Exam 6: Performance Evaluation: Variance Analysis

Melrose Manufacturing produces gourmet blackberry preserves.Melrose based its current year budget on a production level of 540,000 jars of preserves using ½ hour direct labor time for each jar (which includes hand-sorting and trimming the berries).Total budgeted variable overhead for the year was $1,242,000.During the year, Melrose used 280,000 direct labor hours to produce 550,000 jars of blackberry preserves.Actual variable overhead for the year was $1,246,000.What is Melrose's variable overhead efficiency variance?

Why is the direct materials price variance based on the quantity of materials purchased, but the direct materials quantity variance on the quantity of materials used?

Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August, the company purchased 4,000 yards of artificial pine bough, and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough and purchased 4 boxes of 5,000 sprigs of holly berries for $7,000 per box.The standard price for artificial pine bough is $2.60 per yard, and the standard price per sprig of holly berry is $1.45.During August, Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials price variance for artificial pine boughs for August?

Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units.The standard allows for 2 switches per unit.The company actually used 12,500 to produce the 6,000 units.Johnston budgeted $0.75 per switch, but because they received a discount for purchasing more than 10,000 switches, they received a discount of $0.05 per switch and paid $0.70 each.What is Johnston's direct materials quantity variance for the period?

Assembly line workers at Thompson Manufacturing worked a total of 12,000 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.00.If the actual wage rate was $10.50 per direct labor hour, Thompson's direct labor rate variance is

Most companies monitor their performance

The flexible budget variance is the difference between the static budgeted amounts and the flexible budgeted amounts.

The variable overhead variance is separated into which of the following components?

The sales volume variance is influenced most heavily by actions of the

Which of the following is not a factor that could influence worker productivity?

The flexible budget variance is influenced most heavily by forces external to the operating process.

The following labor standards have been set for a product: The following data pertain to operations for the period. Required: Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Backyard Creations purchased 7,800 feet of copper tubing at a price of $2.30 per foot and used 7,500 feet during the period.The standard quantity allowed for the units produced is 7,300 and the standard price of the copper tubing is $2.50 per foot.What is Backyard Creations' direct materials quantity variance for the period?

If the actual price of direct material is $10 per unit while the standard price of the direct material is $11,

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 to produce 42,660 yards of dyed denim fabric.The standard allows for 8 yards of fabric per gallon of dye.The standard price for the dye is $1.26.What is the materials quantity variance for Indigo for June?

Which of the following is not a method companies use to reduce their labor costs?

Variances are labeled as

Your friend has accepted a position with a large manufacturing company as production manager.She has found out that she must analyze and report any variances that relate to production.She has been told that managers use a method called "management by exception" and is concerned that any variance will be viewed negatively by her supervisors. Required: Explain to your friend the concept of "management by exception" and put her mind at ease about all variances being viewed as negative and explain what factors may be considered when deciding what variances to investigate.

Casper Concrete manufactures custom concrete countertops for restaurants and individual homeowners.Casper's actual fixed overhead for the year was $86,600.During the year Casper produced 8,500 square feet of countertop and used 4,420 direct labor hours.Casper had budgeted to produce 9,000 square feet of countertop and had budgeted to use 4,500 direct labor hours.Casper's fixed overhead spending variance was $1,200 unfavorable for the year.What was Casper's budgeted fixed overhead for the year (if necessary, round your answer to the nearest dollar)?

Assembly line workers at Thompson Manufacturing worked a total of 9,300 direct labor hours to produce 36,000 units.The standard for producing one unit is 15 minutes at a wage rate of $10.50.If the actual wage rate was $10 per direct labor hour, Thompson's direct labor efficiency variance is