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Exam 21: Flexible Budgets and Standard Costs

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Question 1

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Fixed budget performance reports compare actual results with the results expected under a fixed budget.

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Question 2

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The overhead cost variance is:

A) The difference between the overhead costs actually incurred and the overhead budgeted at the actual operating level.
B) The difference between the actual overhead incurred during a period and the standard overhead applied.
C) The difference between actual and budgeted cost caused by the difference between the actual price per unit and the budgeted price per unit.
D) The costs that should be incurred under normal conditions to produce a specific product (or component) or to perform a specific service.
E) The difference between the total overhead cost that would have been expected if the actual operating volume had been accurately predicted and the amount of overhead cost that was allocated to products using the standard overhead rate.

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Question 3

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________ are preset costs for delivering a product or service under normal conditions.

A fixed budget performance report never provides useful information for evaluating variances.

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.

A product has a sales price of $20.Based on a 15,000-unit production level,the variable costs are $12 per unit and the fixed costs are $6 per unit.Using a flexible budget for an actual production and sales level of 18,000 units,what is the budgeted operating income?

Maxwell Co.collected the following information about its production activities for the current year. a.Compute the direct materials price and quantity variances and indicate whether each is favorable or unfavorable. b.Prepare the journal entry to record the issuance of direct materials into production. Actual costs and quantities: Direct materials used 95,000 lbs.@ $6.30 per lb. Units completed during the year,50,000 units Standard costs and quantities: Price per lb.of direct material,$6.05 Two lbs.of direct material per unit

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

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

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

A cost variance is the difference between actual cost and standard cost.

Flexible budgets may be prepared before or after an actual period of activity.Why would management prepare such budgets at differing time frames?

The purchasing department is responsible for the price paid for materials.

When recording the journal entry for labor,the Work in Process Inventory account is

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:

The difference between the actual sales and the flexible budget sales is called the ________ variance.

A company's flexible budget for 12,000 units of production showed sales,$48,000; variable costs,$18,000; and fixed costs,$16,000.The fixed costs expected if the company produces and sells 16,000 units is:

Standard costs are used in the calculation of:

Variable budget is another name for:

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