Exam 14: Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

Patterson, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this period are presented below. Required: 1. What was the actual operating income for the period? 2. What is the firm's master budget operating income? 3. What was the flexible-budget operating income for the period? 4. What is the total operating-income variance of the period? 5. What was the sales-volume variance, in terms of operating income, for the period? 6. What are the key elements of the traditional financial control model? 7. What are the primary limitations of the traditional financial control model?

The amount A is:

How many units of the product were produced in August?

Authoritative standards (within the context of a standard cost system) are determined primarily by:

A favorable price variance for direct materials indicates that:

The flexible-budget operating income in October is:

The Chen Company uses a standard cost system. As such, all of its inventories are carried on the books at standard, not actual, cost. During the most recent accounting period, the company had the following summary transactions: 1. Purchased, on credit, direct materials; the standard cost of these materials was $30,000, while the actual cost was $32,000. 2. Issued to production direct materials. The standard cost of materials that should have been used for this period's output was $35,000, while the standard cost of materials actually used in production during the period was $33,000. 3. Actual direct labor cost, which has been incurred but not yet paid, for the period was $75,000. The standard direct labor cost for this period's output was $80,000. The direct labor efficiency variance for the period was $10,000(F). 4. For the units completed during the period, the standard direct labor cost was $78,000, while the standard direct materials cost was $34,000. 5. For the units sold during the period, the standard materials cost was $30,000, while the standard direct labor cost was $76,000 Required: Given the above information, provide the correct journal entries for the following: 1. Purchase of direct materials 2. Issuance of materials to production. 3. Direct labor cost for the period. 4. The labor and materials cost associated with finished production this period. 5. The labor and materials cost associated with items sold during the period.

An organization subject to intense competitive pressures would most likely use:

The number of pounds of direct materials used to produce July's output was:

Sarheen, Inc. maintains no inventories and has collected the following data on one of its products for the most recent period: Required: Determine: 1. The direct material usage (quantity) variance. 2. The actual cost of the direct materials purchased and used during the period. (Hint: these two amounts are identical.) 3. The direct material price variance. 4. The correct summary journal entry to record direct material costs for this period's production, including associated standard cost variances. (Note: assume that any price variances are recorded at point of production.)

Fill in the unknowns A through S below.

Let "AQ" = actual quantity of direct materials issued to production, AP = actual price paid per unit of direct material purchased, SP = standard price per unit of direct material, and SP = standard quantity of direct materials allowed based on actual output for the period. Required: Use the above notation to develop a formula (i.e., an equation) for each of the following standard cost variances: 1. Direct materials price variance (calculated at point of production, not point of purchase). 2. Direct materials usage variance. 3. Flexible-budget (FB) variance for direct materials. 4. Joint price-quantity variance for direct materials.

The column heading identified as B is:

The total standard direct labor cost for the units manufactured in February is:

What was the direct materials price variance for July?

Which one of the following is the difference in direct material costs between the actual cost incurred during the period and the total standard cost in the flexible budget for the units manufactured during the period?

The difference between the actual sales volume for a period and the flexible-budget sales volume is:

Shoemaker Perkins Company uses a standard cost system and had 400 pounds of raw material X15 on hand on September 1. The standard cost is $10 per pound. The standard calls for 2 pounds of material X15 for each unit of the product manufactured. The company manufactured 600 units of the product in September, and had 500 pounds of Material X-15 in stock on September 30. The actual price for Material X-15 purchased during the month was $1 per pound below the standard cost. The material usage variance in September was $3,000 unfavorable. What is the purchase-price variance for Material X in September?