Question 1

List the direct labor variances and briefly describe each.

Accepted Answer

The direct labor variances are the direc

Question 2

A standard is a sales price, cost, or quantity that is expected under normal conditions.

Accepted Answer

A) True 
 B)False

Question 3

What does the fixed overhead cost variance measure?

Accepted Answer

The fixed overhead cost varian

Question 4

The following information relates to Randolph Manufacturing's overhead costs for the month:
 $$\begin{array} { | l | l | } 
\hline \text { Static budget variable overhead } & \$ 14,200 \
\hline \text { Static budget fixed overhead } & \$ 5,600 \
\hline \text { Static budget direct labor hours } & 1,000 \text { hours } \
\hline \text { Static budget number of units } & 5,000 \text { units } \
\hline
\end{array}$$ Randolph allocates manufacturing overhead to production based on standard direct labor hours.
Randolph 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 variable overhead efficiency variance. (round the answer to the nearest dollar)

Accepted Answer

@#IMG-DLM& * 4,700 units produced × 0.22

Question 5

Beacon Novelties manufactures frisbees that it sells to other companies for customizing with their own logos. Beacon prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a frisbee is based on static budget volume of 60,000 frisbees per month:
 $$\begin{array} { | l | r | r | } 
\hline \text { Direct Materials } ( .2 @ \$ .30 \text { per lb.) } & & .06 \
\hline \text { Direct Labor } ( 4 \text { mins. @ \$.15 per min.) } & & .60 \
\hline \text { Manufacturing Overhead: } & & \
\hline \text { Variable } ( 4 \text { mins. @ \$.07 per min.) } &.28 \
\hline \text { Fixed } ( 4 \text { mins. @ \$.16 per min.) } &  .64 & .92\
\hline \text { Total cost per unit }&& \$ 1.58 \
\hline
\end{array}$$ Actual cost and production information for June 2019 follows:
a. There were no beginning or ending inventory balances. All expenditures were on account.
b. Actual production and sales were 62,000 frisbees.
c. Actual direct materials usage was 10,000 lbs. at an actual cost of $0.24 per lb.
d. Actual direct labor usage was 208,000 minutes at a total cost of $37,440.
e. Actual overhead cost was $8,000 variable and $30,000 fixed.
f. Selling and administrative costs were $130,000
.
Requirements
1. Compute the cost and efficiency variances for direct materials and direct labor.
2. Journalize the purchase and usage of direct materials and the assignment of direct labor, including the related variances.

Accepted Answer

Requirement 1:
 \[\begin{array} { | l |

Question 6

The Body Balance Fitness 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 variable costs?

Accepted Answer

A)  decrease in sales price per unit 
B)  increase in variable cost per unit 
C)  increase in sales volume 
D)  increase in fixed costs 
A)  decrease in sales price per unit 
B)  increase in variable cost per unit 
C)  increase in sales volume 
D)  increase in fixed costs

Question 7

A direct labor cost variance is unfavorable if the employer pays workers more per hour than budgeted.

Accepted Answer

A) True 
 B)False

Question 8

Ramos Manufacturing uses a standard cost system. The T-account for manufacturing overhead is shown below:
   In addition to the above, Ramos calculated the following overhead variances:
Variable overhead cost variance: $5,000 F
Variable overhead efficiency variance: $4,850 U
Fixed overhead cost variance: $1,200 F
Fixed overhead volume variance: $3,350 U
Prepare the journal entry to close the manufacturing overhead account and record the overhead variances. Omit explanation.

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 9

For each of the following cost standards, indicate which manager is responsible for the standard, and list one factor that should be used in setting the standard.
-
 $$\begin{array} { | l | l | l | } 
\hline \text { Cost standard } & \text { Responsible manager } & \text { Factor used in setting the standard } \
\hline \text { Direct materials } & & \\
\hline \text { Direct labor } & & \
& & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following cost standards,...

Question 10

An efficiency variance measures how well the business uses its materials or human resources.

Accepted Answer

A) True 
 B)False

Question 11

Devon Company has collected the following data for one of its products: $\begin{array}{|l|r|}
\hline\text { Direct materials standard (4 pounds @ } \$ 1 / 1 b \text {.) } & \$ 4 \text { per unit } \
\hline \text { Direct materials flexible budget variance - unfavorable } & \$ 15,000 \
\hline \text { Actual direct materials used } & 103,000 \text { pounds } \
\hline \text { Actual units produced } & 22,000 \text { units }\\hline
\end{array}$ What is the direct materials efficiency variance?

Accepted Answer

A)  $22,000 U 
B)  $15,000 F 
C)  $15,000 U 
D)  $22,000 F 
A)  $22,000 U 
B)  $15,000 F 
C)  $15,000 U 
D)  $22,000 F

Question 12

Which department is usually responsible for a direct labor cost variance attributable to inexperienced workers on the assembly line?

Accepted Answer

A)  purchasing 
B)  production 
C)  human resources 
D)  engineering 
A)  purchasing 
B)  production 
C)  human resources 
D)  engineering

Question 13

Only substantial unfavorable variances should be investigated to determine their causes.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following will result in an unfavorable direct materials efficiency variance?

Accepted Answer

A)  The actual cost per unit of direct materials exceeds the standard cost of direct materials. 
B)  The actual cost per unit of direct materials is less than the standard cost per unit of direct materials. 
C)  The actual quantity of direct materials used per unit exceeds the standard quantity of direct materials allowed per unit. 
D)  The actual quantity of direct materials used per unit is less than the standard quantity of direct materials allowed per unit. 
A)  The actual cost per unit of direct materials exceeds the standard cost of direct materials. 
B)  The actual cost per unit of direct materials is less than the standard cost per unit of direct materials. 
C)  The actual quantity of direct materials used per unit exceeds the standard quantity of direct materials allowed per unit. 
D)  The actual quantity of direct materials used per unit is less than the standard quantity of direct materials allowed per unit.

Question 15

A standard cost system is an accounting system that uses standards for product costs.

Accepted Answer

A) True 
 B)False

Question 16

For each of the following cost standards, indicate which manager is responsible for the standard, and list one factor that should be used in setting the standard.
-
 $$\begin{array} { | l | l | l | } 
\hline \text { Efficiency standard } & \text { Responsible party } & \text { Factor used in setting the standard } \
\hline \text { Direct materials } & & \
\
\hline \text { Direct labor } & & \
& & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | l | } 
\hlin

Question 17

What does a favorable direct materials cost variance indicate?

Accepted Answer

A)  The actual quantity of direct materials used was less than the standard quantity. 
B)  The actual cost of direct materials purchased was less than the standard cost of direct materials purchased. 
C)  The actual cost of direct materials purchased was greater than the standard cost of direct materials purchased. 
D)  The actual quantity of direct materials used was greater than the standard quantity. 
A)  The actual quantity of direct materials used was less than the standard quantity. 
B)  The actual cost of direct materials purchased was less than the standard cost of direct materials purchased. 
C)  The actual cost of direct materials purchased was greater than the standard cost of direct materials purchased. 
D)  The actual quantity of direct materials used was greater than the standard quantity.

Question 18

An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.

Accepted Answer

A) True 
 B)False

Question 19

The sum of the cost variances and efficiency variances equals ________.

Accepted Answer

A)  the static budget variance 
B)  the flexible budget variance 
C)  the difference between the flexible budget and the static budget 
D)  the difference between the static budget and the previous year's actual results 
A)  the static budget variance 
B)  the flexible budget variance 
C)  the difference between the flexible budget and the static budget 
D)  the difference between the static budget and the previous year's actual results

Question 20

A company is analyzing its month-end results by comparing it to both static and flexible budgets. 
-During the month, the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget. This difference results in a(n) ________.

Accepted Answer

A)  favorable flexible budget variance for variable costs 
B)  favorable sales volume variance for variable costs 
C)  unfavorable flexible budget variance for variable costs 
D)  unfavorable sales volume variance for variable costs 
A)  favorable flexible budget variance for variable costs 
B)  favorable sales volume variance for variable costs 
C)  unfavorable flexible budget variance for variable costs 
D)  unfavorable sales volume variance for variable costs

Exam 23: Flexible Budgets and Standard Cost Systems

List the direct labor variances and briefly describe each.

A standard is a sales price, cost, or quantity that is expected under normal conditions.

What does the fixed overhead cost variance measure?

The Body Balance Fitness 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 variable costs?

A direct labor cost variance is unfavorable if the employer pays workers more per hour than budgeted.

For each of the following cost standards, indicate which manager is responsible for the standard, and list one factor that should be used in setting the standard. - Cost standard Responsible manager Factor used in setting the standard Direct materials Direct labor

An efficiency variance measures how well the business uses its materials or human resources.

Which department is usually responsible for a direct labor cost variance attributable to inexperienced workers on the assembly line?

Only substantial unfavorable variances should be investigated to determine their causes.

Which of the following will result in an unfavorable direct materials efficiency variance?

A standard cost system is an accounting system that uses standards for product costs.

For each of the following cost standards, indicate which manager is responsible for the standard, and list one factor that should be used in setting the standard. - Efficiency standard Responsible party Factor used in setting the standard Direct materials Direct labor

What does a favorable direct materials cost variance indicate?

An efficiency variance measures how well a company keeps unit costs of material and labor inputs within standards.

The sum of the cost variances and efficiency variances equals ________.

A company is analyzing its month-end results by comparing it to both static and flexible budgets. -During the month, the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget. This difference results in 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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