Exam 13: Management Accounting for Cost Control and Performance Evaluation Flexible Budgets and Variance Analysis

Taylor Products Inc.has an $8000 unfavourable flexible budget variance for October.If October's flexible budget net income was $175 000,which of the following statements is true?

Paw-Paw Products Paw-Paw Products produces and sells flannel covered dogbeds. In the current year, Paw-Paw had expected to sell 8000 beds but actually produced and sold 8500 beds. The following information is available regarding the standard cost to produc In the current year, 44 000 metres of material were purchased and used at a cost of $1.60 per metre and 365 500 direct labour minutes were incurred at a cost of $.23 per minute. -The company's direct labour rate variance for the current year was:

Drummel Ltd.has a $7000 unfavourable variable overhead efficiency variance.Give one possible reason for this variance.

Meow Products Ltd. Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post: Direct materials: 3 feet @1.75 per foot Direct labour: 15 minutes @\ .30 per minute In the current year, 38 000 feet of material were purchased out of which 35 000 feet were used at a cost of $1.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $.32 per minute. -The company's direct materials price variance for the current year was:

In most companies,machines break down occasionally and employees are often less than perfect.Which type of standard acknowledges these characteristics when determining the standard cost of a product?

Carlton Corporation Carlton Corporation produces and sells faux-leather handbags. In the current year, the company budgeted for the production and sale of 1000 handbags; however, 900 handbags were actually produced and sold. Each bag has a standard requiring 2 metres of material at a cost of $4.00 per metre and 1 hour of assembly time at a cost of $9.50 per hour. Actual costs for the production of 900 bags were $7215 for materials (1850 metres purchased and used @ $3.90 per metre) and $10 125 for labour (1125 hours @ $9.00 per hour). -Carlton's direct labour efficiency variance is:

Bayou Barbecue Inc.in the US bottles and sells barbecue sauce.In the current year,the company had expected to sell 500 000 bottles but actually bottled and sold 600 000 bottles.The standard direct materials cost for each bottle is $.36 comprised of 12 ounces of material at a cost of $.03 per ounce.During the year,7 800 000 ounces of material was purchased out of which 7 350 000 ounces were used at a cost of $.035 per ounce. Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U). A. Direct materials price variance B. Direct materials usage variance

Dabney Inc.has a favourable direct labour efficiency variance.Which of the following would be the most likely reason for this variance?

Hoppe Inc.manufactures widgets.Management has determined that each widget has a standard materials cost of $3.50 when 2.5 grams of raw material at a cost of $1.40 per gram are used.The static budget for the month of December showed an estimated production of 4000 widgets in December.During December,4300 widgets were actually produced.The actual cost for each widget was $3.60 when 2.25 grams of raw material at a cost of $1.60 per gram were purchased and used.What should be the total direct materials cost according to Hoppe's flexible budget for December?

Moreland Manufacturing Inc. US-based Moreland Manufacturing Inc. produces and sells stainless steel faucets. In the current year, the company had budgeted for the production and sale of 6000 faucets but, due to unexpected demand, 7000 faucets were actually produced and sold. Each faucet has a standard requiring 15 ounces of direct material at a cost of $.40 per ounce and 15 minutes of assembly time at a cost of $.20 per minute. Actual costs for the production of 7000 faucets were $41 359.50 for materials (106 050 ounces purchased and used @ $.39 per ounce) and $21 560 for labour (98 000 minutes @ $.22 per minute). -Moreland's direct materials price variance is:

Harkin Ltd.has a $5000 unfavourable variable overhead spending variance.Give two possible reasons for this variance.

In early 2009,Duncan Manufacturing Inc.had budgeted for the production and sale of 12 000 units at a sales price of $20 per unit.The following information is available regarding the standard cost for each unit: Direct materials: \ 4.00 (4 pounds at \ 1.00 per lb) Direct labour: \ 2.50(10 minutes of assembly at \ .25 per minute Actual results for 2009 were determined to be as follows: Number of units produced and sold: 11200 units Sales revenue: \ 235200 ( \2 1 per unit) Direct materials cost: \ 47840 (46 000 lbs purchased and used at \ 1.04 per lb Direct labour cost: \ 22000(110000 minutes at \ .20 per minute) Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U). A. Sales price variance B. Direct materials price variance C. Direct materials usage variance D. Direct labour rate variance E. Direct labour efficiency variance

A(n)___________ is attainable only when near-perfect conditions exist.

Trina makes handmade leis in Hawaii which she sells to local tourists.She anticipates August to be a busy month with the sale of 500 leis.She has prepared the following static budget for August: Sales revenue (500 units) \5 000 Variable costs: Direct materials 1000 Direct labour 1000 Overhead 375 Fixed costs Net income During August,Trina actually produced and sold 400 leis.What should be Trina's net income in August based on a flexible budget?

Meow Products Ltd. Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts. The following information is available regarding the standard cost to produce a single post: Direct materials: 3 feet @1.75 per foot Direct labour: 15 minutes @\ .30 per minute In the current year, 38 000 feet of material were purchased out of which 35 000 feet were used at a cost of $1.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $.32 per minute. -The company's direct labour rate variance for the current year was:

Mystic Falls Inc. Mystic Falls Inc. bottles and sells a popular soft drink. In 2009, the company had expected to sell 1 000 000 bottles but actually bottled and sold 900 000 bottles. The standard direct materials cost for each bottle is $.40 comprised of 10 grams at a cost of $.04 per gram. During 2009, 10 000 000 grams of material were purchased out of which 9 200 000 grams were used at a cost of $.05 per gram. -The direct materials price variance for 2009 was:

Armstrong Products Refer to the Armstrong Products information below. Armstrong Products applies fixed overhead at a rate of $3 per direct labour hour. Each unit produced is expected to take 2 direct labour hours. Armstrong expected production in the current year to be 10 000 units but 9000 units were actually produced. Actual direct labour hours were 19 000 and actual fixed overhead costs were $62 000. -Armstrong's fixed overhead spending variance is:

Bellow Ltd.uses direct labour hours as the cost driver for variable overhead.In order to calculate the variable overhead efficiency variance,which of the following items does not need to be known?

New Hampshire Products has a favourable fixed overhead spending variance.Which of the following would be the most likely reason for this variance?

Carolina Tile Company in the US manufactures and installs industrial tile flooring.In the current year,the company had anticipated producing and installing 80 000 tiles but actually produced and installed 90 000 tiles.The standard direct materials cost for each square foot of tile is $6.30 comprised of 3 pounds of material at a cost of $2.10 per pound.During the year,300 000 pounds of material were purchased out of which 280 000 pounds were used at a cost of $1.90 per pound. Required: Compute each of the following variances.Indicate whether the variance is favourable (F)or unfavourable (U). A. Direct materials price variance B. Direct materials usage variance