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Exam 13: Budgeting and Standard Cost Systems

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Question 21

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Which of the following will not affect direct materials quantity variance?

A) Malfunctioning equipment
B) Purchasing of inferior raw materials
C) Material requiring rework
D) Spoilage of materials

E) All of the above
F) A) and B)

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Question 22

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The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: $\begin{array}{lll}\$ 360,000 & \text { Variable factory overhe ad } & \text { Actual } \\104,000 & \text { Fixed factory overhead } & \\450,000 & 60,000 \text { hours at } \$ 7.50 & \text { Standard: }\end{array}$ What is the amount of the fixed factory overhead volume variance?

A) $26,000 unfavorable
B) $12,000 favorable
C) $26,000 favorable
D) $12,000 unfavorable

E) A) and B)
F) None of the above

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Question 23

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Christiansen and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, utilities of $5,000, and supervisor salaries of $15,000. A flexible budget for 12,000 units of production would show:

The following data is given for the Walker Company: $\begin{array}{ll}\text {1, 000 units}&\text {Budgeted prochuction}\\\text {980 units}&\text {Actual production}\\&\text {Materiale:}\\\$ 2.00 & \text { Standard price per 1b } \\12 & \text { Standard pounds per completed urit } \\11,800 & \text { Actual pounds purchased and used in production } \\\$ 23,000 & \text { Actual price paid for materials }\\&\text { Labor: }\\\$ 14 \text { per hour } & \text { Standard hourly labor rate } \\4.5 & \text { Standard hours allowed per completed unit } \\4,560 & \text { Actual labor hours worked } \\\$ 62.928 & \text { Actual total labor costs }\\&\text { Overhead: }\\\$ 27,000 & \text { Actual and budgeted fixed overhead } \\\$ 3.50 \text { per standard labor hour } & \text { Standard variable overhead rate } \\\$ 15.500 & \text { Actual variable overhead costs }\end{array}$ Overhead is applied on standard labor hours. The factory overhead volume variance is:

The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed cost for the actual units produced is termed volume variance.

The budget that summarizes future plans for the acquisition of fixed assets is the:

If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 favorable.

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is termed:

If Division Inc. expects to sell 300,000 units in 2012, desires ending inventory of 22,000 units, and has 24,000 units on hand as of the beginning of the year, the budgeted volume of production for 2012 is 298,000 units.

If the expected sales volume for the current period is 22,000 units, the desired ending inventory is 800 units, and the beginning inventory is 500 units, the number of units set forth in the production budget, representing total production for the current period, is:

The standard fixed factory overhead rate is based on 100% capacity of 120,000 machine hours for Thompson Inc. The standard costs and the actual costs of factory overhead for the production of 25,000 units during March were as follows: $\begin{array}{ll}\$ 950,000 & \text { Actual: Factory overhead } \\900,000 & \text { Standard: } 100,000 \text { hours at } \$ 9.00\end{array}$ If there was a $60,000 unfavorable volume variance for March, what is the standard fixed factory overhead cost rate?

The difference between the standard cost of a product and its actual cost is called a variance.

Which of the following are the principal components of a master budget?

The most effective means of presenting standard factory overhead cost variance data is through a selling overhead cost budget.

It would be most appropriate to develop direct labor time standards for use in administrative activities when the activity involves:

The following data relate to direct labor costs for the current period: $\begin{array}{lrr} \text {36,000 hours at \$23.50 } & \text { Standard costs } \\ \text {36,000 hours at \( \$ 23.00 \) } & \text { Actual costs } \\\end{array}$ What is the direct labor time variance?

Standard Corporation uses a standard cost system. The following information was provided for the period that just ended: $\begin{array}{ll}3 \text { hrs. } & \text { Stanchard time per completed unit } \\\$ 108,000 & \text { Actual total factory overhe ad } \\\$ 60,000 & \text { Fixed factory overhead } \\\$ 2.00 \text { per labor hour } & \text { Standard fixed factory overhead rate } \\30,000 \text { hours } & \text { Standard variable factory overhe ad rate } \\28,000 \text { hours } & \text { Normal capacity } \\9,000 & \text { Plant operated during the period } \\\end{array}$ The fixed factory overhead volume variance is

An unfavorable volume variance may be due to a failure of supervisors to maintain an even flow of work.

Production and sales estimates for May for the Hudson Co. are as follows: $\begin{array}{ll}17,500& \text { Estimated inventory (units) , May 1}\\19,300&\text {Desired inventory (unit) , May 31 }\\&\text {Expected sales volume (units) :}\\4,200 & \text { Area W } \\7,000 & \text { AreaX } \\9,000 & \text { Area Y } \\\$ 15 & \text { Unit sales price }\end{array}$ The number of units expected to be sold in May is:

The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget.