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Exam 8: Flexible Budgets and Standard Costs

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Question 1

Multiple Choice

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Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

A) $25.02.
B) $11.52.
C) $2.40.
D) $2.52.
E) $3.42.

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

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Question 2

Multiple Choice

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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:

A) Sales budget.
B) Standard budget.
C) Flexible budget.
D) Fixed budget.
E) Variable budget.

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

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Question 3

Multiple Choice

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The following information relating to a company's overhead costs is available. Based on this information, the total variable overhead variance is:

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

A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880.The direct materials price variance is:

A flexible budget is also called a ________ budget.

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.

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

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

Gala Enterprises reports the following information regarding the production of one of its products for the month. Compute the total direct materials cost variance, the direct materials price variance, the direct materials quantity variance and identify each as either favorable or unfavorable.

Sanchez Company's output for the current period was assigned a $400,000 standard direct labor cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?

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

Georgia, Inc. has collected the following data on one of its products. The direct materials price variance is:

Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable overhead costs of $190,000, and 23,000 units produced. The total variable overhead variance is:

A budget performance report shows budgeted amounts, actual amounts, and differences between budgeted and actual amounts.

Based on predicted production of 25,000 units, FreshCo. anticipates $175,000 of fixed costs and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

The following information describes a company's usage of direct labor in a recent period. The total direct labor cost variance is:

Gala Enterprises collected the following data regarding production of one of its products. Compute the variable overhead cost variance, the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead spending variance, and the fixed overhead volume variance.

Management by exception means studying industry standards to define normal conditions.

Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is: