Exam 7: Flexible Budgets, Variances, and Management Control: I

Match the department that is most likely responsible for the listed variance. A)Purchasing department B)Production department C)Marketing department D)Personnel department -Direct material rate variance

A favourable direct materials yield variance results when less direct materials are used than planned.

Use the information below to answer the following question(s).All Good Things Ltd.planned on producing 600 units for the year.However, actual production was 400 units.Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour; static budget amounts were 1,200 hours at $21 per hour. -What is the All Good Things Ltd.direct labour rate variance?

Use the information below to answer the following question(s).Bates Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit. -What is the static-budget variance of variable costs?

Al's Boxes manufactures corrugated boxes.The standard materials allowed for each box is 0.5 kilograms of paper, which has a standard cost of $5 per kilogram.During April 10,000 kilograms were used to manufacture 19,500 boxes.The actual materials cost was $5.25 per kilogram.Required: a.Determine the materials rate variance. b.Determine the materials efficiency variance.

During February the Lungren Manufacturing Company's costing system reported several variances that the production manager was surprised to see.The following information is for the manufacture of garden gates, its only product: 1.Direct materials rate variance, $800 unfavourable.2.Direct materials efficiency variance, $1,800 favourable.3.Direct manufacturing labour rate variance, $4,000 favourable.4.Direct manufacturing labour efficiency variance, $600 unfavourable.Required: a.Provide the manager with some ideas as to what may have caused the rate variances. b.What may have caused the efficiency variances?

Coffey Company maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals.Item A contains hard-to-get material Y.Currently, the standard cost of material Y is $2.00 per gram.During February, 22,000 grams were purchased for $2.10 per gram, while only 20,000 grams were used in production.There was no beginning inventory of material Y.Required: a.Determine the direct materials rate variance, assuming that all materials costs are the responsibility of the materials purchasing manager so rate variances are based on purchase quantities. b.Determine the direct materials rate variance, assuming that all materials costs are the responsibility of the production manager so rate variances are determined as quantities are placed into production. c.Discuss the issues involved in determining the rate variance at the point of purchase versus the point of consumption.

Use the information below to answer the following question(s).Tractor Corporation produces toy tractors.The company uses the following direct cost categories: Actual performance for the company is shown below: Actual output: 5,000 units Direct Materials: Direct Manufacturing Labour: Direct Marketing Labour: -What is the rate variance of the direct materials?

It's year-end and you have the task of clearing up the final accounting entries for management accounting.There is an unfavourable direct materials rate variance of $25,000 which needs to be closed.The company uses the proration approach in this situation, and it has been determined that half of the variance should be charged to finished goods and half to cost of goods sold.Required: Prepare the necessary entry for the end of period adjustment.

A flexible-budget variance can be decomposed into an efficiency variance and a rate variance.

Use the information below to answer the following question(s).Robb Industries Inc.(RII), developed standard costs for direct material and direct labour.In 2019, RII estimated the following standard costs for one of their major products, the 10-litre plastic container. During June 2020, RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour. -June's direct manufacturing labour efficiency variance is

Answer the following question(s)using the information below.Eco Furniture Ltd.makes wooden furniture.One of their products is a wooden desk.The exterior is made of walnut, a high quality wood, but the interior drawers are made of pine, a less expensive wood.The budgeted direct materials quantities and prices for one desk are: During the month of November 600 desks were produced.The actual material volume and costs were: -What is the direct materials yield variance for pine?

A variance is considered to be

Which of the following reasons is unlikely to be related to an unfavourable variance for labour costs?

The flexible budget contains

In a journal entry for a standard costing system that records favourable variances, to increase the relevant variance account

To prepare budgets based on actual data from past periods is preferred since past inefficiencies are excluded.

Jam Life Inc.manufactures jam products.It makes a mixed fruit and berry jam by blending strawberries, peaches, and apricots.Budgeted costs to produce 100,000 kilograms of jam in September were: Actual costs to produce 100,000 kilograms of jam in September were: -What is the direct material yield variance for Strawberry Jam? (3 marks)

Answer the following question(s)using the information below.Apple Valley Orchards, Inc.(AVO), developed standard costs for direct material and direct labour.In 2019, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples. During September 2020, AVO produced and sold 1,200 pies using 1,875 kilograms of direct materials at an average cost per kilogram of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour. -September's direct labour rate variance is

Whistler Table Company manufactures tables for schools.The current year operating budget is based on sales of 20,000 units at $100 per table.Operating income is anticipated to be $120,000.Budgeted variable costs are $64 per unit while fixed costs total $600,000.Actual income for the year was $2,184,000 on actual sales of 21,000 units.Actual variable costs were $60 per unit and fixed costs totaled $570,000.Required: Prepare a Level 2 variance analysis report with both flexible-budget and sales-volume variances.