Exam 23: Flexible Budgets and Standard Cost Systems

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

When a manufacturing company uses a standard cost system,the direct materials cost variance is recorded at the time direct materials are issued in production.

Setting standard costs is a function of the company's production department and does not require input from other departments.

Developing efficiency standards based on best practices is called benchmarking.

The fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of total fixed overhead variance.

The flexible budget variance is the difference between the actual results and the expected results in the flexible budget for the actual units sold.

A cost variance measures the difference in quantities of actual inputs used and the standard quantity of inputs allowed for the actual number of units produced.

List three ways in which using a standard cost system helps managers.

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 recruit some highly skilled production workers from another company to bring down the defect rate but was worried that the higher wages of these workers might negatively affect operating income.This would produce a(n)________.

Atlace Manufacturing uses a standard cost system.Standards for direct materials are as follows: Direct materials (pounds per unit of output) 3 Cost per pound of direct materials \ 6 The company plans to produce 3,000 units and has purchased 15,000 pounds of direct materials at a net cost of $42,600.What is the journal entry to record this transaction?

Unfavorable variances are subtracted from each other to arrive at a favorable variance.

The management of Vert 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 2,000 Variable overhead efficiency variance 6,000 Fixed overhead cost variance 3,500 When determining the total production cost flexible budget variance,what is the total manufacturing overhead variance of the company?

When using management by exception,which of the following variances would not affect the production manager?

A company is setting its direct materials and direct labor standards for its leading product.Direct material costs from the supplier are $7 per square foot,net of purchase discount.Freight-in amounts to $0.10 per square foot.Basic wages of the assembly line personnel are $19 per hour.Payroll taxes are approximately 25% of wages.How much is the direct labor cost standard per hour? (Round your answer to the nearest cent.)

In a standard cost system,the manufacturing overhead allocated to production equals the standard overhead allocation rate multiplied by the standard quantity of the allocation base allowed for expected output.

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

What does the fixed overhead cost variance measure?

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

A manufacturer,using a standard cost system,purchased 250 units of direct materials at a cost of $2 per unit.The standard cost per unit of direct materials is $1.85.Prepare the journal entry to record the direct materials cost variance at the time of purchase.

To compute the variable overhead cost variance,first compute the difference between actual cost and standard cost.Then,multiple this difference by standard quantity.