Exam 23: Flexible Budgets and Standard Cost Systems

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?

The following information relates to Turpin Manufacturing's overhead costs for the month: Static budget variable overhead \ 14,200 Static budget fixed overhead \ 5,600 Static budget direct labor hours 1,000 hours Static budget number of units 5,000 units Turpin allocates manufacturing overhead to production based on standard direct labor hours. Turpin reported the following actual results for last month: actual variable overhead, $14,500; actual fixed overhead, $5,400; actual production of 4,700 units at 0.22 direct labor hours per unit. The standard direct labor time is 0.20 direct labor hours per unit. Compute the fixed overhead cost variance.

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?

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

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.

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

The Comfort Foam Products Company completed the flexible budget analysis for the second quarter, which is given below. Which of the following would be a correct factor to explain the sales volume variance for variable costs?

The static budget, at the beginning of the month, for Beacon Banner Company follows: Static budget: Sales volume: 1100 units; Sales price: $70.00 per unit Variable costs: $33.00 per unit; Fixed costs: $37,800 per month Operating income: $2900 Actual results, at the end of the month, follows: Actual results: Sales volume: 995 units; Sales price: $75.00 per unit Variable costs: $35.00 per unit; Fixed costs: $35,000 per month Operating income: $4800 Calculate the sales volume variance for revenue.

What does the variable overhead efficiency variance measure?

An unfavorable variance means more cost has been incurred than planned.

When recording direct materials purchased, what does an unfavorable direct materials cost variance represent? Will this variance have a debit or credit balance?

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

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

Which department is usually responsible for a direct materials cost variance due to favorable price negotiations?

The difference between the actual allocation base (actual quantity) and the amount of the allocation base that should have been used (standard quantity) times the standard cost is called the ________.

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 is an example of a direct materials efficiency standard?

The static budget, at the beginning of the month, for Amira Company follows: Static budget: Sales volume: 1000 units; Sales price: $70.00 per unit Variable costs: $32.00 per unit; Fixed costs: $36,800 per month Operating income: $1200 Actual results, at the end of the month, follows: Actual results: Sales volume: 980 units; Sales price: $74.00 per unit Variable costs: $35.00 per unit; Fixed costs: $34,600 per month Operating income: $3620 Calculate the flexible budget variance for fixed costs.

An unfavorable sales volume variance in operating income suggests a(n) ________.

Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Oceanside 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 pound per unit; $12 per pound Direct labor: 4 hours per unit; $18 per hour Oceanside produced 3000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 7500 pounds of direct materials and actual total materials costs were $98,400. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)