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Exam 8: Flexible Budgets and Standard Costs

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Question 61

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What are some causes of direct labor rate and efficiency variances?

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The use of workers with different skill ...

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Question 62

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A volume variance occurs when the company operates at a different capacity level than was expected.

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Question 63

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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.

________ are preset costs for delivering a product or service under normal conditions.

Based on predicted production of 25,000 units, Marvel Mix Co. anticipates $175,000 of variable costs and $137,500 of fixed costs. What are the flexible budget amounts of total costs for 28,000 units?

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:

The following information comes from the records of Magno 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 work 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

The fixed overhead variance can be broken down into the ________ variance and the ________ variance.

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

Selected information from Richards Company's flexible budget is presented below: Richards Company applies overhead to production at a rate of $31.25 per unit based on a normal operating level of 80% of capacity. For the current period, Richards Company produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs. The company used 11,000 labor hours to produce the 5,400 units. Calculate the variable overhead spending and efficiency variances, and the fixed overhead spending and volume variances. Indicate whether each variance is favorable or unfavorable.

Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials cost variance.

The variable overhead spending variance, the fixed overhead spending variance, and the variable overhead efficiency variance can be combined to find the:

Beluga 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: Beluga 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: $________

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The fixed costs expected if the company produces and sells 16,000 units is:

Which department is often responsible for the direct materials price variance?

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 price variance.

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead cost variance.

Firenze Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000.