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Exam 13: Budgeting and Standard Cost Systems

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Question 31

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Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: $\begin{array}{ll}\$ 2.50 & \text { Actual price per kilogram } \\31,000 & \text { Actual lilograms of material used } \\\$ 18.10 & \text { Actual hourly labor rate } \\4.900 \text { lahor hrs } & \text { Actual hmurs of morhuction }\\\$ 2.80 & \text { Standard price per kilogram } \\6 \text { kilograms } & \text { Standard kilograms per completed urit } \\\$ 18.00 & \text { Standard hourly labor rate } \\1 \text { hr. } & \text { Standard time per completed urit } \\\$ 34,900 & \text { Actual total factory overhead }\\\$ 18,000 & \text { Actual fixed factory overhead } \\\$ 1.20 \text { per labor hour } & \text { Standard fixed factory overhead rate } \\\$ 3.80 \text { per labor hour } & \text { Standard variable factory overhead rat } \\15,000 \text { hours } & \text { Maximum plant capacity } \\5,000 & \text { Units completed churing the period }\end{array}$ Refer to the information provided for Frogue Company. The variable factory overhead controllable variance is:

A) $6,000 favorable.
B) $2,100 favorable.
C) $2,100 unfavorable.
D) $6,000 unfavorable.

E) B) and C)
F) None of the above

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Question 32

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Based on the following production and sales data of Jackson Co. for March of the current year, prepare (a) a sales budget and (b) a production budget. $\begin{array}{lll} \underline{\text { Product X}} & \underline{\text { Product T }}\\18,000 \text { units } &{26,000 \text { units }} & \text { Estimated inventory, March 1} \\15,000\text { units }& 32,000 \text { units } & \text { Desired inventory, March 31 }\\&&\text { Expected sales volume: }\\260,000 \text { units } & 320,000 \text { units } & \text { Area I } \\130,000 \text { units } & 190,000 \text { units } & \text { Area II } \\\$ 12 & \$ 4 & \text { Unit sales price }\end{array}$

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Question 33

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The cash budget presents the expected inflow and outflow of cash for a specified period of time.

Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: $\begin{array}{ll}33.00 & \text { Actual price per kilogram } \\11,000 & \text { Actual kilograms of material used } \\\$ 18.20 & \text { Actual hourly labor rate } \\4,900 \text { labor hours } & \text { Actual hours of prochuction }\\\$ 2.80 & \text { Standard price per kilogram } \\6 \text { kilograms } & \text { Standard kilograms per completed urit } \\\$ 18.00 & \text { Standard hourly labor rate } \\1 \text { hr. } & \text { Standard time per completed urit } \\\$ 34,900 & \text { Actual total factory overhead } \\\$ 18,000 & \text { Actual Fixed factory overhead }\\\$ 1.20 \text { per labor hour } & \text { Standard fixed factory overhead rate } \\\$ 3.80 \text { per labor hour } & \text { Standard variable factory overhead rate } \\15,000 \text { hours } & \text { Maximum plant capacity } \\5,000 & \text { Units completed chringthe period }\end{array}$ The direct labor cost variance is:

Below is budgeted production and sales information for Cooper Cans, Inc. for the month of March: $\begin{array}{lll}\text { Tin }& \text { Aluminum }\\4,000 \text { units } & 10,000 \text { units } & \text { Estimated beginning inventory } \\3,000 \text { units } & 14,000 \text { units } & \text { Desired ending inventory } \\80,000 \text { units } & 360,000 \text { units } & \text { Region I, anticipated sales } \\20,000 \text { units } & 120,000 \text { units } & \text { Region II, anticipated sales }\end{array}$ The unit selling price for aluminum cans is $0.10 and for tin cans is $0.15. Refer to the information provided for Cooper Cans Inc. Budgeted production for tin cans during the month is:

The formula to compute direct materials price variance is:

If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the rate variance was $1,200 favorable.

A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future is called continuous budgeting.

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

The following data relate to direct labor costs for the current period: $\begin{array}{lrr} \text { 9,000 hours at \$ 5.50 } &\text {Standard costs}\\ \text {8.750 hours at \( \$ 5.25 \) } & \text {Actual costs}\\\end{array}$ What is the direct labor rate variance?

A formal written statement of management's plans for the future, expressed in financial terms, is called a budget.

For which of the following reasons, management accountants usually provide for a minimum cash balance in their cash budgets?

The first budget to be prepared is usually the production budget.

The most effective means of presenting standard factory overhead cost variance data is through a factory overhead cost variance report.

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the:

Below is budgeted production and sales information for Cooper Cans, Inc. for the month of March: $\begin{array}{lll}\text { Tin }& \text { Aluminum }\\4,000 \text { units } & 10,000 \text { units } & \text { Estimated beginning inventory } \\3,000 \text { units } & 14,000 \text { units } & \text { Desired ending inventory } \\80,000 \text { units } & 360,000 \text { units } & \text { Region I, anticipated sales } \\20,000 \text { units } & 120,000 \text { units } & \text { Region II, anticipated sales }\end{array}$ The unit selling price for aluminum cans is $0.10 and for tin cans is $0.15. Refer to the information provided for Cooper Cans Inc. Budgeted sales for the month are:

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: $\begin{array}{ll}\text { StandardCosts } \\7,500 \text { hours } \$ 12 & \text { Directlabor } \\\\\text { Actual Costs } \\7,400 \text { hours } \$ 11.40 & \text { Direct labor }\end{array}$ The amount of the direct labor rate variance is:

The following data is given for the Walker Company: $\begin{array}{ll}1,000 \text { units } & \text { Budgeted prochuction } \\980 \text { units } & \text { Actual production }\\\$2.00& \text { Stendard price per Ib } &\\12& \text { Standard pounds per completed unit } &\\11,800& \text {Actual pounds purchased and used in production } &\\\$23,000& \text { Actual price paid for materials } &\\& \text {Labor: } \\\$ 14 \text { per hour } & \text { Standard hourly labor rate } \\4.5 & \text { Standard hours allowed per completed unit } \\4,560 & \text { Actual labor hours worked } \\\$ 62.928 & \text { Actual total labor costs }\\& \text { Overhead: } \\ \$ 27,000 & \text { Actual and budgeted fixed overhead } \\\$ 3.50 \text { per standard direct labor hour }& \text { Standard variable overhe ad rate }\\\$ 15.500&\text { Actual variable overhead costs }\end{array}$ Overhead is applied on standard labor hours. The variable factory overhead controllable variance is:

Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. Refer to the information provided for Benjamin Corporation. The cash collections from accounts receivable in October are:

Production and sales estimates for June are as follows: $\begin{array}{ll}18,500& \text { Estimated inventory (units) , June 1}\\19,000&\text {Desired inventory (unit) , June 30 }\\&\text {Expected sales volume (units) :}\\3,000 & \text { Area X } \\4,000 & \text { AreaY } \\5,500 & \text { Area Z } \\\$ 20 & \text { Unit sales price }\end{array}$ The number of units expected to be manufactured in June is: