Exam 23: Flexible Budgets and Standard Cost Systems

Global Engineering's actual operating income for the current year is $58,000. The flexible budget operating income for actual sales volume is $39,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

List three ways in which using a standard cost system helps managers.

The static budget, at the beginning of the month, for Vintage Wine Company follows: Static budget: Sales volume: 2000 units; Sales price: $50.00 per unit Variable costs: $13.00 per unit; Fixed costs: $25,500 per month Operating income: $48,500 Actual results, at the end of the month, follows: Actual results: Sales volume: 1900 units; Sales price: $58.50 per unit Variable costs: $16.00 per unit; Fixed costs: $34,300 per month Operating income: $46,450 Calculate the flexible budget variance for variable costs.

The management of Watchdog Security Systems has calculated the following variances: Direct materials cost variance \ 9000 Direct materials efficiency variance 37,000 Direct labor cost variance 15,500 Direct labor efficiency variance 12,000 Total variable overhead variance 7500 Total fixed overhead variance 3000 What is the total direct labor variance of the company?

A favorable sales volume variance in variable costs suggests a(n) ________.

When a manufacturing company uses a standard cost system, an unfavorable variance is a contra expense.

The management of Guardian Fire Alarms has calculated the following variances: Direct materials cost variance \ 11,000 Direct materials efficiency variance 36,000 Direct labor cost variance 16,500 Direct labor efficiency variance 13,500 Total variable overhead variance 7500 Total fixed overhead variance 4000 What is the total direct materials variance of the company?

The management technique whereby managers concentrate on results that are outside the accepted parameters is called management by ________.

Under a standard cost system, the journal entry to record direct labor includes ________.

The sales volume variance is a result of the difference between the actual sales price and the budgeted sales price.

Aquatic Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Aquatic 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: 5 pounds per unit; $6 per pound Direct labor: 4 hours per unit; $16 per hour During the first quarter, Aquatic produced 3000 units of this product. Actual direct materials and direct labor costs were $65,000 and $326,000, respectively. For the purpose of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 3000 units.

Which of the following is the correct formula for measuring an efficiency variance?

In a standard costing system, each input of direct materials, direct labor, and manufacturing overhead has a cost standard and an efficiency standard.

Dixon, Inc. uses a standard cost system. On December 31, the last day of the accounting period, the account balances include the following: What is the net operating income on a standard cost income statement of the company for the year ended December 31?

Apogee 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 allocated to production based on direct labor hours (DLHr). 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 2200 units

The total fixed overhead variance is the total of the variable overhead cost variance and fixed overhead volume variance.

Based on the following, what is the total direct materials variance?

Aunt Emily's Food Products is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit, which Aunt Emily's purchases by the pound. In addition, the production requires a certain amount of direct labor. Aunt Emily's uses a standard cost system, and at the end of the first quarter, there was a favorable direct materials cost variance. Which of the following is a logical explanation for that variance?

A company is analyzing its month-end results by comparing it to both static and flexible budgets. -During the month, the actual sales volume was lower than the expected sales volume as per the static budget. This difference results in an unfavorable ________.

Which of the following should be considered when analyzing manufacturing overhead variances?