Exam 7: Flexible Budgets, Variances, and Management Control: I

Jam Life Inc. manufactures jam products. It makes a mixed fruit and berry jam by blending strawberries, peaches, and apricots. Budgeted costs to produce 100,000 kilograms of jam in September were: Actual costs to produce 100,000 kilograms of jam in September were: Required: 1. Calculate the total direct materials rate and efficiency variances. 2. Calculate the total direct materials mix and yield variances. 3. Jam Life's largest competitor sells a 500 gram jar of mixed fruit and berry jam for $4.50 . If Jam Life's management wants to meet this price and cover monthly fixed costs of $180,000 then what will be the company's margin of safety? (Assume that Jam Life will continue to use the budgeted mix of ingredients.)

Use the information below to answer the following question(s). Tractor Corporation produces toy tractors. The company uses the following direct cost categories: Actual performance for the company is shown below: Actual output: 5,000 units Direct Materials: Direct Manufacturing Labour: Direct Marketing Labour: -What is the combined total of the flexible budget variances?

A packaging company produces a variety of cardboard boxes in an automated process. Expected production per month is 160,000 units. The required direct materials costs $0.30 per unit. Variable manufacturing overhead costs are $24,000 per month and are allocated based on units of production. Direct labour is budgeted to be $6,400. The company only produces based on customer orders, so all production is considered sold as it is produced. Revenue for the month will be $240,000. What is the budgeted contribution margin per unit?

Your company hired a summer student as an accounting intern to prepare variance analysis for the plant manager (the student's father), so that the entire organization could become more effective and efficient. Up to this time, the company used a budget but only one that specified sales and production in units, and each department gauged and reported on its own performance based on historical rules of thumb developed over the years. The plant manager instructed every department manager to assist the new accountant as achieving favourable results would ensure he got a good bonus. For the month of May, the student met with the department heads of each functional area, obtaining from them the data and estimates to come up with: standard costs and prices; and, standard direct material usage and standard direct labour usage. Then in June, July and August the student collected; and, analyzed the variance results, and prepared a report for the plant manager. The report indicated favourable variances in virtually every functional area, allowing the plant manager to receive a larger bonus than usual. Required: Comment on the above process, in terms of variance analysis.

Match the department that is most likely responsible for the listed variance. -Direct labour efficiency variance

The input standard cost per completed unit may be calculated by

Mittrell Company produces chairs and has determined the following direct cost categories and budgeted amounts: Required: a. What is the combined total of the flexible-budget variances? b. What is the rate variance of the direct materials? c. What is the rate variance of the direct manufacturing labour and the direct marketing labour, respectively? d. What is the efficiency variance for direct materials? e. What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?

Use the information below to answer the following question(s). Tractor Corporation produces toy tractors. The company uses the following direct cost categories: Actual performance for the company is shown below: Actual output: 5,000 units Direct Materials: Direct Manufacturing Labour: Direct Marketing Labour: -What is the rate variance of the direct manufacturing labour, and the direct marketing labour, respectively?

A continuous improvement budgeted cost, in terms of variances and standard costs

Whistler Table Company manufactures tables for schools. The current year operating budget is based on sales of 20,000 units at $100 per table. Operating income is anticipated to be $120,000. Budgeted variable costs are $64 per unit while fixed costs total $600,000. Actual income for the year was $2,184,000 on actual sales of 21,000 units. Actual variable costs were $60 per unit and fixed costs totaled $570,000. Required: Prepare a Level 2 variance analysis report with both flexible-budget and sales-volume variances.

When a journal entry is made in a standard cost system to record the liability for direct manufacturing labour costs, the difference between the debit to the work-in-process control account and the credit to the payroll payables is

Use the information below to answer the following question(s). Tractor Corporation produces toy tractors. The company uses the following direct cost categories: Actual performance for the company is shown below: Actual output: 5,000 units Direct Materials: Direct Manufacturing Labour: Direct Marketing Labour: -What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively?

Answer the following question(s) using the information below. Apple Valley Orchards, Inc. (AVO), developed standard costs for direct material and direct labour. In 2016, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples. During September 2017, AVO produced and sold 1,200 pies using 1,875 kilograms of direct materials at an average cost per kilogram of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour. -September's direct material rate variance is

Use the information below to answer the following question(s). Everclean Filter Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and had used a budgeted selling price of $11 per unit. ‪ -What is the static-budget variance of revenues?

Use the information below to answer the following question(s). Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2016, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container. During July 2017, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour. -July's direct material rate variance is

Compute the total standard cost per book for Publisher's Company using the following information: 1) Direct Materials: 1 ream of paper allowed per output unit manufactured, at $5.00 per ream. 2) Direct Mfg. Labour: 0.35 labour-hours of input allowed per output unit finished, at $17.50 standard cost per hour. 3) Variable Manufacturing Overhead: assigned on the basis of 0.25 per hour at $25 standard cost per hour per output unit finished.

You have been promoted to management accountant at a hospital. One of the things you noted from reviewing past internal reports is that the quality of the data is poor at times, and there is no objective standard for evaluating performance. When you asked about this at a board of directors meeting, the consensus reply was that the hospital's operations were too subjective and service orientated, and that it was a non-profit organization, so setting profit goals was of no value. Required: Comment on a possible approach that could be taken to provide objective criteria for performance evaluation in this situation.

Bach Table Company manufactures tables for schools. The current year operating budget is based on sales of 40,000 units at $50 per table. Operating income is anticipated to be $300,000. Budgeted variable costs are $30 per unit, while fixed costs total $500,000. Actual income for the year was a surprising $2,268,000 on actual sales of 42,000 units. Actual variable costs were $33 per unit and fixed costs totaled $550,000. Required: Prepare a Level 2 variance analysis report with both flexible-budget and sales-volume variances.

The flexible-budget variance measures

The following data for the lew grow Garden Supplies Company pertains to the production of 2,500 garden spades during March. The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground. Direct Materials (all materials purchased were used): Standard cost: $1.00 per handle and $3.50 per metal tool. Total actual cost: $11,350. Materials flexible-budget efficiency variance was $650 unfavourable. Direct Manufacturing Labour: Standard cost is 5 garden spades per hour at $20.00 per hour. Actual cost per hour was $21.00. Labour efficiency variance was $400 favourable. Required: a. What is the standard direct material amount per garden spade? b. What is the standard cost allowed for all units produced? c. What is the total direct materials flexible-budget variance? d. What is the direct material flexible-budget rate variance? e. What is the total actual cost of direct manufacturing labour? f. What is the labour rate variance for direct manufacturing labour?