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Exam 21: Flexible Budgets and Standard Costing

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Question 71

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The following company information is available for January: The direct material price variance is:

A) $5,000 favorable.
B) $300 favorable.
C) $5,300 unfavorable.
D) $5,000 unfavorable.
E) $5,300 favorable.

F) A) and B)
G) D) and E)

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Question 72

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Assume Martin Guitar Company has a standard of 3 hours of direct labor per unit produced and $20 per hour for the labor rate. During last period, the company used 24,000 hours of direct labor at a $456,000 total cost to produce 6,000 units. Compute the direct labor rate and efficiency variances.

A) Rate Variance: $24,000 unfavorable; Efficiency Variance: $120,000 favorable.
B) Rate Variance: $24,000 favorable; Efficiency Variance: $120,000 unfavorable.
C) Rate Variance: $96,000 favorable; Efficiency Variance: $96,000 unfavorable.
D) Rate Variance: $120,000 favorable; Efficiency Variance: $24,000 unfavorable.
E) Rate Variance: $120,000 unfavorable; Efficiency Variance: $24,000 unfavorable.

F) A) and D)
G) All of the above

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Question 73

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Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called _________________ and _____________ variances.

Bartels Corp. produces woodcarvings. It takes 2 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 10,000 carvings and used 21,040 hours of direct labor at a total cost of $250,376. What is Bartels' labor efficiency variance for August?

The entry to record the material variances would include a:

Another name for a static budget is a variable budget.

A _______________________ contains relevant information that compares actual results to planned activities.

If Falcon Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

Although a fixed budget is only useful over the relevant range of operations, a flexible budget is useful over all possible production levels.

A management approach that emphasizes significant differences from plans is known as ___________________.

Fixed budget performance reports compare actual results with the expected amounts in the fixed budget.

Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overhead this period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units what is the fixed overhead volume variance for March?

A flexible budget expresses all costs on a per unit basis.

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output is called a:

The following information describes a company's usage of direct labor in a recent period: $\begin{array} { l r } \text { Actual hours used } & 45,000 \\\text { Actual rate per hour } & \$ 15 \\\text { Standard rate per hour } & \$ 14 \\\text { Standard hours for units produced } & 47,000\end{array}$ -The direct labor efficiency variance is:

Regarding overhead costs, as volume increases:

Elroy Co. has prepared the following fixed budget for the year, assuming production and sales of 30,000 units. This level of production represents 80% of capacity. Calculate the following flexible budget amounts at the indicated levels of capacity:

In preparing flexible budgets, the costs that remain constant in total are _______________ costs. Those costs that change in total are _______________ costs.

An unfavorable variance is recorded with a debit.

Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overhead this period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units, the entry to record the overhead variances would include a: