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