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Exam 21: Flexible Budgets and Standard Costs

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Question 21

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Hassock Corp.produces woven wall hangings.It takes 2 hours of direct labor to produce a single wall hanging.Hassock's standard labor cost is $12 per hour.During August,Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376.What is Hassock's labor efficiency variance for August?

A) $12,480 favorable.
B) $10,376 unfavorable.
C) $14,584 unfavorable.
D) $4,160 favorable.
E) $12,480 unfavorable.

F) B) and D)
G) None of the above

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Question 22

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Engineworks Co.provides the following fixed budget data for the year: Required: Prepare a flexible budget performance report for the year using the contribution margin format.

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Question 23

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Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

Fletcher Company collected the following data regarding production of one of its products. -Compute the standard quantity allowed for the actual output.

Ransom,Inc.budgets direct materials cost at $1.10/liter and each product requires 4 liters per unit of finished product.April's activities show usage of 832 liters to complete 196 units at a cost of $798.72.Compute the direct materials price and quantity variances.Indicate if the variance is favorable or unfavorable.

Fixed budgets are also known as flexible budgets.

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 rate variance?

The following company information is available.The direct materials quantity variance is:

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?

Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through 10.Enter the letter of the term with the definition,using the space preceding the definition. (a)Cost variance (b)Volume variance (c)Price variance (d)Quantity variance (e)Standard costs (f)Controllable variance (g)Fixed budget (h)Flexible budget (i)Variance analysis (j)Management by exception

A company uses the following standard costs to produce a single unit of output. During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. -Based on this information,the total direct labor cost variance for the month was:

In this type of budget,the master budget is based on a single prediction for sales volume,and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur:

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

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials quantity variance is:

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

Explain variance analysis.Describe how variance analysis assists managers.

Cost variances are ignored under management by exception.

A flexible budget expresses all costs on a per unit basis,regardless of cost behavior.

Fletcher Company collected the following data regarding production of one of its products. -Compute the direct labor rate variance.

A company uses the following standard costs to produce a single unit of output. During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. -Based on this information,the direct labor rate variance for the month was: