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

Caan Corporation used the following data to evaluate their current operating system.The company sells items for $20 each and used a budgeted selling price of $20 per unit. Required: Prepare a Level 1 static-budget variance analysis using a income statement in contribution margin format.Use the following three column headings: Actual Results, Static Budget, Static-budget Variance.

In a manufacturing area of an organization; poor product design, problems with the quality of materials, and scheduling conflicts could result in

Jan's Boxes manufactures corrugated boxes.The standard materials allowed for each box is 0.3 kilograms of paper, which has a standard cost of $4.50 per kilogram.During April 6,300 kilograms were used to manufacture 18,000 boxes.The actual materials cost was $4.55 per kilogram.Required: a.Determine the materials rate variance. b.Determine the materials efficiency variance.

Benchmarking is the continuous process of measuring products, services, and activities against the best possible levels of performance.

The flexible-budget variance measures

Answer the following question(s)using the information below.Abernathy 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 operating income?

Littrell Company produces chairs and has determined the following direct cost categories and budgeted amounts: Actual performance for the company is shown below: Required: a.What is the combined total of the flexible-budget variances? b.What is the rate variance of the direct materials? c.What is the rate variance of the direct manufacturing labour and the direct marketing labour, respectively? d.What is the efficiency variance for direct materials? e.What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?

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 mix variance for Strawberry Jam.? (3 marks)

Which of the following statements is TRUE?

Use the information below to answer the following question(s).Ames Golf Company used the following data to evaluate their current operating system.The company sells 1 pack of golf balls for $10 per pack.The $10 selling price is also the budgeted selling price. -A company uses a static budget approach and the previous management accountant calculated the following information: Fixed costs variance $10,000 U; revenues variance $400,000 F; contribution margin variance $60,000 F.What is the total static-budget variance?

The terms, usage variances and efficiency variances mean the same thing.

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 operating income?

Mayberry Company had the following journal entries recorded for the end of June.Unfortunately, the company's only accountant quit on July 10 and the president is at a loss as to the company's performance for the month of June. Required: a.What kind of performance did the company have for June? Explain each variance. b.Why is Direct Materials given in two entries?

Give at least three good reasons why a favourable rate variance for direct materials might be reported.

Tyson's Hardware, a retailing company with several locations, anticipated that it would have 96,000 sales units for 664 customer shipments.Average storage bin usage for various inventories was estimated to be 200 storage bins per day.The costs and cost drivers were determined to be as follows: During the year the warehouse processed 90,000 units for 600 customer shipments.The workers used 225 storage bins on average each day to sort, store, and process goods for shipment.The actual costs for were: Required: a.Prepare a static-budget and show the static-budget variances for each cost item and the total static-budget variance. b.Prepare a flexible-budget and show the flexible-budget variances for each cost item and the total flexible-budget variance.

General Insurance Company had a static budgeted operating income of $4.6 million; however, actual income was $3.0 million.What is the static budget variance of operating income?

The type of budget that is based on one level of output, without adjustment for any operational or financial changes is called

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 walnut?

Describe the purpose of variance analysis.

Use the information below to answer the following question(s).Sawyer Industries Inc.(SII), developed standard costs for direct material and direct labour.In 2019, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container. During July 2020, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour. -July's direct material flexible-budget variance is