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Chapter 21: Flexible Budgets and Standard Costs

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Financial & Managerial Accounting
Pages: 936 - 985

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87 Questions for Chapter 21: Flexible Budgets and Standard Costs

  1. Refer to Exercise 21-13. Hart Company records standard costs in its accounts and its materials variances in separate accounts when it assigns materials costs to the Work in Process Inventory account.

    Found on Page 973
  2. After evaluating Null Company’s manufacturing process, management decides to establish standards of 3 hours of direct labor per unit of product and $15 per hour for the labor rate. During October, the company uses 16,250 hours of direct labor at a $247,000 total cost to produce 5,600 units of product. In November, the company uses 22,000 hours of direct labor at a $335,500 total cost to produce 6,000 units of product.

    Found on Page 973
  3. Sedona Company set the following standard costs for one unit of its product for 2017.

    Found on Page 973
  4. Refer to the information from Exercise 21-17. Compute and interpret the following.

    Found on Page 974
  5. World Company expects to operate at 80% of its productive capacity of 50,000 units per month. At this planned level, the company expects to use 25,000 standard hours of direct labor. Overhead is allocated to products using a predetermined standard rate of 0.625 direct labor hours per unit. At the 80% capacity level, the total budgeted cost includes $50,000 fixed overhead cost and $275,000 variable overhead cost. In the current month, the company incurred $305,000 actual overhead and 22,000 actual labor hours while producing 35,000 units.

    Found on Page 974
  6. Tohono Company’s 2017 master budget included the following fixed budget report. It is based on an expected production and sales volume of 20,000 units.

    Found on Page 979
  7. Refer to the information in Problem 21-1B. Tohono Company’s actual income statement for 2017 follows.

    Found on Page 980
  8. What is the predetermined standard overhead rate? How is it computed?

    Found on Page 967
  9. Refer to the information in Exercise 21-8 and compute the (1) direct labor rate and (2) direct labor efficiency variances. Indicate whether each variance is favorable or unfavorable.

    Found on Page 972
  10. Juan Company’s output for the current period was assigned a $150,000 standard direct materials cost. The direct materials variances included a $12,000 favorable price variance and a $2,000 favorable quantity variance. What is the actual total direct materials cost for the current period?

    Found on Page 969

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