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Exam 8: Performance Evaluation

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Question 21

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The differences between the standard and actual amounts are called variances.

A) True
B) False

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Question 22

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Hickam Company makes one product,for which it has developed the following standard for labor: each unit should require 1.50 hours at $12/hour.In April,Hickam made 10,000 units,using 1.65 hours per unit at a cost of $11.50 per hour. Required: (a)Determine the total labor variance and indicate whether it is favorable or unfavorable. (b)Determine the labor price variance and indicate whether it is favorable or unfavorable. (c)Determine the labor usage variance and indicate whether it is favorable or unfavorable.

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(a)Total labor variance = (15,000 hours ...

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Question 23

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Which manager is normally held responsible for fixed cost volume variances?

Which manager is usually held responsible for materials price variances?

The two factors that determine the costs of manufacturing inputs (materials,labor,and overhead)are price and quantity.

Kokko Company makes a product that is expected to require 2 hours of labor per unit of product.The standard cost of labor is $6.00.Kokko actually used 2.1 hours of labor per unit of product.The actual cost of labor was $6.25 per hour.Kokko made 1,100 units of product during the period.Based on this information alone,the labor usage variance is:

Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

How do differences between planned and actual volume impact companies that use a cost plus pricing strategy?

Hurst Company's standard variable materials cost per unit was $8.The actual materials cost per unit on production of 10,000 units was $8.22.Based on this information,Hurst Company incurred an unfavorable variable materials price variance of $2,200.

Which of the following statements is incorrect?

The sales volume variance is favorable if actual sales volume is higher than the budgeted.

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

Which of the following statements is true?

Indicate whether each of the following statements is

The Broaddus Company has requested a performance report that reports both sales activity variances and flexible budget variances.The following table of information is provided: $\begin{array}{c}\begin{array}{|l|}\hline \text { Column(1) } \\\hline \\\hline \\\hline \text { Number of units } \\\hline \\\hline \text { Seles } \\\hline \text { Less variable costs: } \\\hline \text { Materials } \\\hline \text { Labor } \\\hline \text { Overhead } \\\hline \text { Selling \& admin. } \\\hline \text { Contribution margin } \\\hline \text { Less fixed costs: } \\\hline \text { Manufacturing } \\\hline \text { Selling \& admin } \\\hline \text { Net income } \\\hline \end{array}\begin{array}{c|}\hline \text { (2) } \\\hline \text { Static } \\\hline \text { Budget } \\\hline 8,600 \\\hline\\\hline \$ 430,000 \\\hline\\\hline 103,200 \\\hline 77,400\\\hline 43,000 \\\hline 17,200 \\\hline \$ 189,200 \\\hline \\ \hline 18,000 \\\hline 37,0010 \\\hline \$ 134,200 \\\hline\end{array}\begin{array}{c|}\hline \text { (3) } \\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\end{array}\begin{array}{c|}\hline \text { (4) } \\\hline\text { F}/\\\hline\text {U}\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\end{array}\begin{array}{c|}\hline \text { (5) } \\\hline \text { Flexible } \\\hline \text { Budget } \\\hline9,000 \\\hline\\\hline \$ 450,000 \\\hline\\\hline 108,000 \\\hline81,000 \\\hline 45,000 \\\hline 18,000 \\\hline \$ 198,000 \\\hline \\ \hline 18,000 \\\hline 37,000 \\\hline \$ 143,000 \\\hline\end{array}\begin{array}{c|}\hline \text { (6) } \\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline \end{array}\begin{array}{c|}\hline \text { (7) } \\\hline\text { F}/\\\hline\text {U}\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\\\hline\end{array}\begin{array}{l|}\hline \text { (8) }\\\hline \text { Actual } \\\hline \text { Results } \\\hline 9,000 \\\hline\\\hline \$ 460,000 \\\hline\\\hline 113,000 \\\hline 88,000 \\\hline 44,000 \\\hline 20,000 \\\hline \$ 195,000 \\\hline\\\hline 16,000 \\\hline 38,000 \\\hline \$ 141,000 \\\hline\end{array}\end{array}$ Required: 1)Compute and enter variances in columns 3 and 6.In column 3,enter the variance (difference)between column 2 and column 5;in column 4,label the variance as favorable (F)or unfavorable (U).In column 6,enter the variance between columns 5 and 8,and in column 7 indicate whether this variance is favorable or unfavorable. 2)Which column contains sales volume variances,and which column contains flexible budget variances? 3)Comment on this company's performance.

Which of the following reason(s) cause flexible budgets to be useful planning tools?

Indicate whether each of the following statements is

Indicate whether each of the following statements is

Sanchez Company established a direct materials standard of 4 pounds at $4.50 per pound for one of its products.During March,Sanchez purchased 15,000 pounds at $4.42 per pound. Required: Based on this information, (a)Which variance can you calculate? (b)What is the dollar amount of the variance? (c)Is the variance favorable or unfavorable? (d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Indicate whether each of the following statements is