Ch 9. Accounting
If the planned budget revenue for 5,000 units is $120,000, what is the flexible budget revenue if the actual activity is 4,500 units?
$108,000 120,000/5,000 = $24 per unit $24 x 4,500 = 108,000
If the actual level for the month is 4,000 units, actual revenue at $6,000, actual variable costs are $.20 unit, and actual fixed costs total $500, which of the following is true
$4,700 net income $1,300 in total cost [$6,000-(4,000x$.20)-500]
A company's cost of supplies for when 5,000 units are sold is $7,500 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 than expected?
$437.50. Fixed cost remain the same (350x1.25=$437.50)
The standard price of materials is $3.50 per pound and the standard quantity allowed for actual output is 7,000 pounds. If the actual quantity purchased and used was 6,700 pounds and the actual price per pound was $3.40, the direct materials price variance is $____, ____
$670, favorable 6,700 x (3.40-3.50)
The spending variance is _____
(AQ x AP) - (SQ x SP)
The spending variance is labeled as favorable when the ____.
actual cost is less than what the cost should have been at the actual level of activity
The price variance is the difference between the _____
actual price and the standard price multiplied by the actual amount of the input
The materials price variance is the difference between the actual price of materials _____
and the standard price for materials with the difference multiplied by the actual quantity of materials
A quantity variance is _____
calculated using the standard price of the input
The materials price variance is calculated using the
standard price of input actual quantity of the input purchased actual price of the input
The amount of an input that should have been used to complete the period's actual output
standard quantity allowed
When the standard hourly rate is lower than the actual rate, the labor rate variance is ______.
unfavorable
when the standard purchase price is less than the actual price, the material price variance is __.
unfavorable
How much input should be used to produce a product provide a service in a(n) _____standard
Quantity
The difference between actual materials used in production and a standard amount allowed for the actual output is reflected in the materials _____ variance
Quantity
An unfavorable materials quantity variance occurs when
the actual amount of material used is greater than the standard amount of material allowed for the actual output
The standard rate per hour includes
-Employment taxes -Fringe benefits -Direct labor rate per hour
The materials price variance is _____
-generally the responsibility of the purchasing manager -impacted by the delivery method chosen -charged to the production manager when production problems occur
The materials price variance is generally calculated at the time materials are purchased because
-it allows materials to be carried in the inventory accounts at standard costs -Managment can generate more timely variance reports -it simplifies bookkeeping
Unfavorable labor rate variances may occur as a result of:
-overtime premiums being charged to the direct labor account. -skilled workers being assigned to jobs requiring little skill.
The variable overhead efficiency variance compares the ____ hours times the standard rate with the standard hours allowed for the actual output times the _____
Actual & standard
What is used to calculate the standard quantity per unit of direct materials
Direct materials requirements per u it of finished product, allowance for waste and spoilage
All materials variances are generally the responsibility of the production manager
Fajse
The standard hours or quantity allowed for an input is the amount of the input that should have been used to produce the standard output for the period
False
True or false: a favorable labor rate variance is always favorable for a company
False
When the standard price is higher than the actual price of the materials variance is ____
Favorable
Estimates of what revenue and cost should have been based on the actual level of activities are shown on the _____ budget
Flexible
What costs revenues should happen for the actual level of activity is shown on a(n) ____ budget
Flexible
The materials price variance is ___
Impacted by the delivery method chosen Charged to the production manager when production problems occur Generally the responsibility of the purchasing manager
When demand for a product is insufficient to keep all of the production workers busy and no layoffs occur an unfavorable _____, _____ variance may occur
Labor, efficiency
If managers consider it unwise to adjust the workforce in response to change in workload _____.
The direct labor workforce is really fixed in the short run
When the actual cost incurred exceeds the standard cost allowed for the actual level of output the spending variance is
Unfavorable
When the standard purchase price is less than the actual price paid for materials, the materials price variance is _____
Unfavorable
When the standard purchasing price is less than the actual price paid for materials, the material price variance is _____
Unfavorable
The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor ____ variance
efficiency
The difference between the standard and the actual direct labor hourly rates is reflected in the ____, ___ variance
labor & rate
SR(AH-SH) is the formula for the __ variance
labor efficiency
Variances are more accurate when using:
multiple cost drivers
If poor-quality materials results in excessive labor processing time, the _________ manager will probably be held responsible for the labor efficiency variance.
purchasing
The materials price variance is generally the responsibility of the ___ department manager
purchasing
SP(AQ-SQ) is the formula for the materials _____ variance.
quantity
A materials price variance is equivalent to a labor ____ variance and a materials quantity variance is equivalent to a labor ____ variance
rate and efficiency
Direct material standards:
- should be based on input from production and purchasing managers. - are based on standard price and quantity.
The standard hours per unit of an output includes _____
-the estimated time to complete the unit -an allowance for cleanup and downtime.
True or false: the standard hours per unit include both direct and indirect labor hours
False
Fancy Nail's monthly rent is $2,500. The company's static budget for March was based on the activity level of 2,000 manicures. Total sales was budgeted at $40,000 and nail technician wages (a variable cost based on the number of manicures) was budgeted at $20,000. Actual manicures in March totaled 2,200. Assuming no other expenses, Fancy Nails' flexible budget will show ______.
Sales of $44,000, net operating income of $19,500
How much should be paid for an input is indicated by a price ___
Standard
An unchanged planning budget is known as a(n) ____ planning budget
static
Excessive inventory on hand, especially on the work in process inventory account, may lead to ____.
- inefficient operations - obsolete goods - high defect rates
A spending variance is the ____
difference between what a cost should have been at the actual level of activity and the actual amount of the cost
a benchmark used in measuring performance is called a(n) __.
standard
the final, delivered price that should be paid for each unit of direct materials is the ______ price per unit of materials.
standard
The standard price of the material is used in the calculation of the material quantity variance because _____
using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager
The standard rate per unit that a company expects to pay for variable overhead equals the ____
variable portion of the predetermined overhead rate