Study Guide Managerial Accounting 2

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

capital expenditures budget

When preparing the cash budget, all the following should be considered except

Depreciation Expense

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory.

False

The sales budget is the starting point for preparation of the direct labor cost budget.

False

Jase Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show

variable costs of $52,800 and $24,000 of fixed costs

If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a

time variance

The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as follows: Standard Costs Direct labor7,500 hours @ $11.80 Actual Costs Direct labor7,400 hours @ $11.40 ​ The direct labor time variance is

$1,180 favorable

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are Standard Costs Direct materials (per completed unit)1,040 kilograms at $8.75 Actual Costs Direct materials2,000 kilograms at $8.00 ​ The amount of direct materials price variance is

$1,500 favorable variance

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business—September, October, and November—are $260,000, $375,000, and $400,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. ​ The cash collections expected in September from accounts receivable are estimated to be

$145,600

The following data relate to direct labor costs for the current period: Standard costs9,000 hours at $5.50Actual costs8,500 hours at $5.75 What is the direct labor rate variance?

$2,125 unfavorable

The following data relate to direct labor costs for the current period: Standard costs 36,000 hours at $22.00Actual costs 35,000 hours at $23.00 What is the direct labor time variance?

$22,000 favorable

The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00Actual costs 7,500 hours at $11.40 ​ What is the direct labor rate variance?

$4,500 favorable

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are Standard Costs Direct materials2,500 kilograms @ $8.50 Actual Costs Direct materials2,600 kilograms @ $8.75 ​​ The amount of the direct materials quantity variance is

$850 unfavorable variance

The formula to compute the direct material quantity variance is to calculate the difference between

(Actual quantity × Standard price) - Standard costs

Production and sales estimates for April are as follows: Estimated inventory (units), April 19,000 Desired inventory (units), April 30 18,000 Expected sales volume (units): Area A 3,000 Area B 4,750 Area C 4,250 Unit sales price $20 ​ ​ The number of units expected to be manufactured in April is

11,000

Production estimates for August are as follows: Estimated inventory (units), August 1 12,000 Desired inventory (units), August 31 9,000 Expected sales volume (units), August 75,000 ​ For each unit produced, the direct materials requirements are as follows: Material A ($5 per lb.) 3 lbs. Material B ($18 per lb.) 1/2 lb. ​ ​ The number of pounds of Materials A and B required for August production is

216,000 lbs. of A; 36,000 lbs. of B

Production estimates for July are as follows: Estimated inventory (units), July 1 8,500 Desired inventory (units), July 31 10,500 Expected sales volume (units), July 76,000 For each unit produced, the direct materials requirements are as follows: Direct material A ($5 per lb.) 3 lbs. Direct material B ($18 per lb.) 1/2 lb. ​ ​ The number of pounds of materials A and B required for July production is

234,000 lbs. of A; 39,000 lbs. of B

Which of the following conditions normally would not indicate that standard costs should be revised?

Actual costs differed from standard costs for the preceding week.

The operating budgets of a company includes the

Production Budget

A favorable cost variance occurs when the actual cost is less than the budgeted cost at actual volumes.

True

Financial reporting systems that are guided by the principle of exceptions concept focus attention on variances from standard costs.

True

Supervisor salaries, maintenance, and indirect factory wages would normally appear in the factory overhead cost budget.

True

The budgeted volume of production is based on the sum of (1) the expected sales volume and (2) the desired ending inventory, less (3) the estimated beginning inventory.

True

The total manufacturing cost variance consists of

direct materials cost variance, direct labor cost variance, and factory overhead cost variance

The standard price and quantity of direct materials are separated because

direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department

The budget process involves doing all of the following except

dismissing all managers who fail to achieve operational goals specified in the budget

A series of budgets for varying rates of activity is termed a(n)

flexible budget

The first budget customarily prepared as part of an entity's master budget is the

sales budget

A favorable cost variance occurs when

standard costs are more than actual costs