FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 8: Flexible Budgets and Standard Costs

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 91

Multiple Choice

Review LaterAdd Note

Review Later

Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor cost variance. $\begin{array}{lrl}\text { Direct labor standard (2hrs. @, } \$ 12.75 / \mathrm{hr} .) & \$ 5.50&\text {per finished} \\&&\text {unit}\\\text { Actual direct labor hours } & 81,500 &\text {hrs.} \\\text { Actual finished units produced } & 40,000&\text {units}\\\text { Actual cost of direct labor } & \$ 1,100,250\end{array}$

A) $80,250 unfavorable.
B) $80,250 favorable.
C) $61,125 favorable.
D) $61,125 unfavorable.
E) $19,125 favorable.

F) C) and D)
G) A) and E)

Correct Answer

verified

Show Answer

Question 92

Essay

Review LaterAdd Note

Review Later

Flexible budgets may be prepared before or after an actual period of activity. Why would management prepare such budgets at differing time frames?

Correct Answer

verified

Flexible budgets are prepared prior to a...

View Answer

Show Answer

Question 93

Multiple Choice

Review LaterAdd Note

Standard costs are:

Which of the following is not part of the flow of events in variance analysis:

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the direct labor efficiency variance?

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

When recording the journal entry for labor, the Work in Process Inventory account is

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is: $\begin{array} { l l } \text { Direct materials standard } ( 7 \mathrm {~kg} @ \$ 2 / \mathrm { kg } ) & \$ 014 \text { per finished unit } \\\text { Actual cost of materials purchased } & \$ 322,500 \\\text { Actual direct materials purchared and used } & 150,000 \text { lbs. }\end{array}$

Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?

A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain.

When there is a difference between the actual volume of production and the standard volume of production, which of the following, based solely on fixed overhead, occurs:

If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials price variance?

Maxwell Co. collected the following information about its production activities for the current year. a. Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable. b. Prepare the journal entry to record the issuance of direct materials into production. Actual costs and quantities: Direct materials used 95,000 lbs. @ $6.30 per lb. Units completed during the year, 50,000 units Standard costs and quantities: Price per lb. of direct material, $6.05 Two lbs. of direct material per unit

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the direct labor rate variance?

Tiger, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units: The standard cost per unit when operating at this same 80% capacity level is: The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were: Calculate the following variances and indicate whether each is favorable or unfavorable. $\begin{array}{l}\begin{array} { | c | l |} \hline \text { Direct materials: }&\quad\quad\quad\quad\quad\quad\quad\\\hline \text { Price variance } & \\\hline \text { Quantity variance } & \\\hline \text { Direct labor: } & \\\hline \text { Rate variance } & \\\hline \text { Efficiency variance } & \\\hline \text { Variable overhead: } & \\\hline \text { Spending variance } & \\\hline \text { Efficiency variance } & \\\hline \text { Fixed overhead: } & \\\hline \text { Spending variance } & \\\hline \text { Volume variance } & \\\hline\end{array}\end{array}$

Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials quantity variance.

Milltown Company specializes in selling 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 price variance for the month.

An unfavorable variance is recorded with a debit because it reflects additional costs higher than the standard cost.