11.Armstrong, Inc. uses a flexible budget. Armstrong produced 16,000 units in Ma
ID: 2596475 • Letter: 1
Question
11.Armstrong, Inc. uses a flexible budget. Armstrong produced 16,000 units in May incurring direct materials cost of $20,480. Its master budget for the year projected direct materials cost of $362,500, at a production volume of 290,000 units. A flexible budget for May should reflect direct materials cost of: A. $20,480. B. $20,000. C. $21,000. D. $19,750. -12. In establishing standard costs for labor, management must look at all of the following except A. Time allowed to produce each product. B. Direct labor requirements for each product. C. The wage rate of a direct laborer. D. The quantity of materials for each product. 13.If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @$0.12 per unit, then the materials quantity variance is: A. $2,850 Favorable. B. $1,575 Unfavorable. C. $1,275 Favorable. D. $2,850 Unfavorable. 14.If the standard quantity of materials is 84,500 units@ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit, then the materials price variance is: A. $2,850 Favorable. (95,000 x $0.12)-(95,000 x $0.15)- $2,850 F B. $1,575 Unfavorable. C. $1,275 Favorable. D. $2,850 Unfavorable. 15.There will be a favorable materials price variance if: A. The standard price per unit is less than the actual price per unit. B. The standard price per unit is greater than the actual price per unit. C. The actual quantity purchased is greater than expected. D. The actual quantity purchased is less than expected.Explanation / Answer
Solution 11 - Flexible Budget For Direct Material
Solution 12 - (d) Material Quantity is not required for setting Standard price of Labour since both Labour and Material are different cost objects hence Material Quantity is not Relevant for determinig Standard cost of Labour
Solution 13 - Calculation of Material Quantity Variance
Material Quantity Variance = (Standard Quantity - Actual Quantity)*standard Rate
(84500 units - 95000 units) * $0.15 per unit =
$1575 Unfavourable
Solution 14 - Material Price Variance
Material Price Variance = (Standard Price - Actual Price) * Actual Units
($0.15 - $0.12) * 84500 = $2850 Favourable
Solution 15 - (b) There will be Favourable Material Price Variance if 'Standard Price is More than Actual Price'
Reason = Suppose Standard price = $5
Actual Price = $4
Since Expected price was $5 but actual cost incurred is $4 hence The variance is Favourable.
Particulars Standard cost for Direct Material ($362500/290000) $1.25 per unit Actual Units 16000 units Flexible budget (16000 * $1.25) $20000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.