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

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): Standard cost: $6.00 per kilogram of clay Total actual cost: $11,200 Standard cost allowed for units produced was $12,000 Materials efficiency variance was $240 unfavourable Direct Manufacturing Labour: Standard cost is 2 pots per hour at $24.00 per hour Actual cost per hour was $24.50 Actual labour was 972 hours -What is the direct materials rate variance for the clay pots?

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). 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 input-efficiency variance?

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

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 actual operating income for Ames Golf Company using the actual results?

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 flexible-budget variance is

The direct materials mix variance is the difference between: 1)the actual cost of direct materials based on the actual total quantity of all direct material inputs used,and 2)the flexible-budget cost of direct materials based on the budgeted total quantity of direct material inputs for the actual output.

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). 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?

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 variable costs?

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.sales-volume variance?

A flexible budget enables managers to compute a richer set of variances than a static budget does.