Exam 23: Flexible Budgets and Standard Cost Systems

The static budget,at the beginning of the month,for Bob's Deep Sea Fishing Company follows: Static budget: Sales volume: 2,000 units; Sales price: $50.00 per unit Variable costs: $13.00 per unit; Fixed costs: $25,200 per month Operating income: $48,800 Actual results,at the end of the month,follows: Actual results: Sales volume: 1,900 units; Sales price: $58.50 per unit Variable costs: $16.5 per unit; Fixed costs: $33,400 per month Operating income: $46,400 Calculate the flexible budget variance for operating income.

The standard cost income statement doesn't alter the actual operating income-it simply emphasizes the variances from standard.

Western Outfitters projected sales of 79,000 units for the year at a unit sales price of $12.00.Actual sales for the year were 71,000 units at $18.00 per unit.Variable costs were budgeted at $4.25 per unit,and the actual variable cost was $4.80 per unit.Budgeted fixed costs totaled $378,000 while actual fixed costs amounted to $410,000.What is the flexible budget variance for operating income?

Bridget Company manufactures candles.The standard direct materials quantity required to produce one large candle is 1 pound at a cost of $5 per pound.Every candle requires 2 direct labor hours at a standard cost of $3 per direct labor hour.During November,7,200 large candles were produced using 7,500 pounds costing $45,000.At the end of November,an examination of the labor cost records showed that the company used 15,000 direct labor hours (DLHr)at a cost of $4 per hour. Using the format below,prepare an analysis of the direct labor cost variances.

Based on the following,what is the total direct materials variance?

The management of Zeta Fire Alarms has calculated the following variances: Direct materials cost variance \ 9,000 Direct materials efficiency variance 35,000 Direct labor cost variance 16,500 Direct labor efficiency variance 13,000 Total variable overhead variance 8,000 Total fixed overhead variance 3,500 What is the total direct materials variance of the company?

What does the variable overhead cost variance measure?

A variance is the difference between an actual amount and the budgeted amount.

A favorable variance reflects a decrease in operating income.

When a manufacturing company uses a standard cost system,Work-in-Process Inventory is debited at standard input quantities and standard costs.

The Maine Oyster Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct analysis of the flexible budget variance for sales revenue?

A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing wastage of valuable direct materials.The production manager decided to purchase a higher grade of materials that would be more reliable,but he was worried that the cost of the new materials might negatively affect operating income.This would produce a(n)________.

Rees Manufacturing uses a standard cost system.Standards for direct materials are as follows: Direct materials (pounds per unit of output) 2 Cost per pound of direct materials \ 6 Actual purchases of direct materials for the current month are 10,000 pounds for $51,600.Planned and actual production for the month is 3,000 units.Rees has issued 10,000 pounds of direct materials to production.The journal entry to record this transaction is ________.

Delicious Food Products is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Delicious purchases by the pound.In addition,the production requires a certain amount of direct labor.Delicious uses a standard cost system,and at the end of the first quarter,there was a favorable direct materials cost variance.Which of the following is a logical explanation for that variance?

Bentz Fashions uses standard costs for its manufacturing division.From the following data,calculate the total fixed overhead variance. Actual fixed overhead \ 36,000 Budgeted fixed overhead \ 26,000 Allocated fixed overhead \ 28,350 Standard overhead allocation rate \ 6.75 Standard direct labor hours per unit 2,10 Actual output 2,000 units

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 6,500 units Budgeted variable overhead costs \ 15,000 Budgeted direct labor hours 500 hours At the end of the year,actual data were as follows: Production volume 4,000 units Actual variable overhead costs \ 15,400 Actual direct labor hours 495 hours How much is the standard cost per direct labor hour for variable overhead? (Round your answer to the nearest cent.)

An unfavorable variance means more cost has been incurred than planned.

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

A standard cost system helps management set performance standards.

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