Deck 8: Flexible Budgets and Standard Costs

Question 1

Sweet Baby Diaper Company sells disposable diapers for $.20 each. Variable costs are $.05 per diaper, while fixed costs are $75,000 per month for volumes up to 850,000 diapers and $112,500 for volumes above 850,000 diapers. The flexible budget would reflect monthly operating income for 800,000 diapers and 900,000 diapers of what dollar amounts?

A) $7,500 and $60,000, respectively
B) $60,000 and $45,000, respectively
C) $45,000 and $22,500, respectively
D) $22,500 and $7,500, respectively

Answer 1

$45,000 and $22,500, respectively

Question 2

A graph of a flexible budget formula reflects fixed costs of $30,000 and total costs of $90,000 at a volume of 6,000 units. Assuming the relevant range is 1,000 to 12,000 units, the graph would reflect total costs at 10,000 units of what dollar amount?

A) $100,000
B) $130,000
C) $180,000
D) $160,000

Answer 2

$130,000

Question 3

Western Outfitters Mountain Sports projected 2008 sales of 75,000 units at a unit sale price of $12.00. Actual 2008 sales were 72,000 units at $14.00 per unit. Actual variable costs, budgeted at $4.00 per unit, totaled $4.75 per unit. Budgeted fixed costs totaled $375,000, while actual fixed costs amounted to $400,000.

- What is the sales volume variance for total revenue?

A) $144,000 favorable
B) $42,000 unfavorable
C) $108,000 favorable
D) $36,000 unfavorable

Answer 3

$36,000 unfavorable

Question 4

Western Outfitters Mountain Sports projected 2008 sales of 75,000 units at a unit sale price of $12.00. Actual 2008 sales were 72,000 units at $14.00 per unit. Actual variable costs, budgeted at $4.00 per unit, totaled $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000.

-What is the flexible budget variance for variable expenses?

A) $12,000 favorable
B) $54,000 unfavorable
C) $54,000 favorable
D) $25,000 favorable

Question 5

Western Outfitters Mountain Sports projected 2008 sales of 75,000 units at a unit sale price of $12.00. Actual 2008 sales were 72,000 units at $14.00 per unit. Actual variable costs, budgeted at $4.00 per unit, totaled $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000.

-What is the sales volume variance for operating income?

A) $41,000 unfavorable
B) $24,000 unfavorable
C) $24,000 favorable
D) $65,000 unfavorable

Question 6

Company has collected the following data for one of its products:
What is the total actual cost of the direct materials used?

A) $100,000
B) $89,000
C) $75,000
D) $83,250

Question 7

Boxes Company has collected the following data for one of its products:


- How much is the direct materials efficiency variance?

A) $11,000 unfavorable
B) $11,000 favorable
C) $25,000 unfavorable
D) $25,000 favorable

Question 8

Boxes Company has collected the following data for one of its products:


-How much is the direct materials price variance?

A) $11,000 F
B) $25,000 F
C) $11,000 U
D) $25,000 U

Question 9

The following information describes a company's usage of direct labor in a recent period:


- How much is the direct labor efficiency variance?

A) $40,000 unfavorable
B) $40,000 favorable
C) $36,000 favorable
D) $36,000 unfavorable

Question 10

The following information describes a company's usage of direct labor in a recent period:


-How much is the direct labor price variance?

A) $84,000 favorable
B) $88,000 favorable
C) $88,000 unfavorable
D) $84,000 unfavorable

Question 11

The standard cost of direct labor per hour is $8.00. Four standard direct labor hours are allowed per finished good. During the current period, 350 finished goods were produced using 1,350 direct labor hours. The direct labor price variance is $405, unfavorable. Calculate the actual cost of direct labor per hour.

A) $7.70
B) $8.30
C) $8.00
D) Impossible to determine using the given data

Question 12

Jennifer Gibson Company budgeted 4,000 pounds of direct materials costing $7.00 per pound to make 8,000 units of product. The company actually used 4,200 pounds costing $6.50 per pound to make the 8,000 units. What is the direct materials efficiency variance?

A) $3,400 F
B) $3,400 U
C) $1,400 F
D) $1,400 U

Question 13

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?

A) $8,400 unfavorable
B) $3,200 favorable
C) $8,750 favorable
D) $5,200 unfavorable

Question 14

Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials efficiency variance?

A) $3,200 unfavorable
B) $3,550 favorable
C) $3,550 unfavorable
D) $3,200 favorable

Question 15

Video Products budgeted 2 hours of direct labor per unit at $9.00 per hour to produce 3,500 units of product. The 3,500 units were completed using 7,350 hours at $9.25 per hour. What is the direct labor price variance?

A) $1,837.50 unfavorable
B) $1,750.00 favorable
C) $1,750.00 unfavorable
D) $1,837.50 favorable

Question 16

Education Products Company gathered the following information for Job 155:


- What is the direct materials price variance?

A) $800 unfavorable
B) $1,960 favorable
C) $960 favorable
D) $1,160 unfavorable

Question 17

Education Products Company gathered the following information for Job 155:


-What is the direct materials efficiency variance?

A) $960 unfavorable
B) $800 unfavorable
C) $960 favorable
D) $800 favorable

Question 18

Education Products Company gathered the following information for Job 155:


- What is the direct labor price variance?

A) $270 unfavorable
B) $270 favorable
C) $120 favorable
D) $120 unfavorable

Question 19

Education Products Company gathered the following information for Job 155:


- What is the direct labor efficiency variance?

A) $150 unfavorable
B) $150 favorable
C) $125 favorable
D) $125 unfavorable

Question 20

Martin Racing Company gathered the following actual results for the current month:
Budgeted production and standard costs were:


- What is the direct materials price variance?

A) $2,400 unfavorable
B) $1,350 favorable
C) $2,400 favorable
D) $1,350 unfavorable

Question 21

Martin Racing Company gathered the following actual results for the current month:
Budgeted production and standard costs were:


-What is the direct materials efficiency variance?

A) $1,500 unfavorable
B) $2,550 favorable
C) $3,900 favorable
D) $1,050 unfavorable

Question 22

Martin Racing Company gathered the following actual results for the current month:
Budgeted production and standard costs were:


- What is the direct labor price variance?

A) $2,250 unfavorable
B) $1,500 favorable
C) $2,300 unfavorable
D) $3,050 favorable

Question 23

Martin Racing Company gathered the following actual results for the current month:
Budgeted production and standard costs were:


-What is the direct labor efficiency variance?

A) $750 favorable
B) $750 unfavorable
C) $2,250 favorable
D) $2,250 unfavorable

Question 24

Kelly Company gathered the following information for 2009:


- What is the actual quantity used per unit for Product X?

A) 2.5 lbs.
B) 3.0 lbs.
C) 1.0 lb.
D) 2.0 lbs.

Question 25

Kelly Company gathered the following information for 2009:


-What is the direct materials flexible budget variance for Product X?

A) $200 unfavorable
B) $400 favorable
C) $600 favorable
D) $200 favorable

Question 26

Kelly Company gathered the following information for 2009:


- What is the standard price per unit for Product Y?

A) $5.50/lb.
B) $2.67/lb.
C) $5.00/lb.
D) $5.38/lb.

Question 27

Kelly Company gathered the following information for 2009:


- What is the efficiency variance for Product Y?

A) $1,200 favorable
B) $1,200 unfavorable
C) $1,650 unfavorable
D) $1,650 favorable

Question 28

Boxes Company has collected the following data for one of its products:


- What is the actual cost of the direct materials used per pound?

A) $1.00
B) $.75
C) $.89
D) $1.11

Question 29

Daub, Inc. gathered the following information for the month ended March 31, 2009:
Actual production was 5,000 units. Actual overhead costs were $26,000 for variable costs and $35,000 for fixed costs. Actual machine hours worked were 14,100 hours. What is the overhead production volume variance?

A) $2,750 unfavorable
B) $2,750 favorable
C) $3,750 unfavorable
D) $3,750 favorable

Question 30

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bag Of premium dog food that it manufactures; the standard price is $.50 per pound. During the most Recent month, Regal manufactured 1,000 bags of premium dog food; 54,000 pounds of direct Materials were actually used at a cost of $29,160.

-How much was the direct materials price
Variance?

A) $2,000 unfavorable
B) $2,000 favorable
C) $2,160 favorable
D) $2,160 unfavorable

Question 31

Regal Dog Food Company's standard quantity of direct materials is fifty pounds for each bagOf premium dog food that it manufactures; the standard price is $.50 per pound. During the most Recent month, Regal manufactured 1,200 bags of premium dog food; 64,000 pounds of direct Materials were actually purchased and used. The direct materials price variance for the month was $3,200 unfavorable. What was the actual cost per pound of direct materials?

A) $.55
B) $.45
C) $.50
D) $.56

Question 32

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 2,000 units and used 3,900 labor hours at a cost of $47,580.

- What was the labor efficiency variance for the month?

A) $1,200 unfavorable
B) $1,220 unfavorable,
C) $1,200 favorable
D) $1,220 unfavorable

Question 33

The following labor standards have been provided by the Rand Company:
Standard hours per unit: 2
Standard cost per hour: $12
During the most recent month Rand produced 3,000 units while reporting an unfavorable labor price variance of $1,160. What was the total actual labor cost assuming that 5,800 labor hours were
Actually incurred?

A) $68,440
B) $70,760
C) $69,600
D) $73,160

Question 34

Sue Corporation has provided the following information:
Direct labor standard per unit: 2.5 hours
Standard cost per labor hour: $16.00
Actual number of direct labor hours incurred: 1,975
Actual cost of direct labor: $15.50
Actual number of units produced: 750

-
What is the direct labor price variance?

A) $937.50 unfavorable
B) $937.50 favorable
C) $987.50 favorable
D) $987.50 unfavorable

Question 35

Peterson Company gathered the following flexible budget information:
How much is the total budgeted overhead at 95% of normal capacity?

A) $90,000
B) $150,000
C) $147,000
D) $142,500

Question 36

Inc. gathered the following information for the month ended March 31, 2009:
Actual production was 5,000 units. Actual overhead costs were $26,000 for variable costs and $35,000 for fixed costs. Actual machine hours worked were 14,100 hours. What is the standard rate of variable overhead per machine hour?

A) $1.84
B) $2.50
C) $2.00
D) $1.50

Question 37

The overhead flexible budget variance is:

A) the difference between the actual total overhead and the total overhead in the static budget.
B) the difference between the actual total overhead and the total overhead in the flexible budget.
C) favorable, if actual production exceeds budgeted production.
D) unfavorable, if actual production exceeds budgeted production.