Exam 23: Flexible Budgets and Standard Cost Systems

Benefit Pillow Company projected sales of 75,000 units for the year at a unit sales price of $14.00.Actual sales for the year were 70,000 units at $19.00 per unit.Variable costs were budgeted at $4.00 per unit,and the actual variable cost was $4.90 per unit.Budgeted fixed costs totaled $377,000 while actual fixed costs amounted to $410,000.What is the flexible budget variance for operating income?

Myers Manufacturing uses a standard cost system.The allocation base for overhead costs is direct labor hours.Standard and actual data for manufacturing overhead are as follows: Variable overhead allocation rate: $30 per direct labor hour Fixed overhead allocation rate: $10 per direct labor hour Actual overhead incurred (variable and fixed): $45,600 Standards for direct labor are as follows: Hours per unit 0.5,Direct labor cost per hour $18.00 Actual direct labor for the month: 1,200 hours for a total cost of $24,000 Actual and planned production for the month: 3,000 units Prepare the journal entry to allocate overhead cost (both variable and fixed)to production.

If both favorable and unfavorable variances exist,the variances are subtracted from each other.The variance is determined to be favorable or unfavorable based on which one is the larger amount.

The static budget, at the beginning of the month, for Divine Décor Company, follows: $\underline{\text{Static budget:}}$ Sales volume: 1500 units; Sales price: $70.00 per unit Variable costs: $32.00 per unit; Fixed costs: $38,000 per month Operating income: $19,000 $\underline{\text{Actual results, at the end of the month, follows:}}$ $\underline{\text{Actual results:}}$ Sales volume: 990 units; Sales price: $75.00 per unit Variable costs: $35.00 per unit; Fixed costs: $33,000 per month Operating income: $6600 Calculate the flexible budget variance for sales revenue.

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

The direct materials cost and efficiency variances make up the total direct materials variance.

The variable overhead cost variance measures how well the business ________.

The Chesapeake Oyster 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 \ 62,780 \ 1391 \ 64,171 \ 4151 \ 60,020 Variable Costs Contribution Margin \ 35,200 \ 1953 \ 37,153 \ 2403 \ 34,750 Fixed Costs Operating income/(Loss) Which of the following statements would be a correct factor to explain the flexible budget variance for sales revenue?

-According to the above table. what is the total fixed overhead variance for the total product cost flexible budget variance?

The total product cost flexible budget variance is obtained by adding direct labor efficiency variance and fixed overhead volume variance.

Ibis Paper Company prepared the following static budget for November: Static Budget Units/Volume 12,000 Per Unit Sales Revenue \ 21,00 \ 252,000 Variable Costs 8.00 Contribution Margin 156,000 Fixed Costs Operating Income/(Loss) If a flexible budget is prepared at a volume of 14,500 units,calculate the operating income.The production level is within the relevant range.

An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.

Devon Company has collected the following data for one of its products: Direct materials standard (4 pounds @\ 1/ .) \ 4 per unit Direct materials flexible budget variance - unfavorable \ 15,000 Actual direct materials used 103,000 pounds Actual units produced 22,000 units What is the direct materials efficiency variance?

Meridian Fashions uses standard costs for their manufacturing division.The allocation base for overhead costs is direct labor hours.From the following data,calculate the fixed overhead cost variance. Actual fixed overhead \ 38,000 Budgeted fixed overhead \ 24,000 Standard overhead allocation rate \ 9 Standard direct labor hours per unit 4 DLHr Actual output 2100 units

In a standard cost system,the standard overhead allocation rate replaces the predetermined overhead allocation rate but the concept is the same.

A favorable direct materials cost variance occurs when the actual direct materials cost incurred is greater than the standard direct materials cost.

Alphonse Company manufactures staplers.The budgeted sales price is $14.00 per stapler,the variable costs are $3.00 per stapler,and budgeted fixed costs are $12,000.What is the budgeted operating income for 4200 staplers?

Which of the following will result in an unfavorable direct labor cost variance?

Akao Products uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Akao had an unfavorable efficiency variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

Porter Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.The allocation base for variable overhead costs is direct labor hours.At the beginning of the year,the static budget for variable overhead costs included the following data: Production volume 5000 units Budgeted variable overhead costs \ 16,000 Budgeted direct labor hours (DLHr) 500 hours At the end of the year,actual data were as follows: Production volume 4100 units Actual variable overhead costs \ 15,200 Actual direct labor hours (DLHr) 500 hours What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)