Exam 7: Flexible Budgets, Direct-Cost Variances, and Management Control

Efficiency is ________.

Classic Products Company manufactures colonial style desks. Some of the company's data was misplaced. Use the following information to replace the lost data: What amounts are reported for revenues in the flexible-budget (A) and the static-budget (B), respectively?

The only difference between the static budget and flexible budget is that the static budget is prepared using actual prices charged and costs per units incurred.

Continuous improvement through the use of standard costs is the process of repeatedly identifying the causes of variances, taking corrective actions, and evaluating results.

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. During June, Heavy Products produced and sold 25,000 containers using 23,000 pounds of direct materials at an average cost per pound of $75 and 17,500 direct manufacturing labor-hours at an average wage of $35.75 per hour. The direct material price variance during June is ________.

Which of the following information is needed to prepare a flexible budget?

Better Products Inc. planned to use $43 of material per unit but actually used $32 of material per unit, and planned to make 1,510 units but actually made 1,340 units. The flexible-budget amount for materials is ________.

Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. The explanation that lower-quality materials were purchased is most likely for ________.

A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were ________.

The goal of variance analysis is for managers to understand why variances arise, to learn, and to improve future performance.

Which of the following can be a reason for a favorable price variance for direct materials?

A difference between the static-budget and the flexible-budget amounts is called the sales-volume variance.

A favorable price variance for direct manufacturing labor might indicate that ________.

If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

The textbook discusses three levels of variances, Level 0, Level 1, Level 2, and Level 3. Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.

An unfavorable variance indicates that ________.

Studies show that variance analysis is no longer a popular tool of corporate managers as they have adopted various other forms of performance evaluation.

Zebra Corporation currently produces baseball caps in an automated process. Expected production per month is 17,000 units, direct material costs are $7.50 per unit, and manufacturing overhead costs are $60,000 per month. Manufacturing overhead is entirely fixed costs. What is the flexible budget for 11,000 and 17,000 units, respectively?

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor-hours at an average wage of $21.56 per hour. June's direct material flexible-budget variance is ________.

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. During July, GII produced and sold 4,000 containers using 1,000 pounds of direct materials at an average cost per pound of $37 and 475 direct manufacturing labor hours at an average wage of $18.75 per hour. The direct material efficiency variance during July is ________.