Exam 15: Cost Control

U.S.Products operates two divisions with the following sales and expense information for the month of May: North Division: Sales $240,000; Operating income $72,000, Operating assets $600,000. South Division: Sales $160,000; Operating income $80,000, Operating assets $800,000. U.S.Products expects a minimum return of 10% should be earned from all investments. North Division's return on investment for May is:

The cost formula for the maintenance department of the Raven Co.is $13,000 per month plus $6.50 per machine hour used by the production department. a.Calculate the maintenance cost that would be budgeted for the month of November in which 10,800 machine hours are planned to be used. b.Prepare an appropriate performance report for the maintenance department assuming that 11,130 machine hours were actually used in the month of November, and the total maintenance cost incurred was $86,485.

NuArt Company's budgeted production for November is 5,500 units.Budgeted component unit costs include: direct materials, $24; direct labor, $30; variable overhead, $18.Budgeted fixed overhead is $100,000.NuArt's actual production for November was 6,000 units.Actual component unit costs include: direct materials, $24.50; direct labor, $29; variable overhead, $18.40.Actual fixed overhead was $94,000. NuArt's flexible budget amount for direct labor in November would be:

Riverside Company's standard direct labor cost per unit includes 2 hours @ $20 per hour.During June Riverside Company produced 580 units and incurred total labor cost of $22,800 for 1,200 actual direct labor hours worked.Riverside's labor efficiency variance for June is:

The preferred format for a segmented income statement emphasizes:

If it is to be most useful for control purposes, what variance should be reported to the supervisor responsible for the number of pounds of corn syrup used in the manufacture of a candy bar?

The total budget variance is caused by two factors:

ABC, Inc., is segmented into three divisions and the company is concerned about the performance of Division Y.During your analysis of Division Y, you learn that $42,000 of the fixed expenses relate to general corporate expenses and had been allocated equally between the three divisions. $\begin{array}{lcccc}&\text { Total Company } & \text { Division } \mathrm{X} & \text { Division } \mathrm{Y} & \text { Division } \mathrm{Z}\\ \text {Sales } &\$200,000&\$80,000&\$50,000&\$70,000\\ \text {Variable expenses } & \underline{120,000}& \underline{52,000}& \underline{30,000}& \underline{38,000}\\ \text { Contribution margin } &\$80,000&\$28,000&\$20,000&\$32,000\\ \text {Fixed expenses } & \underline{60,000}& \underline{20,000}& \underline{22,000}& \underline{18,000}\\ \text { Net income (loss) } & \underline{\$20,000}& \underline{\$8,000}& \underline{\$(2,000)}& \underline{\$14,000}\\ \text { } &\\\end{array}$ (a.)Calculate what the company's net income would be if Division Y were closed down. (b.)Revise the income statement presented above into a more useful segmented income statement.

The purchasing agent of an organization acquired some raw materials at a bargain price, even though she knew that their quality was lower than that of the materials customarily used.This action resulted in a favorable raw materials purchase price variance that might very well have been more than offset by:

If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:

ABC Company's standard direct labor cost per unit includes 3 hours @ $15 per hour.During May ABC Company produced 380 units and incurred total labor cost of $16,200 for 1,200 actual direct labor hours worked.ABC's labor rate variance for May is:

The principal objective of a performance report is to:

The decision rule to determine what budget variances to investigate should be to:

The standards for one case of Peardrax are: Direct materials 8 lbs. \ \ 3.50/. Direct labor 4 hrs. \ 15.00/ Variable overhead (based on machine hours) 2 hrs. \ \ 5.00/. During the week ended June 7, the following activity took place: • 5,740 machine hours were worked; • 22,600 lbs.of raw material were purchased for inventory at a total cost of $83,620; • 2,700 cases of finished product were produced; • 21,330 lbs.of raw material were used; • 10,650 labor hours were worked at an average rate of $15.20 per hour; • $27,552 actual variable overhead costs were incurred. Calculate each of the following variances: (a.) Price variance for raw materials purchased. (b.) Raw materials usage variance. (c.) Direct labor rate variance. (d.) Direct labor efficiency variance (e.) Variable overhead spending variance. (f) Variable overhead efficiency variance

AAA Export Company's actual production for March is 1,000 units.The standard cost for raw material #123 is $72 per unit consisting of 6 pounds per unit at $12 per pound.The actual cost for raw material #123 in March amounted to $71.50 per unit consisting of 6.5 pounds per unit at $11 per pound.The resulting budget variance for raw material #123 in March was therefore $500 F (1,000 units × ($72.00 − $71.50). What amount of AAA Export's $500 F budget variance in March is attributable to the quantity of raw material #123 used?

How are unfavorable standard cost variances reported in an organization's annual report?

The part of the variable overhead budget variance due to the difference between actual variable overhead cost and the standard cost allowed for the actual inputs used is called the:

Which of the following is true about an unfavorable variance appearing in a performance report?

Which of the following product cost components will not need "flexing" when analyzing end of period production cost variances?

The difference between standard and actual cost per unit of input is measured by: