Exam 23: Flexible Budgets and Standard Cost Systems

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

What does the variable overhead efficiency variance measure?

The Carolina Rubber Products Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following would be a correct analysis of the sales volume variance for sales revenue?

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

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

What does the variable overhead cost variance measure?

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

Fixed overhead volume variance is a flexible budget variance.

The purchasing manager was able to bring down the cost of direct materials by purchasing direct materials of a slightly lower grade quality than the company had used previously.The lower grade of direct materials,however,meant a higher defect rate on the assembly line and higher wastage of direct materials during production,which in turn lowered operating income.This situation would lead to a(n)________.

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

Elite Brands Company uses standard costs for its manufacturing division.Standards specify 0.1 direct labor hours per unit of product.At the beginning of the year,the static budget for variable overhead costs included the following data: Production volume 6,000 units Budgeted variable overhead costs \ 13,500 Budgeted direct labor hours 610 hours At the end of the year,actual data were as follows: Production volume 4,100 units Actual variable overhead costs \ 15,200 Actual direct labor hours 505 hours How much is the standard cost per direct labor hour for variable overhead?

Wood Designs 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 $6.00 per square foot from the supplier.Delivery costs are $0.20 per square foot.Carpenters' wages are $20.00 per hour.Payroll costs are $4.00 per hour,and benefits are $5.00 per hour.How much is the direct materials standard cost per square foot?

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.

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

Carlson Fashions uses standard costs for its manufacturing division.From the following data,calculate the fixed overhead volume variance. Actual fixed overhead \ 40,000 Budgeted fixed overhead \ 21,000 Standard overhead allocation rate \ 8 Standard direct labor hours per unit 4 DLHr Actual output 2,100 units

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

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $9 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $14 per hour.Payroll taxes are approximately 21% of wages.Benefits amount to $2 per hour.How much is the direct materials cost standard per square foot?

The static budget,at the beginning of the month,for Onyx Décor Company,follows: Static budget: Sales volume: 1,000 units; Sales price: $\$ 70.00$ per unit Variable costs: $\$ 32.00$ per unit; Fixed costs: $\$ 37,900$ per month Operating income: $\$ 100$ Actual results, at the end of the month, follows: Actual results: Sales volume: 970 units; Sales price: $\$ 74.00$ per unit Variable costs: $\$ 35.00$ per unit; Fixed costs: $\$ 34,400$ per month Operating income: $\$ 3,430$ Calculate the flexible budget variance for sales revenue.

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

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the previous month,the actual sales price was higher than the expected sales price as per the static budget.This difference results in a(n)________.