Exam 12: Evaluating and Improving Entity Performance

Abrasive Brothers, Inc., manufactures brake pads for automobiles. For April 2017, the company's static budget projected 5,000 units would be produced and sold at a variable cost of $6 per unit and total fixed costs of $12,000. The budgeted selling price was $18 per unit. Actual results for April were somewhat disappointing in that the company produced and sold only 4,200 units at an actual price of $17.50 per unit. -The actual cost of goods sold for April amounted to $39,800. What would be the most meaningful variance to report for cost of goods sold for April?

Abrasive Brothers, Inc., manufactures brake pads for automobiles. For April 2017, the company's static budget projected 5,000 units would be produced and sold at a variable cost of $6 per unit and total fixed costs of $12,000. The budgeted selling price was $18 per unit. Actual results for April were somewhat disappointing in that the company produced and sold only 4,200 units at an actual price of $17.50 per unit. -What would be the amount of cost of goods sold that would be included in a flexible budget for April 2017?

A motivational tool used not to enhance performance, but to discourage poor performance is termed:

A profit variance disaggregated by income statement line item is of limited value in a responsibility accounting system because: