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

The following data for the Alma Company pertain to the production of 1,000 urns during August.Direct Materials (all materials purchased were used): Standard cost: $6.00 per kilogram.Total actual cost: $5,600.Standard cost allowed for units produced was $6,000.Materials efficiency variance was $120 unfavourable.Direct Manufacturing Labour: Standard cost is 2 urns per hour at $24.00 per hour.Actual cost per hour was $24.50.Labour efficiency variance was $336 favourable.Required: a.What is standard direct material cost and quantity per urn? b.What is the direct material rate variance? c.What is the total actual cost of direct manufacturing labour? d.What is the labour rate variance for direct manufacturing labour?

You have been promoted to management accountant at a hospital.One of the things you noted from reviewing past internal reports is that the quality of the data is poor at times, and there is no objective standard for evaluating performance.When you asked about this at a board of directors meeting, the consensus reply was that the hospital's operations were too subjective and service orientated, and that it was a non-profit organization, so setting profit goals was of no value.Required: Comment on a possible approach that could be taken to provide objective criteria for performance evaluation in this situation.

A variance is the difference between the actual cost for the current and previous year.

The materials yield variance will be unfavourable when

Use the information below to answer the following question(s).The following data for a pottery company pertain to the production of 2,000 clay pots during July.Direct Materials (all materials purchased were used): Direct Manufacturing Labour: -What is the standard direct material amount per pot?

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 mix variance for pine?

Benchmarking key activities can be even more important in not-for-profit/non-profit (NFP)organizations than it is for businesses seeking to make a profit.

Rate variances can be calculated for batch-level costs as well as for output unit-level costs.

Glenn's Draperies manufactures curtains.A certain window requires the following: Direct materials standard is 10 square metres at $5 per metre Direct manufacturing labour standard is 5 hours at $10 During the second quarter the company made 1,500 curtains and used 14,000 square metres of fabric costing $68,600.Direct labour totaled 7,600 hours for $79,800.Required: a.Compute the direct materials price and efficiency variances for the quarter. b.Compute the direct manufacturing labour rate and efficiency variances for the quarter.

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 combined total of the flexible budget variances? A)$102,650 unfavourable B)$99,000 unfavourable C)$78,500 unfavourable D)$75,150 favourable E)$75,150 unfavourable

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 material efficiency variance is

The only difference between the static budget and flexible budget is that the static budget is prepared using planned output.

Management by exception is the practice of focusing management attention on areas where performance meets expectations.

An input-price variance is the difference between actual quantity of input used and the budgeted quantity of input that should have been used, multiplied by the budgeted price.

A packaging company produces cardboard boxes in an automated process.The required direct materials costs $0.30 per unit.Fixed manufacturing overhead costs are budgeted at $24,000 per month and are allocated based on units of production.The budgeted contribution margin per unit is $0.85, and administration fixed costs are budgeted at $7,500 per month.What is the flexible-budget amount for operating income for 40,000 and 20,000 units, respectively?

Cost variances should be investigated when

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

The flexible-budget variance may be the result of inaccurate forecasting of units sold.

The sales-volume variance is the difference between the flexible-budget amount and the static-budget amount; unit selling prices, unit variable costs, and fixed costs are held constant.

Use the information below to answer the following question(s).Everclean Filter Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and had used a budgeted selling price of $11 per unit. -What is the static-budget variance of revenues?