Exam 8: Flexible Budgets and Variance Analysis

A flexible budget adjusts for changes in sales volume and other cost-drivers.

Total static budget variances are equal to the sum of activity-level variances and flexible budget variances.

Which statement would NOT be a reason for a flexible budget variance?

The direct materials price variance reflects the effects of ________.

In a manufacturing area of a firm,poor product design and problems with the quality of materials will,more than likely,result in a(n)________ variance or ________ variance.

The variable overhead spending variance is the difference between the actual variable overhead cost and the amount of variable overhead cost budgeted for the actual level of cost driver activity.

One of the first questions a manager should consider when explaining a large variance is whether expectations are valid.

The following data are for the month of January for the Soloway Company.Assume the cost driver is the number of units sold. Static budget data: Sales of 9,000 pairs at $90 per pair Variable costs of $69 per pair Total fixed costs $108,000 Actual results: Sales of 9,600 pairs at $87 per pair Variable costs of $72 per pair Total fixed costs $109,200 Required: A) What is the static budget operating income? B) What is the sales activity variance for operating income? C) What is the flexible budget variance for operating income?

Favorable variances do not require investigation.

Wendel Company has actual fixed overhead costs of $14,700.Fixed overhead costs based on the flexible budget and the actual use of the cost driver are $14,400.Actual variable overhead costs are $14,500.What is the flexible-budget variance for fixed overhead costs?

The Banks Company makes mugs for which the following standards have been developed: Standard Inputs Expected Standard Price Expected For Each Unit of Output Per Unit of Input Direct Materials 5 ounces \ 2 per ounce Direct Labor 1.5 hours \ 8 per hour Production of 400 mugs was expected in July,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.30 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct labor quantity variance for July?

The following information is presented for the Marathon Manufacturing Company. - Direct labor rate standard is $11.55. - Direct labor efficiency standard is 2.5 hours per unit. - Budgeted production is 1,200 units. - Production required 2,910 direct labor hours at a cost of $33,174. - Actual production is 1,150 units. What is the direct labor price variance?

Differences between actual results and the static budget at the original planned level of output are ________ variances.

The activity-level variance for fixed costs equals zero when ________.

A flexible budget is different from a variable budget.

A static budget has multiple levels of activity.

The following data are for Sandy Corporation: Flexible Budget for Actual Static Budget Actual Sales activity Units 18,000 16,000 18,000 Sales \3 60,000 \3 20,000 \3 60,000 Variable costs 234,000 192,000 216,000 Contribution margin \1 26,000 \1 28,000 \1 44,000 Fixed costs 76,000 80,000 80,000 Operating income \5 0,000 \4 8,000 \6 4,000 The static budget variance for operating income is ________.

Purple Rain Company planned to sell 35,000 units.Actual sales were 30,000 units.Based on this information,Blue Company was ________.

Gollerowski Company had the following information available for its specialty product: Standards for one unit of product: Direct Materials: 5 pounds at $2 per pound Direct Labor: 0.50 hour at $16 per hour Materials and Labor Used to produce 8,500 units: Direct Materials: 46,000 pounds at 4 per pound Direct Labor: ? hours at $17 per hour If the Direct Labor Efficiency Variance is $4,000 Unfavorable,what are the actual number of hours worked?

Simmons Company has the following information available for variable overhead costs.Direct labor hours are the cost driver for variable overhead costs. Actual variable overhead costs \ 4,700 Standard variable overhead costs \ 1.20 per hour Actual direct labor hours 3,750 hours Standard direct labor hours per unit 5 hours Units produced 700 What is the variable overhead spending variance?