Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December 31: Sales revenues: $700,000 Cost of goods sold (standard costing): $382,500 Selling & administrative expenses: $100,000 Variances: \[\begin{array} { | l | r | c | } \hline \text { Sales revenue variance } & \$ 4100 & \mathrm {~F} \\ \hline \text { Direct materials cost variance } & 20 & \mathrm { U } \\ \hline \text { Direct materials efficiency variance } & 325 & \mathrm {~F} \\ \hline \text { Direct labor cost variance } & 75 & \mathrm { U } \\ \hline \text { Direct labor efficiency variance } & 10 & \mathrm {~F} \\ \hline \text { Variable overhead cost variance } & 300 & \mathrm { U } \\ \hline \text { Variable overhead efficiency variance } & 80 & \mathrm {~F} \\ \hline \text { Fixed overhead cost variance } & 410 & \mathrm { U } \\ \hline \text { Fixed overhead volume variance } & 130 & \mathrm {~F} \\ \hline \end{array}\] What is the net operating income on a standard cost income statement?

A) $217,240 B) $221,340 C) $321,340 D) $217,500 A) $217,240 B) $221,340 C) $321,340 D) $217,500

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. \[\begin{array} { | l | r | } \hline \text { Actual fixed overhead } & \$ 40,000 \\ \hline \text { Budgeted fixed overhead } & \$ 25,000 \\ \hline \text { Standard overhead allocation rate } & \$ 8 \\ \hline \text { Standard direct labor hours per unit } & 4 \text { DLHr } \\ \hline \text { Actual output } & 2200 \text { units } \\ \hline \end{array}\]

A) $17,600 F B) $45,400 U C) $45,400 F D) $17,600 U A) $17,600 F B) $45,400 U C) $45,400 F D) $17,600 U

Wave Fashions uses standard costs for its manufacturing division. The allocation base for overhead costs is direct labor hours. From the following data, calculate the total fixed overhead variance. \[\begin{array} { | l | r | } \hline \text { Actual fixed overhead } & \$ 36,000 \\ \hline \text { Budgeted fixed overhead } & \$ 24,500 \\ \hline \text { Allocated fixed overhead } & \$ 28,000 \\ \hline \text { Standard overhead allocation rate } & \$ 7.00 \\ \hline \text { Standard direct labor hours per unit } & 2.00 \text { DLHr } \\ \hline \text { Actual output } & 2000 \text { units } \\ \hline \end{array}\]

A) $8000 U B) $8000 F C) $14,000 U D) $14,000 F A) $8000 U B) $8000 F C) $14,000 U D) $14,000 F

For each of the following variances, state which manager is most likely to be responsible for the variance. \[\begin{array} { | l | l | } \hline \text { Variance } & \text { Responsible Manager } \\ \hline \text { Direct Materials Cost } & \\ \hline \text { Direct Labor Efficiency } & \\ \hline \text { Variable Overhead Efficiency } & \\ \hline \end{array}\]

\[\begin{array} { | l | l | } \hline \t

Exam 23: Flexible Budgets and Standard Cost Systems

Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December 31: Sales revenues: $700,000 Cost of goods sold (standard costing): $382,500 Selling & administrative expenses: $100,000 Variances: Sales revenue variance \ 4100 Direct materials cost variance 20 Direct materials efficiency variance 325 Direct labor cost variance 75 Direct labor efficiency variance 10 Variable overhead cost variance 300 Variable overhead efficiency variance 80 Fixed overhead cost variance 410 Fixed overhead volume variance 130 What is the net operating income on a standard cost income statement?

(Multiple Choice)

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Question 101

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

(Multiple Choice)

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Question 102

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

(True/False)

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Question 103

Wave Fashions uses standard costs for its manufacturing division. The allocation base for overhead costs is direct labor hours. From the following data, calculate the total fixed overhead variance. Actual fixed overhead \ 36,000 Budgeted fixed overhead \ 24,500 Allocated fixed overhead \ 28,000 Standard overhead allocation rate \ 7.00 Standard direct labor hours per unit 2.00 DLHr Actual output 2000 units

(Multiple Choice)

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Question 104

The flexible budget variance is the difference between expected results in the flexible budget for the actual units sold and the static budget.

(True/False)

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Question 105

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

(True/False)

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Question 106

Poseidon Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Poseidon 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: 3 pounds per unit; $3 per pound Direct labor: 5 hours per unit; $15 per hour Poseidon produced 5000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the direct labor cost variance was $8000 F. Which of the following is a logical explanation for this variance?

(Multiple Choice)

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Question 107

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

(True/False)

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Question 108

When favorable variances are added to unfavorable variances, the result is always a total favorable variance.

(True/False)

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Question 109

List the direct materials variances, and briefly describe each.

(Essay)

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Question 110

Managers should look at any variance that is significant.

(True/False)

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Question 111

A cost variance measures the difference in quantities of actual inputs used and the standard quantity of inputs allowed for the actual number of units produced.

(True/False)

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Question 112

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

(Multiple Choice)

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Question 113

The term "management by exception" refers to investigating ________.

(Multiple Choice)

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Question 114

For each of the following variances, state which manager is most likely to be responsible for the variance. Variance Responsible Manager Direct Materials Cost Direct Labor Efficiency Variable Overhead Efficiency

(Essay)

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Question 115

To compute the variable overhead cost variance, first compute the difference between actual cost and standard cost. Then, multiply this difference by standard quantity.

(True/False)

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Question 116

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) ________.

(Multiple Choice)

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Question 117

The static budget, at the beginning of the month, for Wadsworth Company follows: Static budget: Sales volume: 2000 units; Sales price: $50.00 per unit Variable costs: $14.00 per unit; Fixed costs: $25,100 per month Operating income: $46,900 Actual results, at the end of the month, follows: Actual results: Sales volume: 1900 units; Sales price: $58.00 per unit Variable costs: $16.5 per unit; Fixed costs: $34,000 per month Operating income: $44,850 Calculate the flexible budget variance for operating income.

(Multiple Choice)

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Question 118

A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management. Upon investigation, the manager found that the workers were poorly motivated and not closely supervised. Midway through the quarter, an incentive program was initiated, and cash bonuses were given when workers hit their production targets. Within a short time, production output increased, but the bonuses had to be charged to the direct labor budget. This could produce an ________.

(Multiple Choice)

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Question 119

An unfavorable flexible budget variance in variable costs suggests a(n) ________.

(Multiple Choice)

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Question 120

Showing 101 - 120 of 223

Favorable and unfavorable variances are subtracted from each other to arrive at a net favorable or unfavorable variance.

The flexible budget variance is the difference between expected results in the flexible budget for the actual units sold and the static budget.

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

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

When favorable variances are added to unfavorable variances, the result is always a total favorable variance.

List the direct materials variances, and briefly describe each.

Managers should look at any variance that is significant.

A cost variance measures the difference in quantities of actual inputs used and the standard quantity of inputs allowed for the actual number of units produced.

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

The term "management by exception" refers to investigating ________.

For each of the following variances, state which manager is most likely to be responsible for the variance. Variance Responsible Manager Direct Materials Cost Direct Labor Efficiency Variable Overhead Efficiency

To compute the variable overhead cost variance, first compute the difference between actual cost and standard cost. Then, multiply this difference by standard quantity.

An unfavorable flexible budget variance in variable costs suggests a(n) ________.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Investments

Current Liabilities and Payroll

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based Just-In-Time

Cost Volume Profit Analysis

Variable Costing

Master Budgets

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Understanding Accounting Information Systems and their Components

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