Quiz 9: Variance Analysis | Quizlet

Which one of the following statements is correct concerning a flexible budget cost formula?
Variable costs are stated:

A. Per-unit and fixed costs are stated in total.

Blaster, Inc., a manufacturer of portable radios, purchases the components from subcontractors to use to assemble into a complete radio. Each radio requires three units each of Part XBEZ52, which has a standard cost of $1.45 per unit. During May 20X1, Blaster experienced the following with respect to part XBEZ52.

	Units
Purchases ($18,000)	12,000
Consumed in manufacturing	10,000
Radios manufactured	3,000

During May 20X1, Blaster Inc. incurred a material efficiency variance of:

A. $1,450 unfavorable.

Use of a standard cost system can include all of the following advantages except that it:

B. Emphasizes qualitative characteristics.

A company has a raw material price variance that is unfavorable. An analysis of this variance indicates that the company's only available supplier of one of its raw materials unexpectedly raised the price of the material. The action management should take regarding this situation should be to:

C. Change the raw material price standard.

A company has a fixed overhead volume variance that is $10,000 unfavorable. The most likely cause for this variance is:

D. Less was produced than planned.

A major disadvantage of a static budget is that:

It is made for only one level of activity.

Under a standard cost system, labor price variances are usually not attributable to:

A. Union contracts approved before the budgeting cycle.

An unfavorable direct labor efficiency variance could be caused by a(n):

B. Unfavorable material usage variance.

Each of the following statements is correct regarding overhead variances except:

B. The efficiency overhead variance ignores the standard variable overhead rate.

A manager receives automated notices of both favorable and unfavorable variations from the budget. Which of the following methods is the manager using?

D. Management by exception

Randall Company uses standard costing and flexible budgeting and is evaluating its direct labor. The total budget variance can usually be broken down into two other variances identified as the:

A. Direct labor rate variance and direct labor efficiency variance.

Norwood Corporation produces a single product. The standard costs for one unit of its Bedford product are as follows:

Direct materials (6 pounds at $0.50 per pound)	3
Direct labor (2 hours at $10 per hour)	20
Variable manufacturing overhead (2 hours at $5 per hour)	10
Total	33

During October Year 2, 4,000 units of Bedford were produced. The costs associated with October operations were as follows:

Material purchased (36,000 pounds at $0.60 per pound)	21,600
Material used in production (28,000 pounds)
Direct labor (8,200 hours at $9.75 per hour)	79,950
Variable manufacturing overhead incurred	41,820

What is the variable overhead spending variance for Bedford for October Year 2?

B. $820 unfavorable.