Exam 23: Flexible Budgets and Standard Cost Systems

The total production cost flexible budget variance is obtained by adding direct labor efficiency variance and fixed overhead volume variance.

Glendale 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 6,300 units Budgeted variable overhead costs \ 13,500 Budgeted direct labor hours (DLHr) 630 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 (DLHr) 495 hours What is the variable overhead efficiency variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

When recording direct materials purchased,what does an unfavorable direct materials cost variance represent? Will this variance have a debit or credit balance?

The management of Drum Lawnmowers has calculated the following variances: Direct materials cost variance \ 11,000 Direct materials efficiency variance 36,000 Direct labor cost variance 17,000 Direct labor efficiency variance 14,000 Variable overhead cost variance 3,500 Variable overhead efficiency variance 6,500 Fixed overhead cost variance 3,000 When determining the total production cost flexible budget variance,what is the total fixed overhead variance of the company?

The following information relates to Welty Manufacturing's overhead costs for the month: Static budget variable overhead \ 14,200 Static budget fixed overhead \ 5,600 Static budget direct labor hours 1,000 hours Static budget number of units 5,000 units Welty allocates manufacturing overhead to production based on standard direct labor hours. Welty reported the following actual results for last month: actual variable overhead,$ 14,500; actual fixed overhead,$ $5,400; actual production of 4,700 units at 0.22 direct labor hours per unit.The standard direct labor time is 0.20 direct labor hours per unit. Compute the fixed overhead volume variance.

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

City Golf Center reported actual operating income for the current year as $66,000.The flexible budget operating income for actual volume is $56,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?

When recording direct materials usage,what does an unfavorable direct materials efficiency variance represent? Will this variance have a debit or credit balance?

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)________.

Which of the following amounts of a flexible budget changes,within the specified relevant range,with changes in sales volume?

For each of the following cost standards,indicate which manager is responsible for the standard,and list one factor that should be used in setting the standard. Cost standard Responsible manager Factor used in setting the standard Direct materials Direct labor

An unfavorable sales volume variance in operating income suggests a(n)________.

Which of the following is a reason companies use standard costs?

A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost.

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?

SeaKist Marine Stores Company manufactures decorative fittings for luxury yachts,which require highly skilled labor,and special metallic materials.SeaKist uses standard costs to prepare its flexible budget.For the first quarter of 2016,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 1.5 pounds per unit; $4 per pound Labor: 2 hours per unit; $18 per hour During the first quarter,SeaKist produced 5,000 units of this product.At the end of the quarter,an examination of the direct materials records revealed that the company used 7,000 pounds of direct materials.The direct materials efficiency variance was $2,000 F.Which of the following is a logical explanation for this variance?

An unfavorable flexible budget variance in variable costs suggests a(n)________.

Which of the following best describes a standard?

The static budget,at the beginning of the month,for Assembly Furniture Company follows: Static budget: Sales volume: 1,000 units; Sales price: $70.00 per unit Variable costs: $33.00 per unit; Fixed costs: $36,100 per month Operating income: $900 Actual results,at the end of the month,follows: Actual results: Sales volume: 990 units; Sales price: $74.00 per unit Variable costs: $35.00 per unit; Fixed costs: $34,000 per month Operating income: $4,610 Calculate the sales volume variance for fixed costs.

Allen Company manufactures staplers.The budgeted sales price is $12.00 per stapler,the variable costs are $2.00 per stapler,and budgeted fixed costs are $12,000.What is the budgeted operating income for 5,000 staplers?