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Exam 8: Flexible Budgets and Standard Costs

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Question 31

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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 operating income for 20,000 units would be:

A) $30,000.
B) $60,000.
C) $69,000.
D) $150,000.
E) $32,727.

F) A) and B)
G) B) and C)

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Question 32

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Georgia, Inc. has collected the following data on one of its products. The actual cost of direct materials used is:

A) $133,750.
B) $150,000.
C) $106,250.
D) $158,750.
E) $120,000.

F) All of the above
G) C) and E)

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Question 33

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The total sales variance can be divided into the sales price variance and the sales volume variance.

A flexible budget is based on a single predicted amount of sales or other activity measure.

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

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

Which of the following is not part of the flow of events in variance analysis:

A flexible budget is useful both before and after the period's activities are complete.

Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $12 per hour. During August, Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376. What is Hassock's labor efficiency variance for August?

Variable budget is another name for a flexible budget.

An ________ standard is based on 100% efficiency without any loss or waste.

A standard that takes into account the reality that some loss usually occurs with any process under normal application of the process is known as a ________ standard.

A favorable variance for a cost means that when compared to the budget, the actual cost is ________ than the budgeted cost.

Fletcher Company collected the following data regarding production of one of its products. Compute the standard quantity allowed for the actual output.

Explain how favorable and unfavorable variances impact income.

If ending variance account balances are immaterial, they can be closed directly to Cost of Goods Sold.

Fletcher Company collected the following data regarding production of one of its products. Compute the direct labor rate variance.

The overhead cost variance is:

Claremont Company sells refurbished copiers. During the month, the company sold 180 copiers for total sales of $540,000. The budget for the month was to sell 175 copiers at an average price of $3,200. The sales price variance for the month was:

Regent, Inc. uses the following standard to produce a single unit of its product: overhead $6 (2 hrs. @ $3/hr.) . The flexible budget for overhead is $100,000 plus $1 per direct labor hour. Actual data for the month show overhead costs of $150,000, and 24,000 units produced. The overhead volume variance is: