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Exam 21: Flexible Budgets and Standard Costs

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Question 51

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Variable budget is another name for:

A) Cash budget.
B) Flexible budget.
C) Fixed budget.
D) Manufacturing budget.
E) Rolling budget.

F) A) and B)
G) A) and C)

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Question 52

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Reference: 21_01 Five Rings, Inc, has collected the following data on one of its products: $\begin{array}{ll}\text { Direct materials standard (4 lbs. @ \$1/lb.) } & \$ 4 \text { per finished unit } \\\text { Total direct materials cost variance-unfavorable } & \$ 13,750 \\\text { Actual direct materials used } & 150,000 \mathrm{lbs} . \\\text { Actual finished units produced } & 30,000 \text { units }\end{array}$ -The direct materials quantity variance is:

A) $30,000 favorable
B) $13,750 unfavorable
C) $16,250 favorable
D) $30,000 unfavorable
E) $13,750 favorable

F) A) and B)
G) A) and C)

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Question 53

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The standard materials cost to produce one unit of Product M is 6 pounds of material at a standard price of $50 per pound.In manufacturing 8,000 units,47,000 pounds of material were used at a cost of $51 per pound.What is the total direct material cost variance?

Match the following definitions with the appropriate terms

When standard costs are used,factory overhead is assigned to products with a predetermined standard overhead rate.

A fixed budget is also called a _____________ budget.

Within the same budget performance report,it is impossible to have both favorable and unfavorable variances.

Reference: 21_01 Five Rings, Inc, has collected the following data on one of its products: $\begin{array}{ll}\text { Direct materials standard (4 lbs. @ \$1/lb.) } & \$ 4 \text { per finished unit } \\\text { Total direct materials cost variance-unfavorable } & \$ 13,750 \\\text { Actual direct materials used } & 150,000 \mathrm{lbs} . \\\text { Actual finished units produced } & 30,000 \text { units }\end{array}$ -The direct materials price variance is:

Reference: 21_01 Five Rings, Inc, has collected the following data on one of its products: $\begin{array}{ll}\text { Direct materials standard (4 lbs. @ \$1/lb.) } & \$ 4 \text { per finished unit } \\\text { Total direct materials cost variance-unfavorable } & \$ 13,750 \\\text { Actual direct materials used } & 150,000 \mathrm{lbs} . \\\text { Actual finished units produced } & 30,000 \text { units }\end{array}$ -The entry to record the material variances would include a:

A process of examining the differences between actual and budgeted costs and describing them in terms of the amounts that resulted from price and quantity differences is called:

An internal report that compares actual cost and sales amounts with budgeted amounts and identifies the differences between them as favorable or unfavorable variances is called a:

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a __________________ standard.

Manatee 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: $\begin{array}{llr} \text { Direct materials(0.5 lbs.@\$1/1b.) } & \text { \$ 0.50 per unit } \\ \text { Direct labor (1 hour@\$6/hour)} & \text { \( \$ 6.00 \) per unit } \\ \text {Overhead(1hour@\$2.05/hour) } & \text { \( \$ 2.05 \) per unit } \\\end{array}$ Manatee actually produced 330,000 units at 75% of capacity and actual costs for the period were: $\begin{array} { l l } \text { Direct materials } ( 162,000lbs ) & \$ 170,100 \\\text { Direct labor (329,500hours) } & \$ 2,042,900 \\\text { Fixed overhead } & \$ 438,000 \\\text { Variable overhead } & \$ 262,000\end{array}$ 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: $__________________

A product has a sales price of $20.Based on a 15,000-unit production level,the variable costs are $12 per unit and the fixed costs are $6 per unit.Using a flexible budget for an actual production and sales level of 18,000 units,what is the budgeted operating income?

Tiger,Inc.,has developed the following standard cost data based on 60,000 direct labor hours,which is 75% of capacity: $\begin{array}{llr} \text {Direct materials (6 lbs. @\$2/1b.) } & \$12\\ \text {Directlabor(1hrs.@\$8/hr.) } &8\\\end{array}$ During the last period,the company operated at 80% of capacity and produced 128,000 units.Actual costs were: $\begin{array}{llr} \text {Direct materials (760,000 } &\$ 1,558,000\\ \text { lbs.)} &\\ \text { Direct labor } (126.000 \mathrm{hrs}&1.014 .300 \end{array}$ Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances.Indicate whether each variance is favorable or unfavorable.

In producing 700 units of Product CBA last period,Cobalt Company used 5,000 pounds of Material H,costing $34,250.The company has established the standard of using 7.2 pounds of Material H per unit of CBA,at a price of $7.50 per pound. a.Calculate the materials price and quantity variances associated with producing the 700 units,and indicate whether they are favorable or unfavorable. b.Record the entry for the material used and related variances for Cobalt. c.Assume these variances are immaterial and prepare the entry to close them out at the end of the year.

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

Reference: 21_05 A job was budgeted to require three hours of labor per unit at $8 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 labor rate variance?

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

When the actual cost of direct materials used exceeds the standard cost,the company must have experienced an unfavorable direct materials price variance.