Exam 8: Budgetary Control and Variance Analysis

In general, non-financial controls are more useful than financial controls for: a. Monitoring employees at lower levels. B) Evaluating workers at lower-levels. C) Evaluating managers at higher levels. D) Both A and B) e. A, B, and C)

Sales commissions for the Grant Company are budgeted based on a percent of sales. The sales department budgeted sales of $150,000 for total commissions of $4,500. If actual sales totaled $170,000 the flexible budget will show total commissions of:

If sales volume exceeds expectations, actual profit will always be higher than budgeted profit.

Thurston Company's budget allows for one pound of material to be used for each unit produced. The budget indicates that the material costs $2.50 per pound. Actual units produced totaled 8,000. The company used a total of 8,200 pounds of material at an actual cost of $2.40 per pound. There were no beginning or ending inventories of raw materials. The input price and input quantity variances, respectively, would be:

If the labor efficiency variance is $1,000unfavorable, then: a. Budgeted labor rate exceeded actual labor rate. B) Actual labor rate exceeded budgeted labor rate. C) Budgeted labor input exceeded actual labor input. D) Actual labor input exceeded budgeted labor input. E) None of the above.

Many firms use process control charts and statistical control methods to help employees track performance on a real-time basis.

A spending variance results when there is a difference between actual and budgeted:

Cico Buckets had budgeted unit sales of 41,600 buckets. Actual sales during May totaled 42,000 buckets at $4.25 per bucket. Its budgeted sales price was $4.00 per bucket. The master budget contribution margin totaled $62,400 and the budgeted variable cost per unit was $2.50. How much is Haslo's sales volume variance? a. $600 F B) $100 F C) $1,600 F D) $1,700 F

The formula for the sales volume variance is:

The two major components of the total profit variance are:

Cheaper ingredients lead to a favorable price variance, but also may lead to unfavorable quantity variances.

Total Profit Variance = Actual Profit - Master Budget Profit.

The input quantity variance is also referred to as the input efficiency variance because it captures the efficiency of input resource use.

The Farmington Company has a flexible budget based on direct labor hours. At the 100,000 hours level, the budget shows the following variable overhead costs: At an activity level of 120,000 hours, total variable costs will be:

For most organizations, a budget is the benchmark for evaluating actual performance.

Given the following data, calculate total profit variance.

Firms use non-financial measures to: a. Identify

If a materials input price is higher than budgeted, the result is an unfavorable materials efficiency variance.

The starting point for preparing a monthly budget is:

A sales mix variance: