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

Use the information below to answer the following question(s). A company makes table lamps, for which the following standards have been developed: During January, production of 100 lamps was expected, but 110 lamps were actually completed. Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram. Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00. -The direct-material price variance for January is

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. -What is the budgeted operating income for Ames Golf Company?

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

If a purchasing agent is able to negotiate a price lower than that set by the current budget by purchasing direct materials of similar quality,

Use the information below to answer the following question(s). Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container. During July, 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 price variance is

The flexible-budget variance is the difference between the actual results and the flexible-budget amount for the actual levels of the revenue and cost drivers.

Use the information below to answer the following question(s). A company makes table lamps, for which the following standards have been developed: During January, production of 100 lamps was expected, but 110 lamps were actually completed. Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram. Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00. -The direct-labour efficiency variance for the month of January is

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?

Use the information below to answer the following question(s). A company makes table lamps, for which the following standards have been developed: During January, production of 100 lamps was expected, but 110 lamps were actually completed. Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram. Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00. -For any actual level of output, the difference between the input that was actually used and the input should have been used is

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

A budget that is adjusted in accordance with changes in actual output is called

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

Variances and flexible budgets help managers gain insights into why actual results differ from planned performance.

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 and budgeted performance for the company is shown below: Direct Materials: Direct Manufacturing Labour: Direct Marketing Labour: -What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?

If a company has a favourable efficiency variance, it uses less inputs than were budgeted for the output units achieved.

Use the information below to answer the following question(s). Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container. During June, 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

Use the information below to answer the following question(s). Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container. During June, 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 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). A company makes table lamps, for which the following standards have been developed: During January, production of 100 lamps was expected, but 110 lamps were actually completed. Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram. Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00. -What is the All Good Things Ltd. direct labour input-price variance?

The textbook discusses five levels of variances: Level 0, Level 1, Level 2, Level 3, and Level 4. Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.