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?

Use the information below to answer the following question(s). Jenny's Condiments makes a specialty mustard for street vendors that is composed of wet ingredients and dry ingredients.Two parts of wet ingredients at a standard cost of $12,and three parts of dry ingredients at a standard cost of $9,are required for every batch.In the first week of July,Jenny produced two hundred thirty batches of mustard using 450 units of wet ingredients and 750 units of dry ingredients. -What are the direct materials quantity variances for the wet and dry ingredients respectively?

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?

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.

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.

________ is a carefully predetermined amount usually expressed on a per-unit basis.

The process in which a company's products or services are measured relative to the best possible levels of performance is known as

A variance is considered to be

Use the information below to answer the following question(s). Sawyer Industries Inc.(SII),developed standard costs for direct material and direct labour.In 2016,SII estimated the following standard costs for one of their major products,the 30-litre heavy-duty plastic container. During July 2017,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 rate variance is

The direct materials mix variance will be favourable when

Depending on the level of the cost hierarchy of an activity,cutting a volume of input to the benefit of one business function may increase costs throughout the entire value chain.

Mittrell 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?

A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not adjusted at the end of the budgeted period.

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 rate variance for January is

The following data for the lew grow Garden Supplies Company pertains to the production of 2,500 garden spades during March.The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground. Direct Materials (all materials purchased were used): Standard cost: $1.00 per handle and $3.50 per metal tool. Total actual cost: $11,350. Materials flexible-budget efficiency variance was $650 unfavourable. Direct Manufacturing Labour: Standard cost is 5 garden spades per hour at $20.00 per hour. Actual cost per hour was $21.00. Labour efficiency variance was $400 favourable. Required: a.What is the standard direct material amount per garden spade? b.What is the standard cost allowed for all units produced? c.What is the total direct materials flexible-budget variance? d.What is the direct material flexible-budget rate variance? e.What is the total actual cost of direct manufacturing labour? f.What is the labour rate variance for direct manufacturing labour?

A favourable variance can be automatically interpreted as "good news."

Use the information below to answer the following question(s). Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container. During June 2017,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 flexible-budget variance is

Your company hired a summer student as an accounting intern to prepare variance analysis for the plant manager (the student's father),so that the entire organization could become more effective and efficient.Up to this time,the company used a budget but only one that specified sales and production in units,and each department gauged and reported on its own performance based on historical rules of thumb developed over the years.The plant manager instructed every department manager to assist the new accountant as achieving favourable results would ensure he got a good bonus.For the month of May,the student met with the department heads of each functional area,obtaining from them the data and estimates to come up with: standard costs and prices;and,standard direct material usage and standard direct labour usage.Then in June,July and August the student collected;and,analyzed the variance results,and prepared a report for the plant manager.The report indicated favourable variances in virtually every functional area,allowing the plant manager to receive a larger bonus than usual. Required: Comment on the above process,in terms 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 2016,SII estimated the following standard costs for one of their major products,the 30-litre heavy-duty plastic container. During July 2017,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 manufacturing labour flexible-budget variance is

Samson Equipment Ltd.is a company that manufactures an abdominal exerciser called The Ab Rippler.The following information is for three of the company's activities in 2015: The output measure is the number of units produced. Required: a.Calculate the flexible-budget variance for each activity in 2015. b.Calculate the price and efficiency variances for each activity in 2015.