Exam 23: Flexible Budgets and Standard Cost Systems

The management of Vert Lawnmowers has calculated the following variances: Direct materials cost variance \ 8,000 Direct materials efficiency variance 38,000 Direct labor cost variance 17,000 Direct labor efficiency variance 13,000 Variable overhead cost variance 3,500 Variable overhead efficiency variance 5,000 Fixed overhead cost variance 3,000 When determining the total production cost flexible budget variance,what is the total manufacturing overhead variance of the company?

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

The Kentucky Foam 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 variable costs?

Global Engineering's actual operating income for the current year is $56,000.The flexible budget operating income for actual sales volume is $51,000,while the static budget operating income is $54,000.What is the sales volume variance for operating income?

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

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

Favorable and unfavorable variances are netted together in the same way debits and credits are.

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,and the manager was worried about the impact of these costs on operating income.This could produce a(n)________.

The production manager of a company,in an effort to gain a promotion,negotiated a new labor contract with the factory employees that required them to bear a greater percentage of benefit costs than before,thus bringing down the cost of direct labor to the company.Shortly afterward,several experienced and highly skilled workers resigned,and were replaced by new employees whose work was very slow during their training period.At the end of the quarter,the company's profits fell 10%.This would produce a(n)________.

The production manager of a company,in an effort to gain a promotion,negotiated a new labor contract with the factory employees that required them to bear a greater percentage of benefit costs than before,thus bringing down the cost of direct labor to the company.Shortly afterward,several experienced and highly skilled workers resigned and were replaced by new employees whose work was very slow during their training period.At the end of the quarter,the company's profits fell 10%.This would produce a(n)________.

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

A favorable variance reflects a decrease in operating income.

Cavalaris Products uses a standard cost system.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?

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

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: 2 hours per unit; $16 per hour Oceanside produced 3,000 units during the quarter.At the end of the quarter,an examination of the direct materials records showed that the company used 6,500 pounds of direct materials and actual total materials costs were $99,600. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

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

Which of the following will result in an unfavorable direct labor cost variance?

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,and the manager was worried about the impact of these costs on operating income.This could produce a(n)________.

Robinson Manufacturing uses a standard cost system.The direct labor cost standard is $18.00 per direct labor hour.The direct labor efficiency standard is 0.5 direct labor hour per unit.Actual direct labor for the month is 1,200 hours for a total cost of $24,000.Production for the month is 3,000 units.Give the journal entry to record direct labor.

Which of the following is an example of a direct labor efficiency standard?