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Exam 6: Flexible Budgets and Standard Cost Systems

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Question 71

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Because it is a volume variance,the fixed overhead volume variance explains why fixed overhead is underallocated or overallocated.

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Question 72

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A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated,and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget.This could produce a(n________.

A) unfavorable direct materials cost variance
B) unfavorable direct materials efficiency variance
C) unfavorable direct labor efficiency variance
D) unfavorable direct labor cost variance

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Question 73

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Alphonse Company manufactures staplers.The budgeted sales price is $14.00 per stapler,the variable costs are $3.00 per stapler,and budgeted fixed costs are $10,000.What is the budgeted operating income for 4300 staplers?

The following information relates to Tablerock Manufacturing's overhead costs for the month: $\begin{array} { | l | l | } \hline \text { Static budget variable overhead } & \$ 14,200 \\\hline \text { Static budget fixed overhead } & \$ 5,600 \\\hline \text { Static budget direct labor hours } & 1,000 \text { hours } \\\hline \text { Static budget number of units } & 5,000 \text { units } \\\hline\end{array}$ Tablerock allocates variable manufacturing overhead to production based on standard direct labor hours. Tablerock reported the following actual results for last month: actual variable overhead,$14,500; actual fixed overhead,$5,400; actual production of 4,700 units at 0.22 direct labor hours per unit.The standard direct labor time is 0.20 direct labor hours per unit. Compute the variable overhead cost variance.(Round intermediate calculations to two decimal places and the answer to the nearest dollar.)

Under a standard cost system,when recording the use of direct materials in the production process,the debit to Work-in-Process Inventory is ________.

Benefit Pillow Company projected sales of 79,000 units for the year at a unit sales price of $12.00.Actual sales for the year were 73,000 units at $14.00 per unit.Variable costs were budgeted at $4.00 per unit,and the actual variable cost was $5.00 per unit.Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $415,000.What is the flexible budget variance for operating income?

Which department is usually responsible for a direct labor cost variance attributable to inexperienced workers on the assembly line?

The fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of total fixed overhead variance.

The total variable overhead variance is obtained by adding variable overhead cost variance and ________.

An unfavorable flexible budget variance in variable costs suggests a(n________.

Ramos Manufacturing uses a standard cost system.The T-account for manufacturing overhead is shown below: $\begin{array}{cc}\text { Mantuacturing overhead}\\\hline\begin{array}{ll|l}&95,000& \\&&93,000\end{array}\end{array}$ In addition to the above,Ramos calculated the following overhead variances: Variable overhead cost variance: $5,000 F Variable overhead efficiency variance: $4,850 U Fixed overhead cost variance: $1,200 F Fixed overhead volume variance: $3,350 U Prepare the journal entry to close the manufacturing overhead account and record the overhead variances.Omit explanation.

The management of Guardian Fire Alarms has calculated the following variances: $\begin{array} { | l | r | } \hline \text { Direct materials cost variance } & \$ 9000 \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 36,000 \mathrm {~F} \\\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \\\hline \text { Direct labor efficiency variance } & 13,500 \mathrm { U } \\\hline \text { Total variable overhead variance } & 8500 \mathrm {~F} \\\hline \text { Total fixed overhead variance } & 3000 \mathrm {~F} \\\hline\end{array}$ What is the total direct materials variance of the company?

Oceanside Marine Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor.Oceanside uses standard costs to prepare its flexible budget.For the first quarter of the year,direct materials and direct labor standards for one of their popular products were as follows: Direct materials: 2 pound per unit; $12 per pound Direct labor: 2 hours per unit; $16 per hour Oceanside produced 3000 units during the quarter.At the end of the quarter,an examination of the direct materials records showed that the company used 6500 pounds of direct materials and actual total materials costs were $99,600. What is the direct materials cost variance? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

Which of the following statements about management by exception is incorrect?

A static budget is prepared for only one level of sales volume.

A company is analyzing its month-end results by comparing it to both static and flexible budgets.During the month,the actual variable costs per unit were lower than the expected variable costs per unit as per the static budget.This difference results in a(n________.

Myers Manufacturing uses a standard cost system.The allocation base for overhead costs is direct labor hours.Standard and actual data for manufacturing overhead are as follows: Variable overhead allocation rate: $30 per direct labor hour Fixed overhead allocation rate: $10 per direct labor hour Actual overhead incurred (variable and fixed): $45,600 Standards for direct labor are as follows: Hours per unit 0.5,Direct labor cost per hour $18.00 Actual direct labor for the month: 1,200 hours for a total cost of $24,000 Actual and planned production for the month: 3,000 units Prepare the journal entry to allocate overhead cost (both variable and fixed)to production.

Which of the following should be considered when analyzing manufacturing overhead variances?

The Alaska Fish Company completed the flexible budget analysis for the second quarter,which is given below. Which of the following statements would be a correct factor to explain the sales volume variance for operating income?

A flexible budget summarizes revenues and costs for various levels of sales volume within a relevant range.