accounting chapter 10

Khan Corporation has budgeted the unit sales for April to be 5,000 units. The sales price is $25 per unit, and production costs are $10 per unit. Monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. The company pays a monthly rent of $2,000. What is the net operating income in the company's planning budget?

$49.000

Variable Overhead Efficiency Variance

$525 unfavorable

commision expense budgeted to be 16000 at a

11600 favorable flexible busget expense 16000/4000

the planning budget calls for total variable cost for supplies to be $6250 based on 1000 units with planned revenue at $24000. A total of 1200 units were actually produced and sold. What amount should appear on the flexible busget

28,800 revenue 24,000/1,000=24$ per unit x 1,200= 28,800 also 7,500 for supplies 6,250/1000=6.25 per unit x 1200 = 7500

a company's cost of suppliers for when 5000 units are sold is $7500 of fixed costs plus $1.25 variable cost per unit. What is the increase in the total cost of supplies if 350 more units are sold that expected.

350*1.25 =437.50

comparing the static planning budget to actual results only make sense when:

all costs are fixed -the actual activity level is the same as the budgets activity level.

standard costs may

be used to compute both flexible activity and spending variances

reverence variance

differnece between how much revenie should have biin

the percentage change in net income in the flexible budget is greater that the percentage change in activity due to

fixed

which of the following is true

fixed cost areoften more controllable than variable cost

if management plans the budget based on 40 hours of operations and weather causes the business to be opened for only 32, what needs to be adjusted on the flexible budget?

hourly wages

direct material standards

should be based on input from production and purchasing managers are based on standard price and quantity

estimates of what revenues and costs should have been based on the actual level of activity are the ______ budget

flexible flexible budget is an estimate of what revenue and costs should have been for an actual level of activity.

revenue and spending variances

subtract fleixble budget form actual results

activity variance

subtract planning budget from flexible

a performance report shows that the plannes revenue was 200000 and the flexible budget revenue was 225000 and the actual revenue was 223000. which of the following statements are true?

the revenue variance is 2000 unfavorable (the revenue variance is the difference between the flexible budget and actual results) the activity variance is 25000 favorable (the activity variance is the differences between the planning budget and the flexible budget.)

if the actual cost is greater that what the cost should have been, the variance is labeled as...

unfavorable

when the standard purchase price is less that the actual price

unfavorable

the variance overhead ___-_efficiency variance measures actively differences and the

variance overhead rate variance measures cost differences.

the flexible budget performance report consist of

-activity variance for net operating income (favorable -and the overall -revenue for spending variance for net operating income -the planning budget, flexible budget and actual results

comparing actual costs to what the cost should have been for the actual level of activity is done on a _____budget

flexible

A planning budget is prepared to determine the costs that should have been incurred for the actual level of activity during the period.

false

Jewels by Jay's planing busget showed $50000 wages ans salaries expense based on a=2000 units and a

10000+1800*20=46000 and favorable

labor rate variance is AH (AR-SR)

4125 unfavorable

The standard price of materials is $4.10 per pound and the standard quantity allowed for actual output 5,800 pounds. If the actual quantity purchased and used was 6,000 pounds, and the actual price per pound was $4.00, the direct materials price variance is:

600 F(6,000x(4.00-4.10)=$600)

If the activity level for the month is $4000 units, actual revenue is $6000, actual variable costs are $.20 unit, and actual fixed costs total $500, which of the following are true?

6000-(4000*.20)-500=4700 net income

Paradise Company's planning budget for 10,000 units showed sales of $500,000. The flexible budget for 12,000 units showed sales of $600,000. What is the variance of $100,000 called if this variance was due only to an increase in unit sales?

Activity variance

Performance reports are often prepared for organizations t

Do NOT have any source of outside revenue

activity variance

The difference between a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity variance is due solely to the difference between the actual level of activity used in the flexible budget and the level of activity assumed in the planning budget.

common errors is in preparimg performane reports

The most common errors in preparing performance reports are to implicitly assume that all costs are fixed or to implicitly assume that all costs are variable.

a flexible budget performance report combines the

activity variancs with the revereue and spending variances

a company's net operating income activity variance is favoirable while the revenue and spending variance for net operating income is unfavorable.

activity was greater than expected but the profit was not as large as it should have been for the actual level of activity

difference between the actual level of activity and the level of activity in the planning budget from the beginning of the period, they are called activity variances.

activuty

when calculating the labor rate variance ___

actual compared to the standard labor rate

the standard quantity allowed for production equals:

actual output x standard quantity

unvaforable variance

actual revenue is less that budgeted revenue

favorable

actual revenue is more than budgeted revenue