Exam 8: Flexible Budgets and Standard Costs

Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

LJ Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. LJ's standard labor cost is $11.00 per hour. During March, LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is LJ's labor rate variance for March?

The difference between the actual sales and the flexible budget sales is called the ________ variance.

A fixed budget is also called a ________ budget.

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

When using a standard cost accounting system, how are unfavorable variances recorded? How are favorable variances recorded?

Milltown Company sells used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales volume variance for the month.

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:

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

When recording variances in a standard cost system:

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

An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity) is called a(n):

A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor efficiency variance?

What are sales variances? How are they used?

Define standard costs. How do they assist management?

In sales variance analysis, the budgeted amount of unit sales is the predicted activity level and the budgeted cost of the goods sold can be treated as a "standard" price.

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of variable costs for 20,000 units would be:

A direct labor cost variance can be divided into price and quantity variances, which are almost always called controllable and volume variances.

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

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.