Answer the questions below.

1.Budgeting involves ________.

1. establishing specific goals
2. executing plans to achieve the goals
3. periodically comparing actual results with the goals
4. All of these choices are correct.

2.Budgeting affects all of the following managerial functions except ________.

1. planning
2. directing
3. controlling
4. None of these choices are correct.

Answer the questions below.

1.The differences between actual and standard costs are called __________ variances.

1. cost
2. profit
3. quantity
4. volume

2.A favorable cost variance results when, choose the best option below.

1. actual cost is greater than standard cost at actual volumes.
2. actual cost is less than standard cost at actual volumes.
3. actual cost is equal to standard cost at actual volumes.
4. actual cost is greater than standard cost at budgeted volumes.

StandardProduct Cost, Direct Materials Variance

Condiments Company uses standards to control its materials costs. Assume that a batch of ketchup (2,900 pounds) has the following standards:

Standard Quantity Standard Price

Whole tomatoes 4,800lbs. $ 0.36per lb.

Vinegar 270gal. $ 2.20per gal.

Corn syrup 23gal. $ 8.00per gal.

Salt 108lbs. $ 2.00per lb.

The actual materials in a batch may vary from the standard due to tomato characteristics. Assume that the actual quantities of materials for batch K-111 were as follows:

5,000 lbs. of tomatoes

259 gal. of vinegar

24 gal. of corn syrup

107 lbs. of salt

a.Determine the standard unit materials cost per pound for a standard batch. If required, round amounts to the nearest cent.

Ingredient Standard Cost per Batch

Whole tomatoes $ ___________________

Vinegar $ ___________________

Corn syrup $ ___________________

Salt $ ___________________

Total $ ___________________

Standard unit materials cost per pound $ ___________________

b.Determine thedirect materials quantity variancefor batch K-111. If required, round amounts to the nearest cent. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Ingredient Materials Quantity Variance Favorable/Unfavorable

Whole tomatoes $___________________ ___________________

Vinegar $___________________ ___________________

Corn syrup $___________________ ____________________

Salt $___________________ ____________________

Total direct materials quantity variance

$____________________ _____________________

Direct Labor Variances

The following data relate to labor cost for production of 3,800 cellular telephones:

Actual: 2,540 hrs. at $13.9

Standard: 2,500 hrs. at $14.1

a.Determine the direct laborrate variance, direct labortime variance, and total direct laborcost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Rate variance $_____________________ __________________________ FAVORABLE/UNFAVORABLE

Time variance $_____________________ __________________________FAVORABLE/UNFAVORABLE

Total direct labor cost variance $ _________________________ ________________________FAVORABLE/UNFAVORABLE

b.The employees may have been less-experienced or poorly trained, thereby resulting in a_________________ (higher or lower)

labor rate than planned. The lower level of experience or training may have resulted in_______________ (more or less)

efficient performance. Thus, the actual time required was_______________ (more or less)

than standard.