variable costs?

A static budget is prepared for only one level of sales volume.

List the direct materials variances,and briefly describe each.

A static budget presents financial data at multiple levels of sales volume.

What does a cost variance measure?

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing a higher waste of valuable direct materials.The production manager decided to recruit some highly skilled production workers from another company to bring down the defect rate.This would produce a(n)________.

Aunt Emily's Food Products is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Aunt Emily's purchases by the pound.In addition,the production requires a certain amount of direct labor.Aunt Emily's uses a standard cost system,and at the end of the first quarter,there was a favorable direct materials cost variance.Which of the following is a logical explanation for that variance?

Which department is usually responsible for a direct labor cost variance attributable to inexperienced workers on the assembly line?

The Alaska Fish Company completed the flexible budget analysis for the second quarter,which is given below. Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget Units Sales Revenue \ 62,730 \ 2478 \ 65,208 \ 5188 \ 60,020 Variable Costs Contribution Margin \ 35,200 \ 2586 \ 37,786 \ 3006 \ 34,780 Fixed Costs Operating income/(Loss) Which of the following statements would be a correct factor to explain the sales volume variance for operating income?

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n)________.

A variance is the difference between an actual amount and the budgeted amount.

A favorable sales volume variance in sales revenue suggests a(n)________.

Fixed overhead volume variance is a flexible budget variance.

When a manufacturing company uses a standard cost system,Work-in-Process Inventory is debited at standard input quantities and standard costs.

Which of the following amounts of a flexible budget remains constant,within the specified relevant range,when the sales volume changes?