Answer the following questions using the information below: Genent Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: $\begin{array}{|l|r|r|r|r|r|} \hline &\text { Actual } & \text { Flexible Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\ &\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget } \\ \hline\text { Units sold } & 495,000 & & 495,000 & & 453,750 \\ \hline \text { Revenues } & \$ 185,150 & \$ 4,400 \mathrm{~F} & (\mathrm{~A}) & \$ 6,160 \mathrm{U} & (\mathrm{B}) \\ \hline \text { Variable } & & & & & \\ \text { costs } & (\mathrm{C}) & \$ 880 \mathrm{U} & \$ 69,780 & \$ 10,300 \mathrm{~F} & \$ 88,080 \\ \hline \text { Fixed costs } & \$ 36,430 & \$ 3,770 \mathrm{~F} & \$ 40,200 & 0 & \$ 40,200 \\ \hline \text { Operating } & & & & & \\ \text { income } & \$ 78,060 & (\mathrm{D}) & \$ 70,770 & (\mathrm{E}) & \$ 66,630\\\hline \end{array}$ -What is the total static-budget variance?

A) $11,430 favorable B) $7,290 favorable C) $4,140 unfavorable D) $4,140 favorable A) $11,430 favorable B) $7,290 favorable C) $4,140 unfavorable D) $4,140 favorable

Answer the following questions using the information below: The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. $\begin{array}{lccc} & \text { Actual } & \text { Flexible } & \text { Static } \\ & \text { Results } & \text { Budget } & \text { Budget } \\ \text { Sales volume (in units) } & 11,000 & & 10,000\\\\ \text { Sales revenues } & \$ 238,000 & \$ & \$230,000 \\ \text { Variable costs } & 150,000 & \$ & 180,000\\\\ \text { Contribution margin }& 88,000& \$ &50,000\\\\ \text { Fixed costs } & 36,000 & \$ & 35,000\\ \text { Operating profit } & \$ 52,000& \$& \$ 15,000 \end{array}$ -The flexible budget will report ________ for variable costs.

A) $136,364 B) $198,000 C) $30,000 D) $13,583 A) $136,364 B) $198,000 C) $30,000 D) $13,583

Answer the following questions using the information below: Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. $\begin{array}{lll}&\text { Budgeted quantity }&\text { Budgeted price }\\ \text { Direct materials } & 0.10 \text { pounds } & \$ 60 \text { per pound } \\ \text { Direct labor } & 0.05 \text { hours } & \$ 30 \text { per hour } \end{array}$ During June, AII produced and sold 20,000 containers using 1,900 pounds of direct materials at an average cost per pound of $64 and 1,000 direct manufacturing labor-hours at an average wage of $30.50 per hour. -The direct manufacturing labor price variance during June is ________.

A) $500 unfavorable B) $500 favorable C) $7,600 unfavorable D) 1,600 unfavorable A) $500 unfavorable B) $500 favorable C) $7,600 unfavorable D) 1,600 unfavorable

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. $\begin{array}{lr} \text { Materials Control }&300,000\\ \text { Direct Materials Price Variance } & 10,000 \\ \text { Accounts Payable Control } & 290,000\\\text { Work-in-Process Control } & 120,000 \\ \text { Direct Materials Efficiency Variance } & 8,000\\ \text { Materials Control }&128,000\\ \text { Work-in-Process Control } & 850,000 \\ \text { Direct Manufacturing Labor Price Variance } & 15,000 \\ \text { Direct Manufacturing Labor Efficiency Variance } &18,000\\ \text { Wages Payable Control }&847,000 \end{array}$ Required: a.What kind of performance did the company have for June? Explain each variance. b.Why is Direct Materials given in two entries?

a.The first entry is for materials purch

Exam 7: Flexible Budgets, direct-Cost Variances, and Management Control

Static-budget variance for operating income is calculated by taking a difference between static-budget operating income and actual operating income.

(True/False)

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Question 81

Answer the following questions using the information below: Genent Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: Actual Flexible Budget Flexible Sales-Volume Static Results Variances Budget Variances Budget Units sold 495,000 495,000 453,750 Revenues \ 185,150 \ 4,400 () \ 6,160 () Variable costs () \ 880 \ 69,780 \ 10,300 \ 88,080 Fixed costs \ 36,430 \ 3,770 \ 40,200 0 \ 40,200 Operating income \ 78,060 () \ 70,770 () \ 66,630 -What is the total static-budget variance?

(Multiple Choice)

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Question 82

A flexible-budget variance pertaining to revenues is often called a sales-volume variance.

(True/False)

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Question 83

The sales-volume variance is sometimes due to ________.

(Multiple Choice)

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Question 84

When benchmarking it is best when management accountants simply analyze the costs and allow management to provide the insight as to why the revenues and costs differ between companies.

(True/False)

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Question 85

The use of high-quality raw materials is likely to result in a favorable efficiency variance and an unfavorable price variance.

(True/False)

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Question 86

Answer the following questions using the information below: The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. Actual Flexible Static Results Budget Budget Sales volume (in units) 11,000 10,000 Sales revenues \ 238,000 \ \2 30,000 Variable costs 150,000 \ 180,000 Contribution margin 88,000 \ 50,000 Fixed costs 36,000 \ 35,000 Operating profit \ 52,000 \&\ 15,000 -The flexible budget will report ________ for variable costs.

(Multiple Choice)

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Question 87

Benchmarking measures how well a company and its managers are doing in comparison to other organizations.

(True/False)

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Question 88

A favorable variance indicates that budgeted costs are less than actual costs.

(True/False)

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Question 89

A difference between the static-budget and the flexible-budget amounts is called the sales-volume variance.

(True/False)

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Question 90

Answer the following questions using the information below: These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity. -These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity.The best label for the formula [(AP)(AQ)- (BP)(BQ)] is the ________.

(Multiple Choice)

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Question 91

Answer the following questions using the information below: Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity Budgeted price Direct materials 0.10 pounds \ 60 per pound Direct labor 0.05 hours \ 30 per hour During June, AII produced and sold 20,000 containers using 1,900 pounds of direct materials at an average cost per pound of $64 and 1,000 direct manufacturing labor-hours at an average wage of $30.50 per hour. -The direct manufacturing labor price variance during June is ________.

(Multiple Choice)

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Question 92

A flexible budget ________.

(Multiple Choice)

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Question 93

Which of the following elements are used in calculating revenue in a flexible budget?

(Multiple Choice)

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Question 94

The following data for the Panoid Garden Supplies Company pertains to the production of 2,000 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 $\$ 3.00$ per metal tool. Total actual cost: $\$ 9,000$ . Materials flexible-budget efficiency variance was $\$ 500$ unfavorable. Direct Manufacturing Labor: Standard cost is 5 garden spades per hour at $\$ 20.00$ per hour. Actual cost per hour was $\$ 21.00$ . Labor efficiency variance was $\$ 500$ favorable. 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 price variance? e.What is the total actual cost of direct manufacturing labor? f.What is the labor price variance for direct manufacturing labor?

(Essay)

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Question 95

In a flexible budget ________.

(Multiple Choice)

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Question 96

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. Materials Control 300,000 Direct Materials Price Variance 10,000 Accounts Payable Control 290,000 Work-in-Process Control 120,000 Direct Materials Efficiency Variance 8,000 Materials Control 128,000 Work-in-Process Control 850,000 Direct Manufacturing Labor Price Variance 15,000 Direct Manufacturing Labor Efficiency Variance 18,000 Wages Payable Control 847,000 Required: a.What kind of performance did the company have for June? Explain each variance. b.Why is Direct Materials given in two entries?

(Essay)

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Question 97

The price variance is the difference between the actual price and the budgeted price of the input,multiplied by the actual quantity of input.

(True/False)

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Question 98

The flexible-budget variance for direct cost inputs can be further subdivided into a ________.

(Multiple Choice)

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Question 99

Benchmarking is a process ________.

(Multiple Choice)

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Question 100

Static-budget variance for operating income is calculated by taking a difference between static-budget operating income and actual operating income.

A flexible-budget variance pertaining to revenues is often called a sales-volume variance.

The sales-volume variance is sometimes due to ________.

When benchmarking it is best when management accountants simply analyze the costs and allow management to provide the insight as to why the revenues and costs differ between companies.

The use of high-quality raw materials is likely to result in a favorable efficiency variance and an unfavorable price variance.

Benchmarking measures how well a company and its managers are doing in comparison to other organizations.

A favorable variance indicates that budgeted costs are less than actual costs.

A difference between the static-budget and the flexible-budget amounts is called the sales-volume variance.

A flexible budget ________.

Which of the following elements are used in calculating revenue in a flexible budget?

In a flexible budget ________.

The price variance is the difference between the actual price and the budgeted price of the input,multiplied by the actual quantity of input.

The flexible-budget variance for direct cost inputs can be further subdivided into a ________.

Benchmarking is a process ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

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