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Exam 23: Flexible Budgets and Standard Costs

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Question 61

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Which of the following is an example of a materials price standard?

A) $40 per direct labor hour
B) 4.5 square feet per unit
C) $0.95 per square foot
D) 0.5 direct labor hours per unit

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Question 62

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Which of the following will result in an unfavorable direct materials efficiency variance?

A) The actual cost per unit of direct materials exceeded the standard cost of direct materials.
B) The actual cost per unit of direct materials was less than the standard cost of direct materials.
C) The actual quantity of direct materials used per unit exceeded the standard quantity of direct materials allowed per unit.
D) The actual quantity of direct materials used per unit was less than the standard quantity of direct materials allowed per unit.

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Question 63

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Portobello Company prepared the following static budget for the coming month: Using the format below, please prepare a flexible budget including data at volumes of 4,000 and 6,000 units.

Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows: During the first quarter, Faas produced 5,000 units of this product. At the end of the quarter, an examination of the materials records showed that the company used 7,000 pounds of materials and actual total material costs were $29,750. How much is the direct materials price variance?

Which of the following is one of the reasons why companies use standard costs?

Faas Marine Stores Company manufactures decorative fittings for luxury yachts which require highly skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For the first quarter of 2011, direct material and direct labor standards for one of their popular products were as follows: During the first quarter, Faas produced 5,000 units of this product. At the end of the quarter, an examination of the labor cost records showed that the company used 11,000 hours of direct labor and actual direct labor costs were $184,800. The direct labor efficiency variance was $18,000 U. Which of the following would be a logical explanation for this variance?

Shirt Fantasy produces and sells two types of tee shirtsFancy and Plain. Shirt Fantasy provides the following data: Using the format below, compute the flexible budget variance for Fancy tee shirts for sales revenue only.

Standard costs are developed by the cooperative effort of procurement, production, human resources, and accounting personnel.

In a standard costing system, each item has a price standard and a quantity standard.

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual selling price was higher than projected in the static budget. What kind of variance would that produce?

Which one of the following is NOT a reason for using standard costs?

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Based on the above data, how much was the flexible budget variance for fixed expenses?

Quality Brand Products uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Quality Brand had an unfavorable efficiency variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

The following information describes a company's usage of direct labor in a recent period: How much is the direct labor price variance?

The production manager of a company, in an effort to gain a promotion, negotiated a new labor contract with her factory employees that required them to bear a greater percentage of benefit costs than before, thus bringing down the cost of direct labor to the company. Shortly afterward, several experienced and highly skilled workers resigned, and were replaced by new employees whose work was very slow during their training period. At the end of the quarter, the company's profits fell 10%. This situation could have produced which of the following variances?

When completing a standard costing income statement, unfavorable variances for direct materials or direct labor will go to reduce the "cost of goods sold at standard cost."

Ibis Company prepared the following static budget for the coming month: If a flexible budget was prepared at a volume of 13,000 units, how much would the operating income be?

When management is investigating overhead variances, they need to further determine whether cost increases were controllable or uncontrollable.

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows: Using the format below, please prepare an income statement performance report:

When a company is using standard costs, only unfavorable variances need to be explained or investigated.