Flexible Budgets and Standard Costs – Chapter 23 | Test Bank – 24th

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Fundamental Accounting Principles, 24e (Wild)

Chapter 23 Flexible Budgets and Standard Costs

1) Standard costs can be used by management to assess the reasonableness of actual costs incurred.

2) Standard material costs, standard labor costs, and standard overhead costs can be obtained from standard cost tables published by the Institute of Management Accountants.

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

4) When standard costs are used, factory overhead is assigned to products with a predetermined standard overhead rate.

5) Management by exception means studying industry standards to define normal conditions.

6) While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

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

8) A budget performance report shows budgeted amounts, actual amounts, and differences between budgeted and actual amounts.

9) A cost variance can be further separated into the quantity variance and the price variance.

10) When computing a price variance, the price is held constant.

11) When computing a price variance, the quantity is held constant.

12) Within the same flexible budget performance report, it is impossible to have both favorable and unfavorable variances.

13) Cost variances are ignored under management by exception.

14) Management by exception means that managers focus on the most significant differences between actual costs and standard costs.

15) Variable budget is another name for a flexible budget.

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

17) Another name for a static budget is a variable budget.

18) Fixed budgets are also known as flexible budgets.

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

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

21) A variable or flexible budget is so named because it only focuses on variable costs.

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

23) In sales variance analysis, the budgeted amount of unit sales is the predicted activity level and the budgeted cost of the goods sold can be treated as a "standard" price.

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

25) A flexible budget expresses all costs on a per unit basis, regardless of cost behavior.

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

27) A flexible budget expresses variable costs on a per unit basis and fixed costs on a total basis.

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

29) A direct labor cost variance can be divided into price and quantity variances, which are almost always called controllable and volume variances.

30) When the actual price per unit of direct materials used exceeds the standard price per unit, the company has an unfavorable direct materials price variance.

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

32) One possible explanation for direct labor rate and efficiency variances is the use of workers with different skill levels.

33) An overhead cost variance is the difference between the total overhead actually incurred for the period and the standard overhead applied to products.

34) A volume variance is the difference between overhead at maximum volume of production and the standard volume of production.

35) A volume variance occurs when the company operates at a different capacity level than was expected.

36) An unfavorable variance is recorded with a debit because it reflects additional costs higher than the standard cost.

37) The process of closing ending variance account balances increases Cost of Goods Sold.

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

39) Standard costs are:

A) Actual costs incurred to produce a specific product or perform a service.

B) Preset costs for delivering a product or service under normal conditions.

C) Established by the IMA.

D) Rarely achieved.

E) Uniform among companies within an industry.

40) The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:

A) Variable costs.

B) Fixed costs.

C) Standard costs.

D) Product costs.

E) Period costs.

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

A) Standard variance.

B) Quantity variance.

C) Volume variance.

D) Controllable variance.

E) Price variance.

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

A) Controllable variance.

B) Standard variance.

C) Budget variance.

D) Quantity variance.

E) Price variance.

43) The difference between the total actual cost incurred and the total standard cost is called the:

A) Flexible variance.

B) Usage variance.

C) Cost variance.

D) Controllable variance.

E) Volume variance.

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

A) Preparing a standard cost performance report.

B) Identifying questions and their answers.

C) Taking corrective and strategic actions.

D) Computing and analyzing variances.

E) Working to ensure that all variances are favorable.

45) Standard costs are used in the calculation of:

A) Price and quantity variances.

B) Price variances only.

C) Quantity variances only.

D) Price, quantity, and sales variances.

E) Quantity and sales variances.

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

A) $2,500 Favorable.

B) $78,250 Favorable.

C) $78,250 Unfavorable.

D) $80,750 Favorable.

E) $80,750 Unfavorable.

47) A company provided the following direct materials cost information. Compute the direct materials price variance.

A) $81,000 Favorable.

B) $81,000 Unfavorable.

C) $80,750 Unfavorable.

D) $80,750 Favorable.

E) $78,250 Favorable.

48) A company provided the following direct materials cost information. Compute the direct materials quantity variance.

A) $78,250 Favorable.

B) $2,750 Unfavorable.

C) $2,750 Favorable.

D) $2,500 Favorable.

E) $2,500 Unfavorable.

49) An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

A) Controllable management.

B) Management by variance.

C) Performance management.

D) Management by objectives.

E) Management by exception.

50) In this type of budget, the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur:

A) Sales budget.

B) Standard budget.

C) Flexible budget.

D) Fixed budget.

E) Variable budget.

51) A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:

A) Rolling budget.

B) Production budget.

C) Flexible budget.

D) Merchandise purchases budget.

E) Fixed budget.

52) Static budget is another name for:

A) Standard budget.

B) Flexible budget.

C) Variable budget.

D) Fixed budget.

E) Master budget.

53) Variable budget is another name for:

A) Cash budget.

B) Flexible budget.

C) Fixed budget.

D) Manufacturing budget.

E) Rolling budget.

54) Identify the situation below that will result in a favorable variance.

A) Actual revenue is higher than budgeted revenue.

B) Actual revenue is lower than budgeted revenue.

C) Actual income is lower than expected income.

D) Actual costs are higher than budgeted costs.

E) Actual expenses are higher than budgeted expenses.

55) A flexible budget performance report compares the differences between:

A) Actual performance and budgeted performance based on actual sales volume.

B) Actual performance over several periods.

C) Budgeted performance over several periods.

D) Actual performance and budgeted performance based on budgeted sales volume.

E) Actual performance and standard costs at the budgeted sales volume.

56) Sales variance analysis is used by managers for:

A) Planning purposes only.

B) Budgeting purposes only.

C) Control purposes only.

D) Planning and control purposes.

E) Planning and budgeting purposes.

57) An internal report that helps management analyze the difference between actual performance and budgeted performance based on the actual sales volume (or other level of activity) is called a(n):

A) Sales budget performance report.

B) Flexible budget performance report.

C) Master budget performance report.

D) Static budget performance report.

E) Operating budget performance report.

58) A flexible budget may be prepared:

A) Before the operating period only.

B) After the operating period only.

C) During the operating period only.

D) At any time in the planning period.

E) Only when the company encounters excessive costs.

59) 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 sales expected if the company produces and sells 16,000 units is:

A) $48,000.

B) $64,000.

C) $40,000.

D) $24,000.

E) $18,000.

60) 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 variable costs expected if the company produces and sells 16,000 units is:

A) $48,000.

B) $64,000.

C) $40,000.

D) $24,000.

E) $18,000.

61) 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 contribution margin expected if the company produces and sells 16,000 units is:

A) $48,000.

B) $64,000.

C) $40,000.

D) $24,000.

E) $18,000.

62) 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:

A) $16,000.

B) $64,000.

C) $48,000.

D) $24,000.

E) $18,000.

63) 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 operating income expected if the company produces and sells 16,000 units is:

A) $2,667.

B) $14,000.

C) $18,667.

D) $24,000.

E) $35,000.

64) A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs, $16,000. The operating income expected if the company produces and sells 15,000 units is:

A) $34,000.

B) $10,000.

C) $18,667.

D) $8,000.

E) $14,000.

65) A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

A) $34,000.

B) $10,000.

C) $18,667.

D) $16,000.

E) $24,000.

66) Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

A) $125,000 fixed and $102,500 variable.

B) $125,000 fixed and $123,000 variable.

C) $102,500 fixed and $150,000 variable.

D) $150,000 fixed and $123,000 variable.

E) $150,000 fixed and $102,500 variable.

67) Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

A) $12,500.

B) $25,000.

C) $20,000.

D) $30,000.

E) $35,000.

68) A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

A) $110,500.

B) $85,000.

C) $133,000.

D) $100,000.

E) $50,500.

69) Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

A) $10,000 of fixed costs and $72,000 of variable costs.

B) $10,000 of fixed costs and $90,000 of variable costs.

C) $12,500 of fixed costs and $90,000 of variable costs.

D) $12,500 of fixed costs and $72,000 of variable costs.

E) $10,000 of fixed costs and $81,000 of variable costs.

70) 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 sales for 20,000 units would be:

A) $165,000.

B) $150,000.

C) $117,272.

D) $181,500.

E) $141,900.

71) 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 variable costs for 20,000 units would be:

A) $99,000.

B) $90,000.

C) $66,000.

D) $30,000.

E) $150,000.

72) 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:

A) $99,000.

B) $90,000.

C) $66,000.

D) $150,000.

E) $60,000.

73) 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 fixed costs for 20,000 units would be:

A) $99,000.

B) $90,000.

C) $66,000.

D) $30,000.

E) $150,000.

74) 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.

75) Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $65,000. Based on this information, the budgeted operating income for 28,000 units would be:

A) $52,000.

B) $135,333.

C) $58,000.

D) $72,500.

E) $105,000.

76) Which department is often responsible for the direct materials price variance?

A) The accounting department.

B) The production department.

C) The purchasing department.

D) The finance department.

E) The budgeting department.

77) 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.

78) Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

A) $30,000 favorable.

B) $13,750 unfavorable.

C) $16,250 favorable.

D) $30,000 unfavorable.

E) $13,750 favorable.

79) Georgia, Inc. has collected the following data on one of its products. The direct materials price variance is:

A) $13,750 unfavorable.

B) $16,250 unfavorable.

C) $16,250 favorable.

D) $30,000 unfavorable.

E) $33,000 favorable.

80) Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is:

A) $27,500 unfavorable.

B) $50,000 unfavorable.

C) $50,000 favorable.

D) $22,500 unfavorable.

E) $22,500 favorable.

81) Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is:

A) $27,500 unfavorable.

B) $50,000 unfavorable.

C) $50,000 favorable.

D) $22,500 unfavorable.

E) $22,500 favorable.

82) 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 rate variance for August?

A) $2,000 favorable.

B) $2,104 unfavorable.

C) $2,104 favorable.

D) $4,160 favorable.

E) $2,000 unfavorable.

83) 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?

A) $12,480 favorable.

B) $10,376 unfavorable.

C) $14,584 unfavorable.

D) $4,160 favorable.

E) $12,480 unfavorable.

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

A) $6,125 unfavorable.

B) $7,000 unfavorable.

C) $7,000 favorable.

D) $21,000 favorable.

E) $14,875 favorable.

85) Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

A) $6,125 unfavorable.

B) $7,000 unfavorable.

C) $7,000 favorable.

D) $21,000 favorable.

E) $14,875 favorable.

86) Use the following data to find the direct labor efficiency variance if the company produced 3,500 units during the period.

A) $6,125 unfavorable.

B) $7,000 unfavorable.

C) $7,000 favorable.

D) $21,000 favorable.

E) $6,125 favorable.

87) Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period.

A) $12,250 unfavorable.

B) $14,700 unfavorable.

C) $14,700 favorable.

D) $12,250 favorable.

E) $26,950 favorable.

88) 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.

89) The following company information is available. The direct materials quantity variance is:

A) $10,000 unfavorable.

B) $13,200 unfavorable.

C) $9,600 unfavorable.

D) $10,000 favorable.

E) $13,200 favorable.

90) Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials quantity variance?

A) $400 unfavorable.

B) $450 unfavorable.

C) $2,500 unfavorable.

D) $2,550 unfavorable.

E) $2,950 unfavorable.

91) Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials price variance?

A) $400 unfavorable.

B) $450 unfavorable.

C) $2,500 unfavorable.

D) $2,550 unfavorable.

E) $2,950 unfavorable.

92) A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880. The direct materials quantity variance is:

A) $400 unfavorable.

B) $120 favorable.

C) $400 favorable.

D) $520 favorable.

E) $520 unfavorable.

93) A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880.The direct materials price variance is:

A) $520 unfavorable.

B) $400 unfavorable.

C) $120 favorable.

D) $520 favorable.

E) $400 favorable.

94) A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the total labor cost variance?

A) $2,000 unfavorable.

B) $3,000 unfavorable.

C) $5,500 unfavorable.

D) $8,000 unfavorable.

E) $9,000 unfavorable.

95) A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor rate variance?

A) $27,500 unfavorable.

B) $22,000 favorable.

C) $16,000 unfavorable.

D) $16,000 favorable.

E) $6,000 unfavorable.

96) A job was budgeted to require 3 hours of labor per unit at $11.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $269,500. What is the direct labor efficiency variance?

A) $27,500 unfavorable.

B) $22,000 unfavorable.

C) $16,000 unfavorable.

D) $22,000 favorable.

E) $6,000 unfavorable.

97) The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the total direct materials cost variance?

A) $48,000 unfavorable.

B) $51,000 favorable.

C) $51,000 unfavorable.

D) $3,000 favorable.

E) $3,000 unfavorable.

98) The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials price variance?

A) $47,000 unfavorable.

B) $47,000 favorable.

C) $50,000 unfavorable.

D) $50,000 favorable.

E) $3,000 favorable.

99) The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials quantity variance?

A) $47,000 unfavorable.

B) $47,000 favorable.

C) $50,000 unfavorable.

D) $50,000 favorable.

E) $3,000 favorable.

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

A) $29,000 unfavorable.

B) $29,000 favorable.

C) $22,500 unfavorable.

D) $52,500 favorable.

E) $52,500 unfavorable.

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

A) $29,000 favorable.

B) $29,000 unfavorable.

C) $22,500 unfavorable.

D) $52,500 favorable.

E) $52,500 unfavorable.

102) The following information describes a company's usage of direct labor in a recent period. The total direct labor cost variance is:

A) $6,500 favorable.

B) $29,000 favorable.

C) $22,500 unfavorable.

D) $22,500 favorable.

E) $6,500 unfavorable.

103) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials price variance for the month was:

A) $6,000 unfavorable

B) $1,800 favorable

C) $1,000 favorable

D) $5,800 unfavorable

E) $1,800 unfavorable

104) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials quantity variance for the month was:

A) $1,800 favorable

B) $5,800 unfavorable

C) $5,800 favorable

D) $1,800 unfavorable

E) $1,000 favorable

105) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the total direct materials cost variance for the month was:

A) $4,000 unfavorable

B) $4,000 favorable

C) $5,800 favorable

D) $5,800 unfavorable

E) $1,800 favorable

106) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor rate variance for the month was:

A) $1,200 favorable

B) $3,650 favorable

C) $2,450 favorable

D) $3,650 unfavorable

E) $1,200 unfavorable

107) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct labor efficiency variance for the month was:

A) $3,650 favorable

B) $2,450 favorable

C) $1,200 unfavorable

D) $1,200 favorable

E) $2,450 unfavorable

108) A company uses the following standard costs to produce a single unit of output.

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the total direct labor cost variance for the month was:

A) $3,650 favorable

B) $2,450 favorable

C) $1,200 unfavorable

D) $1,200 favorable

E) $2,450 unfavorable

109) 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.

110) The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:

A) Production variance.

B) Quantity variance.

C) Volume variance.

D) Price variance.

E) Controllable variance.

111) When there is a difference between the actual and the standard capacity, which of the following, based solely on fixed overhead, occurs:

A) Production variance.

B) Volume variance.

C) Overhead cost variance.

D) Quantity variance.

E) Controllable variance.

112) A company's flexible budget for 48,000 units of production showed variable overhead costs of $72,000 and fixed overhead costs of $64,000. The company incurred overhead costs of $122,800 while operating at a volume of 40,000 units. The total controllable cost variance is:

A) $1,200 favorable.

B) $1,200 unfavorable.

C) $13,200 favorable.

D) $13,200 unfavorable.

E) $15,200 favorable.

113) A company's flexible budget for the range of 35,000 units to 45,000 units of production showed variable overhead costs of $2 per unit and fixed overhead costs of $72,000. The company incurred total overhead costs of $148,800 while operating at a volume of 40,000 units. The total controllable cost variance is:

A) $6,800 favorable.

B) $6,800 unfavorable.

C) $3,200 favorable.

D) $3,200 unfavorable.

E) $10,000 favorable.

114) Jefferson Co. uses the following standard to produce a single unit of its product: variable overhead $6 (2 hrs. per unit @ $3/hr.). Actual data for the month show variable overhead costs of $150,000, and 24,000 units produced. The total variable overhead variance is:

A) $6,000F.

B) $6,000U.

C) $78,000U.

D) $78,000F.

E) $0.

115) Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (2 hrs. per unit @ $4/hr.) Actual data for the month show total variable overhead costs of $190,000, and 23,000 units produced. The total variable overhead variance is:

A) $6,000F.

B) $6,000U.

C) $78,000U.

D) $78,000F.

E) $0.

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

A) $1,295U.

B) $1,295F.

C) $2,400U.

D) $2,400F.

E) $3,695U.

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

A) $1,295U.

B) $1,295F.

C) $2,400U.

D) $2,400F.

E) $3,695U.

118) All of the following are associated with the volume variance except:

A) It results from operating at a different capacity than predicted.

B) Failing to meet expected production results from lower customer demand.

C) The volume variance is based solely on fixed overhead.

D) It is considered to be under management's control.

E) It is considered outside the control of the product manager.

119) The overhead cost variance is calculated as:

A) Standard applied overhead less budgeted overhead.

B) Actual overhead incurred less standard overhead applied.

C) Budgeted overhead less standard overhead applied.

D) Actual overhead incurred less standard applied overhead.

E) Actual fixed cost less budgeted overhead.

120) Levelor Company's flexible budget shows $10,710 of overhead at 75% of capacity, which was the operating level achieved during May. However, the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity). If overhead actually incurred was $11,183 during May, the controllable variance for the month was:

A) $473 unfavorable.

B) $473 favorable.

C) $1,530 favorable.

D) $1,530 unfavorable.

E) $1,057 favorable.

121) 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:

A) $10,000 favorable.

B) $12,000 favorable.

C) $4,000 unfavorable.

D) $16,000 unfavorable.

E) $36,000 unfavorable.

122) The variable overhead spending variance, the fixed overhead spending variance, and the variable overhead efficiency variance can be combined to find the:

A) Production variance.

B) Quantity variance.

C) Volume variance.

D) Price variance.

E) Controllable variance.

123) The following information relating to a company's overhead costs is available.

Based on this information, the total overhead variance is:

A) $7,000 favorable.

B) $6,000 favorable.

C) $1,000 unfavorable.

D) $6,000 unfavorable.

E) $1,000 favorable.

124) The following information relating to a company's overhead costs is available.

Based on this information, the total variable overhead variance is:

A) $2,000 favorable.

B) $6,000 favorable.

C) $2,000 unfavorable.

D) $6,000 unfavorable.

E) $1,000 favorable.

125) When recording variances in a standard cost system:

A) Only unfavorable material variances are debited.

B) Only unfavorable material variances are credited.

C) Both unfavorable material and labor variances are credited.

D) All unfavorable variances are debited.

E) All unfavorable variances are credited.

126) 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:

A) Carried forward to the next accounting period.

B) Allocated between cost of goods sold, finished goods, and work in process.

C) Closed to cost of goods sold.

D) Written off as a selling expense.

E) Ignored.

127) 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:

A) A debit to Work in Process for $19,500.

B) A credit to Raw Materials for $19,270.

C) A debit to Direct Material Price Variance for $470.

D) A credit to Direct Material Quantity Variance for $700.

E) A debit to Cost of Goods Sold for $230.

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

A) Debited for standard labor cost.

B) Debited for actual labor cost.

C) Credited for standard labor cost.

D) Credited for actual labor cost.

E) Not used.

129) Cavern Company's output for the current period results in a $5,250 unfavorable direct material price variance. The actual price per pound is $56.50 and the standard price per pound is $55.00. How many pounds of material are used in the current period?

A) 5,393.

B) 5,110.

C) 3,500.

D) 3,750.

E) 4,000.

130) Sanchez Company's output for the current period was assigned a $200,000 standard direct materials cost. The direct materials variances included a $5,000 favorable price variance and a $3,000 unfavorable quantity variance. What is the actual total direct materials cost for the current period?

A) $208,000.

B) $198,000.

C) $202,000.

D) $192,000.

E) $205,000.

131) Sanchez Company's output for the current period was assigned a $400,000 standard direct labor cost. The direct labor variances included a $10,000 unfavorable direct labor rate variance and a $4,000 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period?

A) $414,000.

B) $386,000.

C) $394,000.

D) $406,000.

E) $410,000.

132) 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.

133) 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 sales volume variance for the month.

A) $22,000 unfavorable.

B) $10,000 favorable.

C) $22,000 favorable.

D) $32,000 unfavorable.

E) $32,000 favorable.

134) 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.

A) $22,000 unfavorable.

B) $10,000 favorable.

C) $22,000 favorable.

D) $32,000 unfavorable.

E) $32,000 favorable.

135) 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:

A) $20,000 unfavorable.

B) $20,000 favorable.

C) $36,000 unfavorable.

D) $32,000 unfavorable.

E) $36,000 favorable.

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

A) $540,000.

B) $576,000.

C) $525,000.

D) $560,000.

E) $550,000.

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

A) 243,000 pounds.

B) 240,000 pounds.

C) 40,000 pounds.

D) 480,000 pounds.

E) 80,000 pounds.

138) Fletcher Company collected the following data regarding production of one of its products. Compute the total direct materials cost variance.

A) $6,000 favorable.

B) $3,570 unfavorable.

C) $2,430 favorable.

D) $6,000 unfavorable.

E) $3,570 favorable.

139) Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials price variance.

A) $2,430 unfavorable.

B) $3,570 unfavorable.

C) $2,430 favorable.

D) $6,000 unfavorable.

E) $3,570 favorable.

140) Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance.

A) $2,430 unfavorable.

B) $3,570 unfavorable.

C) $2,430 favorable.

D) $6,000 unfavorable.

E) $3,570 favorable.

141) Fletcher Company collected the following data regarding production of one of its products. Compute the total direct labor cost variance.

A) $80,250 unfavorable.

B) $80,250 favorable.

C) $61,125 favorable.

D) $61,125 unfavorable.

E) $19,125 favorable.

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

A) $80,250 unfavorable.

B) $80,250 favorable.

C) $61,125 favorable.

D) $61,125 unfavorable.

E) $19,125 unfavorable.

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

A) $19,125 favorable.

B) $80,250 favorable.

C) $61,125 favorable.

D) $19,125 unfavorable.

E) $80,250 unfavorable.

144) Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead cost variance.

A) $18,000 favorable.

B) $4,000 favorable.

C) $18,000 unfavorable.

D) $18,300 favorable.

E) $14,300 unfavorable.

145) Fletcher Company collected the following data regarding production of one of its products. Compute the fixed overhead cost variance.

A) $18,300 favorable.

B) $18,000 favorable.

C) $18,000 unfavorable.

D) $18,300 unfavorable.

E) $14,300 unfavorable.

146) Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead spending variance.

A) $25,450 favorable.

B) $4,000 favorable.

C) $4,000 unfavorable.

D) $21,450 unfavorable..

E) $21,450 favorable.

147) Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead efficiency variance.

A) $14,300 unfavorable.

B) $21,450 favorable.

C) $4,000 unfavorable.

D) $4,000 favorable.

E) $21,450 unfavorable.

148) 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?

A) $7.00.

B) $8.50.

C) $11.50.

D) $7.50.

E) $25.00.

149) Ship Co. produces storage crates that require 1.2 meters of material at $.85 per meter and 0.1 direct labor hours at $15.00 per hour. Overhead is applied at the rate of $9 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card?

A) $25.02.

B) $11.52.

C) $2.40.

D) $2.52.

E) $3.42.

150) Presented below are terms preceded by letters a through j and followed by a list of definitions 1 through 10. Enter the letter of the term with the definition, using the space preceding the definition.

(a) Cost variance

(b) Volume variance

(c) Price variance

(d) Quantity variance

(e) Standard costs

(f) Controllable variance

(g) Fixed budget

(h) Flexible budget

(i) Variance analysis

(j) Management by exception

________ (1) Occurs when the company operates at a different capacity level than was predicted.

________ (2) A planning budget based on a single predicted amount of sales or other activity measure.

________ (3) Preset costs for delivering a product, or service under normal conditions.

________ (4) A process of examining differences between actual and budgeted sales or costs and describing them in terms of the price and quantity differences.

________ (5) The difference between actual price per unit of input and standard price per unit of input.

________ (6) A budget prepared based on several different amounts of sales, often including a best-case and worst-case scenario.

________ (7) The difference between actual quantity of input used and standard quantity of input used.

________ (8) The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget.

________ (9) A management process to focus on significant differences between actual costs and standard costs.

________ (10) The difference between actual and standard cost.

151) Presented below are terms preceded by letters a through h and followed by a list of definitions 1 through 8. Enter the letter of the term with the definition, using the space preceding the definition.

(a) Unfavorable variance

(b) Fixed budget performance report

(c) Overhead cost variance

(d) Efficiency variance

(e) Spending variance

(f) Flexible budget performance report

(g) Quantity variance

(h) Favorable variance

________(1) Results from a comparison of actual cost or revenue to budget that contributes to a lower income.

________(2) A report that compares actual results with the results expected under a fixed budget.

________(3) When management pays an amount different from the standard price to acquire an item.

________(4) Results from a comparison of actual cost or revenue to budget that contributes to higher income.

________(5) Difference in variable overhead when the standard allocation base expected for actual production differs from the actual allocation base.

________(6) Difference between actual quantity of an input and the standard quantity of the input.

________(7) Difference between the total overhead cost applied to products and the total overhead cost actually incurred.

________(8) A report that compares actual performance and budgeted performance based on actual sales volume or other activity level.

152) Define standard costs. How do they assist management?

153) Explain variance analysis. Describe how variance analysis assists managers.

154) What are the four steps in the effective management of variance analysis?

155) Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain.

156) Briefly describe management by exception.

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

158) Explain how favorable and unfavorable variances impact income.

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

160) What are sales variances? How are they used?

161) Wren Company determined that in the production of their products last period; they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?

162) What are some causes of direct labor rate and efficiency variances?

163) What is the overhead volume variance? What would be the cause of a favorable volume variance?

164) When using a standard cost accounting system, how are unfavorable variances recorded? How are favorable variances recorded?

165) Joseph, Inc., provides the following results of June's operations:

Required:

(a) Determine the total overhead cost variance for June.

(b) Applying the management by exception approach, which of the variances shown are of greatest concern? Why?

166) Oxford Co. produces and sells two lines of t-shirts, Classic and Mod. Oxford provides the following data. Compute the sales price and the sales volume variances for each product.

167) A company's flexible budget for 60,000 units of production showed sales of $96,000, variable costs of $36,000, and fixed costs of $26,000. What operating income would be expected if the company produces and sells 70,000 units?

168) A company's flexible budget for 30,000 units of production showed sales of $90,000, variable costs of $36,000, and fixed costs of $23,000. Prepare a flexible budget for 25,000 units assuming it is within the same relevant range of production.

169) Based on predicted production of 25,000 units, FreshCo. anticipates $175,000 of fixed costs and $137,500 of variable costs. What are the flexible budget amounts of total costs for 20,000 and 30,000 units?

170) Based on predicted production of 25,000 units, Marvel Mix Co. anticipates $175,000 of variable costs and $137,500 of fixed costs. What are the flexible budget amounts of total costs for 28,000 units?

171) Anniston Co. planned to produce and sell 40,000 units. At that volume level, variable costs are determined to be $320,000 and fixed costs are $30,000. The planned selling price is $10 per unit. Anniston actually produced and sold 42,000 units.

Using a contribution margin format:

(a) Prepare a fixed budget income statement for the planned level of sales and production.

(b) Prepare a flexible budget income statement for the actual level of sales and production.

172) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units.

Using a contribution margin format:

Prepare a fixed budget income statement for the planned level of sales and production.

173) Clevenger Co. planned to produce and sell 30,000 units with a selling price of $10 per unit. Variable costs are expected to be $4 per unit and fixed costs are expected to be $80,000. Clevenger actually produced and sold 37,000 units.

Using a contribution margin format:

Prepare a flexible budget income statement for the actual level of sales and production.

174) 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?

175) Engineworks Co. provides the following fixed budget data for the year:

Required:

Prepare a flexible budget performance report for the year using the contribution margin format.

176) Zip-up Company provides the following data developed for its master budget:

Required:

Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

177) Jake Co. has prepared the following fixed budget for the year, assuming production and sales of 30,000 units. This level of production represents 80% of capacity.

Calculate the following flexible budget amounts at the indicated levels of capacity:

178) Whidbey Co. fixed budget for the year is shown below:

Prepare a flexible budget for Whidbey Co. that shows a detailed budget for its actual sales volume of 42,000 units. Use the contribution margin format.

179) Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials price variance.

180) Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials quantity variance.

181) Job #411 was budgeted to require 3.5 hours of labor at $11.00 per hour. However, it was completed in 3 hours by a person who worked for $14.00 per hour. What is the total labor cost variance for Job #4115?

182) LJ Co. produces picture frames. It takes 3 hours of direct labor to produce a frame. LJ's standard labor cost is $11.00 per hour. During March, LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920. What is LJ's labor rate variance for March?

183) In producing 700 units of product last period, Azure Company used 5,000 pounds of Material K, costing $34,250. The company has established the standard of using 7.2 pounds of Material K per unit of product, at a price of $7.50 per pound. Calculate the materials price and quantity variances associated with producing the 700 units, and indicate whether they are favorable or unfavorable:

184) Use the following cost information to calculate the direct labor rate and efficiency variances and indicate whether they are favorable or unfavorable.

185) 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.

186) Ransom, Inc. budgets direct materials cost at $1.10/liter and each product requires 4 liters per unit of finished product. April's activities show usage of 832 liters to complete 196 units at a cost of $798.72. Compute the direct materials price and quantity variances. Indicate if the variance is favorable or unfavorable.

187) Lionaire, Inc. has developed the following standard cost data based on 60,000 direct labor hours, which is 75% of capacity.

During the last period, the company operated at 80% of capacity and produced 128,000 units. Actual costs were:

Determine the direct materials price and quantity variances and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

188) 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

189) Linx Company's output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275, what was the total actual cost of direct labor incurred during the period?

190) Tiger, Inc. budgeted the following overhead costs for the current year assuming operations at 80% of capacity, or 40,000 units:

The standard cost per unit when operating at this same 80% capacity level is:

The actual production achieved in the current year was 60% of capacity, or 30,000 units. The actual costs were:

Calculate the following variances and indicate whether each is favorable or unfavorable.

191) Beluga Corp. has developed standard costs based on a predicted operating level of 352,000 units of production, which is 80% of capacity. Variable overhead is $281,600 at this level of activity, or $0.80 per unit. Fixed overhead is $440,000. The standard costs per unit are:

Beluga actually produced 330,000 units at 75% of capacity and actual costs for the period were:

Calculate the following variances and indicate whether each variance is favorable or unfavorable:

(1) Direct labor efficiency variance: $________

(2) Direct materials price variance: $________

(3) Controllable overhead variance: $________

192) The following information comes from the records of Barney Co. for the current period.

a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable.

b. Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

193) The following information comes from the flexible budget performance report of Jackal Corp. for the current period. Prepare the journal entries to charge direct materials and direct labor costs to work in process and the materials and labor variances to their proper accounts.

194) The following information comes from the records of Magno Co. for the current period.

a. Compute the overhead controllable and volume variances. In each case, state whether the variance is favorable or unfavorable.

b. Prepare the journal entries to charge overhead costs to work in process and the overhead variances to their proper accounts.

Factory overhead (based on budgeted production of 24,500 units)

Variable overhead $2.25/direct labor hour

Fixed overhead $1.95/direct labor hour

195) If Mercury Company's actual overhead incurred during a period was $32,700 and the company reported a favorable overhead controllable variance of $1,200 and an unfavorable overhead volume variance of $900, how much standard overhead cost was assigned to the products produced during the period?

196) A company's flexible budget for 36,000 units of production showed variable overhead costs of $54,000 and fixed overhead costs of $50,000. The company actually incurred total overhead costs of $95,300 while operating at a volume of 32,000 units. What is the controllable variance?

197) 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)

198) Selected information from Richards Company's flexible budget is presented below:

Richards Company applies overhead to production at a rate of $31.25 per unit based on a normal operating level of 80% of capacity. For the current period, Richards Company produced 5,400 units and incurred $62,000 of fixed overhead costs and $96,000 of variable overhead costs. The company used 11,000 labor hours to produce the 5,400 units. Calculate the variable overhead spending and efficiency variances, and the fixed overhead spending and volume variances. Indicate whether each variance is favorable or unfavorable.

199) Hatter, Inc. allocates fixed overhead at a rate of $17 per direct labor hour. This amount is based on 90% of capacity or 3,600 direct labor hours for 6,000 units. During July, Hatter produced 5,500 units. Budgeted fixed overhead is $66,000, and overhead incurred was $67,000.

Required: Determine the volume variance for July.

200) 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.

201) Naches Co. assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at the standard $8 per hour rate. The direct labor rate variance for the month was $200 favorable and the direct labor efficiency variance was $150 favorable. Prepare the journal entry to charge Work in Process Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor variances. Assuming that the direct labor variances are immaterial, prepare the journal entry that Naches would make to close the variance accounts.

202) Firenze Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes of 22,000 and 24,000.

203) 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.

204) Gala Enterprises reports the following information regarding the production on one of its products for the month. Compute the total direct labor cost variance, the direct labor rate variance, the direct labor efficiency variance and identify each as either favorable or unfavorable.

205) Gala Enterprises collected the following data regarding production of one of its products. Compute the variable overhead cost variance, the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead cost variance, the fixed overhead spending variance, and the fixed overhead volume variance.

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

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

208) 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.

209) Differences between actual costs and standard costs are known as ________. These differences may be subdivided into ________ and ________.

210) Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called ________ and ________ variances.

211) In the analysis of variances, management commonly focuses on four categories of production costs: ________ cost, ________ cost; ________ cost; and ________ cost.

212) A management approach that focuses attention on significant differences from plans and gives less attention to areas where performance is reasonably close to standards is known as ________.

213) A fixed budget is also called a ________ budget.

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

215) A flexible budget is also called a ________ budget.

216) A ________ contains relevant information that compares actual results to planned activities.

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

218) The difference between the flexible budget sales and the fixed budget sales is called the ________ variance.

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

220) If actual price per unit of materials is greater than the standard price per unit of materials, the direct materials price variance is ________.

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

222) The sum of the variable overhead spending variance, the variable overhead efficiency variance, the fixed overhead spending variance is the ________.

223) The fixed overhead variance can be broken down into the ________ variance and the ________ variance.

224) At the end of the accounting period, immaterial variances are closed to ________.