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Exam 8: Flexible Budgets and Standard Costs

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Question 91

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Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales price variance for the month.

A) $22,000 unfavorable.
B) $10,000 favorable.
C) $22,000 favorable.
D) $32,000 unfavorable.
E) $32,000 favorable.

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

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Question 92

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The following company information is available for March. The direct materials price variance is:

A) $5,000 favorable.
B) $300 favorable.
C) $5,200 unfavorable.
D) $5,000 unfavorable.
E) $5,200 favorable.

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

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Question 93

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Identify and explain the primary differences between fixed and flexible budgets.

The following information describes production activities of the Midtown Corp.: 30,000 units were completed during the year Budgeted standards for each unit produced: 1/2 lb. of raw material at $4.15 per lb. 10 minutes of direct labor at $12.50 per hour Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

Gleason Company has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity. Fixed overhead is $360,000 and variable overhead is $180,000 at this level of activity. During the current period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were: Calculate the variable overhead spending and efficiency variance and the fixed overhead spending and volume variances. Indicate whether each is favorable or unfavorable.

Milltown Company sells used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's total sales variance for the month.

Janitor Supply produces an industrial cleaning powder that requires 40 grams of material at $0.10 per gram and 0.25 direct labor hours at $12.00 per hour. Overhead is applied at the rate of $18 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

The difference between actual quantity of input used and the standard quantity of input used results in a:

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

The difference between actual price per unit of input and the standard price per unit of input results in a:

Claymore Corp. has the following information about its standards and production activity for September. The volume variance is:

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of contribution margin for 20,000 units would be:

Static budget is another name for:

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?

Fixed budgets are also known as flexible budgets.

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

The difference between the total actual overhead cost incurred and the total standard overhead cost applied is the ________.

A company provided the following direct materials cost information. Compute the total direct materials cost variance.

During November, Glime Company allocated overhead to products at the rate of $26.00 per direct labor hour. This figure was based on 80% of capacity or 1,600 direct labor hours. However, Glime Company operated at only 70% of capacity, or 1,400 direct labor hours. Budgeted overhead at 70% of capacity is $38,900, and overhead actually incurred was $38,000. What is the company's volume variance for November? (Indicate whether the variance is favorable or unfavorable)

Seafarer Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product. During the past month, actual production was 6,500 units. The material quantity variance was $700 favorable and the material price variance was $470 unfavorable. The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include all of the following except: