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Exam 21: Flexible Budgets and Standard Costing

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Question 41

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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.

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Question 42

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An overhead cost variance is the difference between the actual overhead incurred for the period and the standard overhead applied.

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B) False

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Question 43

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A company established a direct material standard of 2 pounds of material at a cost of $6 per pound for unit produced. During August the company produced 6,000 units of product. 10,000 pounds of direct material which cost $6.50 per pound were used in the production process. Compute the direct material price variance for August.

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 total labor efficiency variance?

A company established a direct material standard of 2 pounds of material at a cost of $6 per pound for unit produced. During August the company produced 6,000 units of product. 10,000 pounds of direct material which cost $6.50 per pound were used in the production process. Compute the direct material quantity variance for August.

A company had a $22,000 favorable direct labor efficiency variance during a time period when the standard rate per direct labor hour was $22 and the actual rate per direct labor hour was $21. If the standard direct labor hours allowed for production were 5,000 what is the amount of actual direct labor hours worked during this period?

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: Manatee 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: $__________________

When standard manufacturing costs are recorded in the accounts and the cost variances are immaterial at the end of the accounting period, the cost variances should be:

Companies promoting continuous improvement strive to achieve practical standards rather than ideal standards.

What are sales variances? How are they used?

DT Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. DT's standard labor cost is $11.00 per hour. During March, DT produced 4,000 frames and used 12,400 hours at a total cost of $133,920. (a) What is DT's labor rate variance for March? (b) What is DT's direct labor efficiency variance for March? (c) Record the labor costs and the variances for DT.

Standard material, labor, and overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

Variable budget is another name for:

Standard costs can serve as a basis for evaluating actual performance.

Actual fixed overhead for a company during March was $97,612. The flexible budget for fixed overhead this period is $88,000 based on a production level of 5,500 units. If the company actually produced 4,300 units, what is the fixed overhead spending variance for March?

If Blue Jay Enterprises actual overhead incurred during a period was $49.050 and the company reported an unfavorable overhead controllable variance of $1,800 and a favorable overhead volume variance of $1,350, how much standard overhead cost was assigned to the products produced during the period?

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

Companies promoting continuous improvement strive to achieve _____________ standards by eliminating inefficiencies and waste.

The entry to record the labor costs and variances would include a:

A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.