Exam 8: Flexible Budgets and Variance Analysis

Ideal standards make no provision for waste,spoilage and machine breakdowns.

A ________ is most likely to be held accountable for price variances for direct materials.

For the current year,LeBombard Company's static budget sales were $225,000.Actual sales for the current year were $220,000.Actual sales last year were $219,000.Expected sales last year were $225,000.What is the static budget variance for sales in the current year?

The static budget is based on the ________ level of output and the flexible budget is based on the ________ level of output.

The amount of actual operating income may differ from the static budget amount for operating income because ________.

One variance often influences another variance.If the direct materials price variance is favorable,then it is possible that this variance will cause ________.

Currently attainable standards are levels of performance that can be achieved by realistic levels of effort.

The static budget variance is the difference between the ________ and the ________.

Use the following data to prepare a flexible budget for possible production levels of 5,000,5,500 and 6,000 units.Assume all levels of production are in the same relevant range. Sales price \1 2.00 per unit Variable costs: Manufacturing \6 .00 per unit Administrative \1 .50 per unit Selling \0 .50 per unit Fixed costs(at 5,000 units): Manufacturing \ 15,000 Administrative \ 5,000

The following information is for Brankov Corporation: Direct Materials (measured in pounds) Standard price per unit of input \ 20 Actual price per unit of input \ 18 Standard inputs per unit of output 3 pounds Actual units of input 8,300 pounds Actual units of output 2,770 units What is the flexible budget variance for direct materials?

The following data was obtained for a company that makes statues: Standard Inputs Expected Standard Price Expected For Each Unit of Output Per Unit of Input Direct Materials 5 pounds \ 12 per pound Direct Labor 1.5 hours \ 12 per hour During the month of July,the company actually produced 1,000 statutes,which is 100 units less than expected.Direct material purchased and used amounted to 5,500 pounds at a cost of $12.50 per pound.Actual direct labor was 1,450 hours at an actual cost of $13.00 per hour. Required: A) Compute the price and quantity variances for direct materials. B) Compute the price and quantity variances for direct labor.

The variable overhead efficiency variance indicates to management how much variable overhead cost it may waste by not controlling the use of cost-driver activity.

The following information is available for Maher Manufacturing Company. -- Direct materials price standard is $3.25 per pound. -- Direct materials quantity standard is six pounds per finished unit. -- Budgeted production is 25,000 finished units. -- 175,000 pounds of direct materials were purchased for $525,000. -- 175,000 pounds of direct materials were used in production. -- 25,600 finished units of product were produced. What is the direct materials quantity variance?

Which of the following statements is FALSE?

Differentiate between a static budget variance and a flexible budget variance.

If the sales activity variance was $8,000 Favorable and the static budget variance was $10,000 Favorable,then the flexible budget variance was ________.

The unfavorable variances resulting from ideal standards are intended to constantly remind personnel of the continuous need for improvement.

Ideal standards have an adverse effect on employee motivation.

The Cheeseman Company makes tables and the following standards have been developed: Standard Inputs Expected Standard Price Expected For Each Unit of Output Per Unit of Input Direct Materials 10 ounces \4 per ounce Direct Labor 3 hours \ 16 per hour Production of 230 tables was expected in July,but 250 tables were actually completed.Direct materials purchased and used were 2,200 pounds at an actual price of $4.50 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the direct material price variance for July?

A static budget is prepared for one expected level of activity.