Exam 23: Flexible Budgets and Standard Cost Systems

A manufacturer, using a standard cost system, purchased 250 units of direct materials at a cost of $2 per unit. The standard cost per unit of direct materials is $1.85. Prepare the journal entry to record the direct materials cost variance at the time of purchase. Omit explanation.

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

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.

Argosy Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Argosy uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 4 pounds per unit; $3 per pound Direct labor: 4 hours per unit; $17 per hour Argosy produced 5000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 21,000 direct labor hours and actual total direct labor costs were $380,000. The direct labor efficiency variance was $17,000 U. Which of the following is a logical explanation for this variance?

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) ________.

A company is setting its direct materials and direct labor standards for its leading product. Direct material costs from the supplier are $9 per square foot, net of purchase discount. Freight-in amounts to $0.20 per square foot. Basic wages of the assembly line personnel are $14 per hour. Payroll taxes are approximately 22% of wages. How much is the direct labor cost standard per hour? (Round your answer to the nearest cent.)

In a standard cost system, the manufacturing overhead allocated to production equals the standard overhead allocation rate multiplied by the standard quantity of the allocation base allowed for expected output.

Standard costs are developed by the cooperative effort of purchasing, production, human resources, and accounting personnel.

Top managers of Marshall Industries predicted annual sales of 23,600 units of its product at a unit price of $5.00. Actual sales for the year were 22,800 units at $5.50 each. Variable costs were budgeted at $2.45 per unit, and actual variable costs were $2.40 per unit. Actual fixed costs of $45,000 exceeded budgeted fixed costs by $2,000. Prepare Marshall's flexible budget performance report.

The management of Earth Barber Lawnmowers has calculated the following variances: Direct materials cost variance \ 8000 Direct materials efficiency variance 37,000 Direct labor cost variance 18,000 Direct labor efficiency variance 12,000 Variable overhead cost variance 3000 Variable overhead efficiency variance 5000 Fixed overhead cost variance 4000 Fixed overhead volume variance 2,500 When determining the total product cost flexible budget variance, what is the total fixed overhead variance of the company?

When a manufacturing company uses a standard cost system, the direct materials cost variance is recorded at the time direct materials are issued in production.

Benson Company manufactures special metallic materials for luxury homes that require highly skilled labor. Benson uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pounds per unit; $4 per pound Direct labor: 5 hours per unit; $14 per hour Benson produced 5000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the company used 30,000 direct labor hours and actual total direct labor costs were $225,000. What is the direct labor efficiency variance?

Lewis Manufacturing uses a standard cost system. The direct labor cost standard is $18.00 per direct labor hour. The direct labor efficiency standard is 0.5 direct labor hour per unit. Actual direct labor for the month is 1,200 hours for a total cost of $24,000. Production for the month is 3,000 units. Give the journal entry to record direct labor (not paid). Omit explanation.

A favorable variance reflects a decrease in operating income.

Judd Company uses standard costs for its manufacturing division. Standards specify 0.2 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 6100 units Budgeted variable overhead costs \ 14,000 Budgeted direct labor hours 500 hours At the end of the year, actual data were as follows: Production volume 4200 units Actual variable overhead costs \ 15,100 Actual direct labor hours 480 hours What is the variable overhead cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

Which of the following is the correct formula for measuring a cost variance?

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

The Chesapeake Oyster 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 sales revenue?

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

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