Exam 6: Performance Evaluation: Variance Analysis

A rush order for overnight delivery of materials is likely to result in

Adler Industries uses a standard cost system in which direct material is carried at standard cost.Adler has established the following standards: standard quantity of 8 pounds per unit, standard price $1.80 per pound.During January, Adler purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in production of 18,700 units. Required: Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable.

The variable overhead spending variance is the difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the budgeted level of activity base experienced.

If a company uses more direct labor hours than the standard allowed, the result is

Hobart Company manufactures patio umbrellas.The direct labor standard for each umbrella is 1.25 direct labor hours at a standard rate of $12.00 per hour.During June, Hobart used 36,000 direct labor hours to produce 30,000 umbrellas.Hobart's direct labor payroll totaled $428,400.What is Hobart's direct labor rate variance for November?

The standard number of direct labor hours used in calculating the direct labor efficiency variance is based on

Academy Awards makes plaques and trophies.Last year the company's workers clocked 600 more direct labor hours than the flexible budget amount of 10,000 hours to complete 30,000 plaques and trophies.All workers were paid $12 per hour, which was $0.50 more than the standard wage rate. Required: Calculate Academy Awards' direct labor efficiency variance for the period.

Sterling Industries manufactures saddles for show horses.Sterling's actual fixed overhead for the year was $123,400.During the year Sterling produced 12,300 saddles using 129,150 direct labor hours.Sterling had budgeted to produce 13,000 saddles and had budgeted to use 130,000 direct labor hours.Sterling's fixed overhead spending variance was $4,200 favorable for the year.What was Sterling's budgeted fixed overhead for the year (if necessary, round your answer to the nearest dollar)?

For a static budget, the difference between actual results and budgeted results is referred to as budget slack.

In June, Indigo Manufacturing purchased 6,000 gallons of blue dye used to produce stone-washed denim clothing.The price per gallon was $1.24 and the company used 5,400 gallons of the dye during the month.The standard price for the dye is $1.26.What is the materials price variance for Indigo for June?

Academy Awards makes plaques and trophies.Last year the company's direct labor payroll totaled $140,000 for 17,300 direct labor hours.The standard wage rate is $7.75 per direct labor hour. Required: Calculate Academy Awards' direct labor rate variance for the period.

The direct labor rate variance is the part of the direct labor flexible budget variance that arises when the actual wage rate differs from the standard wage rate.

Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units.The standard allows for 2 switches per unit.The company actually used 14,500 to produce the 6,000 units.Johnston budgeted $0.75 per switch but had to pay $0.80 per switch.What is Johnston's direct materials quantity variance for the period?

The difference between actual results and budgeted results is referred to as

A favorable variance occurs when the flexible budget operating income amount is greater than the actual operating income.

The algebraic equation for the direct materials quantity variance is

When managers investigate a direct labor efficiency variance, they are trying to

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

Which of the following overhead variances is not correctly paired with a possible explanation for that variance?

Variances have very important meanings, even before their causes are identified.