Exam 24: Flexible Budgets and Standard Costs

Bok Company's output for the current period was assigned a $400,000 standard direct labor cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?

The difference between the actual cost incurred and the standard cost is called the:

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called _________________ and _____________ variances.

Manatee Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. The standard costs per unit are: Manatee actually produced 330,000 units at 75% of capacity and actual costs for the period were: Calculate the following variances and indicate whether each variance is favorable or unfavorable: (1) Direct labor efficiency variance: $__________________ (2) Direct materials price variance: $__________________ (3) Controllable overhead variance: $__________________

A favorable variance for a cost means that when compared to the budget, the actual cost is ____________________ than the budgeted cost.

Overhead cost variance is:

The standard materials cost to produce 1 unit of Product M is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the total direct materials cost variance?

The following information comes from the records of Dina Co. for the current period. a. Compute the overhead controllable and volume variances. In each case, state whether the variance is favorable or unfavorable. b. Prepare the journal entries to charge overhead costs to goods in process and the overhead variances to their proper accounts. Factory overhead (based on budgeted production of 24,500 units) Variable overhead $2.25/direct labor hour Fixed overhead $1.95/direct labor hour

During November, Heim Company allocated overhead to products at the rate of $26.00 per direct labor hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Heim Company operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70% of capacity is $38,900, and overhead actually incurred was $38,000. What is the company's volume variance for November? (Indicate whether the variance is favorable or unfavorable)

A cost variance is the difference between actual cost and standard cost.

Explain variance analysis. Describe how variance analysis assists managers.

How are unfavorable variances recorded? How are favorable variances recorded?

The difference between the actual overhead cost incurred and the standard overhead applied is the _________________________.

Identify the four steps in the budgetary control process.

Fixed budgets are also known as flexible budgets.

Chips Co. assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at the standard $8 per hour rate. The direct labor rate variance for the month was $200 favorable and the direct labor efficiency variance was $150 favorable. Prepare the journal entry to charge Goods in Process Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor variances. Assuming that the direct labor variances are immaterial, prepare the journal entry that Chips would make to close the variance accounts.

The difference between the flexible budget sales and the fixed budget sales is called the __________________________ variance.

Differences between actual costs and standard costs are known as __________________. These differences may be subdivided into _________________ and ________________.

When computing a price variance, the price is held constant.

A flexible budget performance report compares the differences between: