Exam 10: Standard Costs and Performance Reports

The variable overhead efficiency variance measures:

A revenue center is a organizational unit whose manager is responsible for the amount of revenues generated by the unit.

Which factor listed below is a cause for favorable materials quantity variances?

Which of the following factors describes a possible cause for an unfavorable materials price variance?

The management of Green Energy Manufacturing is analyzing variable overhead variances for the fiscal period just ended. The flexible budget called for $176,000 in variable overhead but actual variable overhead was $100,000. In computing the overhead variances, Green's management discovered that it had used 40,000 pounds of direct material, rather than the budgeted amount of 44,000 pounds. (Pounds of direct material is the single overhead driver of variable overhead). The standard variable overhead rate per pound of direct material is $2.00. What is Green's variable overhead spending variance?

The objective of standard cost variance analysis is:

A materials price variance is computed as the difference between:

A static budget is a budget prepared before the beginning of the budget period based on expected level of operations; whereas, a flexible budget is prepared after the fact based on actual operations.

A variable overhead efficiency variance can be caused by using more than the allowed quantity of the various components of variable overhead.

Instant Manufacturing Company has the following information for this year. Standard factory overhead based on normal monthly activity of 40,000 direct labor-hours for 40,000 units is: Actual costs for 38,000 labor-hours were $196,000, of which $76,000 was fixed. Actual production was 38,400 units. Calculate the following variances: a. Variable overhead spending b. Variable overhead efficiency c. Fixed overhead budget

When using responsibility accounting, noncontrollable costs should be excluded from which reports?

The difference between an actual cost number and the related standard cost number is:

An investment center manager would be responsible only for revenues, costs, and profits.

A responsibility accounting system is a system that assigns responsibility for various accounting functions.

Early in September of this year, Frank Company's long-time supplier, the Lloyd Company, was closed unexpectedly because of a labor strike. Frank was forced to seek a backup supply source. After considerable delay, raw materials were obtained, but they were of significantly lower quality than those Lloyd provided, and they were more expensive because of special handling required to rush the orders. The delay created an unusual increase in idle time during the month; and once production resumed, the poor quality raw materials produced reductions in labor and machine productivity and increases in materials waste. Noticing a decline in employee morale, the plant manager decided to provide a company-sponsored employee picnic at the end of the month. By the beginning of October, Lloyd Company employees were back to work and Frank's operations were back to normal. Required: Identify factors from the problem that would likely cause the Frank Company to experience unfavorable variances. Indicate which of the following variance(s) was most likely affected by the factors identified in your answer. .Materials price variance .Materials quantity variance .Labor efficiency variance .Variable overhead spending variance .Variable overhead efficiency variance .Fixed overhead budget variance

The volume variance is caused by:

Before implementing a responsibility accounting system, all areas of authority and responsibility within an organization must be clearly defined. Explain how this accomplished and why it is important.

Lance Production Company has the following information: Standard factory overhead rates are based on a normal monthly volume of 5,000 units (1 standard direct labor-hour per unit). What is Lance's variable overhead efficiency variance?

The best cost driver that Johnson has for variable factory overhead in the assembly department is machine hours. During July, the company budgeted 360 machine hours and $3,240 for its Oklahoma plant's assembly department. The actual variable overhead incurred was $3,435, which was related to 375 machine hours. The variable overhead spending variance and variable overhead efficiency variance are:

The management of XYZ Company is analyzing fixed manufacturing overhead variances for the fiscal period just ended. For the period, XYZ had budgeted $400,000 in total fixed manufacturing overhead but had actually incurred $500,000. Also, the standard fixed overhead rate was $10 per machine hour and XYZ had allowed for 25,000 machine hours. What is XYZ's fixed overhead volume variance?