Exam 23: Flexible Budgets and Standard Cost Systems

Based on the following, what is the total product cost flexible budget variance?

On a standard cost income statement, the variances with debit balances are shown in parentheses because they are contra expenses and therefore decrease the expense Cost of Goods Sold.

When evaluating variances, exceptions can be expressed as a percentage of a budgeted amount or a dollar amount.

Golden Glow Company manufactures candles. The standard direct materials quantity required to produce one large candle is 1 pound at a cost of $5 per pound. Every candle requires 2 direct labor hours at a standard cost of $3 per direct labor hour. During November, 7,200 large candles were produced using 7,500 pounds costing $45,000. At the end of November, an examination of the labor cost records showed that the company used 15,000 direct labor hours (DLHr) at a cost of $4 per hour. Using the format below, prepare an analysis of the direct labor cost variances.

Match the variance to the correct definition -Static budget variance

A direct labor efficiency variance is favorable if laborers actually work more hours than the flexible budget calls for to produce the actual quantity of output.

Marathon Sports Equipment Company projected sales of 82,000 units at a unit sales price of $14 for the year. Actual sales for the year were 75,000 units at $13.00 per unit. Variable costs were budgeted at $3 per unit, and the actual amount was $4 per unit. Budgeted fixed costs totaled $376,000, while actual fixed costs amounted to $425,000. What is the sales volume variance for total revenue?

Complete the following table: Variance How is the variance calculated? How does the variance arise? Flexible budget Sales volume

The static budget, at the beginning of the month, for New England Furniture Company follows: Static budget: Sales volume: 1000 units; Sales price: $71.00 per unit Variable costs: $33.00 per unit; Fixed costs: $36,200 per month Operating income: $1800 Actual results, at the end of the month, follows: Actual results: Sales volume: 960 units; Sales price: $74.00 per unit Variable costs: $35.00 per unit; Fixed costs: $35,000 per month Operating income: $2440 Calculate the sales volume variance for fixed costs.

The Dear Dairy Cheese Company completed the flexible budget analysis for the second quarter, which is given below. Which of the following statements would be a correct factor to explain the flexible budget variance for fixed costs?

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

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?

Favorable and unfavorable variances are netted together in the same way debits and credits are.

Sugar and Spice Foods is famous for its cupcakes. One of the main ingredients of the cupcakes is sugar, which Sugar and Spice purchases by the pound. In addition, the production requires a certain amount of direct labor. Sugar and Spice uses a standard cost system, and at the end of the first quarter, there was a favorable direct labor efficiency variance. Which of the following is a logical explanation for that 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 6000 units Budgeted variable overhead costs \ 16,000 Budgeted direct labor hours (DLHr) 600 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.)

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

Which of the following is an example of a direct labor cost standard?

A company is setting its direct materials and direct labor standards for its leading product. Direct materials cost from the supplier are $8 per square foot, net of purchase discount. Freight-in amounts to $0.10 per square foot. Basic wages of the assembly line personnel are $18 per hour. Payroll taxes are approximately 25% of wages. Benefits amount to $4 per hour. How much is the direct materials cost standard per square foot?

Define variance. What is the difference between a favorable and an unfavorable variance?

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