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

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit × $20.00/hour) = $70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December:The direct labor efficiency variance for December, to the nearest dollar, was:

In September, Larson Inc. sold 40,000 units of its only product for $240,000, and incurred a total cost of $225,000, of which $25,000 was fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U. The amount of operating income in the flexible budget (FB) for September, to the nearest dollar, was:

Prokp Co.'s records for April disclosed the following data relating to direct labor: Prokp's standard direct labor rate per hour (SP) in April, rounded to two decimal places, was:

Chemical, Inc., has set the following standards for direct materials and direct labor for each 20-pound bag of Weed-Be-Doom: The company manufactured 100,000 bags of Weed-Be-Doom in December and used 2,700,000 pounds of XF-2000 and 5,200 direct labor hours. During the month, the company purchased 3,000,000 lbs. of XF-2000 at $0.075 per pound, and incurred a total payroll of $182,000 for direct labor. The company records purchases at standard cost and therefore recognizes material price variances at point of purchase. Required: 1. Compute the price and usage variances for direct materials, and the rate and efficiency variances for direct labor for the month of December. Round all four answers to nearest dollar. 2. Prepare journal entries to record the preceding events.

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit × $20.00/hour) = $70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December: The direct labor rate variance for December, to the nearest dollar, was:

Norio Manufacturing uses powdered plastics (PPS) to manufacture a high-pressure board used in a digital equipment product, Flex 10. Information concerning its operation in June is as follows: Assume that Norio does not maintain an inventory of materials, so that the amount of materials used is equal to the amount of materials purchased. The direct materials purchase-price variance (rounded to the nearest dollar) is:

The direct materials usage ratio for a given period is:

Balt Company maintains a standard cost system; as such, all inventories, including materials, are carried on the books at standard cost. Last period, Balt used 5,000 pounds of Material H to produce 800 units of Product C8. The company has established a standard of 7 pounds of Material H per unit of C8, at a price of $7.50 per pound of material. During the period the inventory for Material H decreased by 2,000 pounds. The company spent $25,000 during the period to purchase material H. Required: 1. Calculate the direct materials purchase-price variance for the period, rounded to the nearest dollar. 2. Calculate the direct materials usage variance for the period, rounded to the nearest whole dollar. 3. Provide the correct summary journal entry to record the purchase, on credit, of materials during the period. 4. Provide the correct summary journal to record direct materials cost for materials issued to production during the period.

Minmax Co.'s direct labor information for February is as follows: Direct labor hours worked (AQ) 33,600 Standard direct labor hours for units manufactured (SQ) 35,000 Unfavorable direct labor rate variance \ 11,760 Total payroll for direct labor \ 470,400 The total standard direct labor cost for the units manufactured in February, rounded to the nearest dollar, was:

Sarheen, Inc.maintains no inventories and has collected the following data on one of its products for the most recent period: Direct material standard (4lbs. @\ 1/ .) \ 4 per unit Total direct materials cost variance-unfavorable \ 13,750 Actual direct material used 125,000. Actual finished units produced 25,000 units 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.)

Contemporary furniture manufactures office desks. The company budgeted to sell 5,000 desks at $200.00 per desk in 2018. Budgeted costs include $80.00 variable cost per desk, and $200,000 fixed costs/year. In 2018 the company sold 6,000 desks at $190.00, and incurred $78.00 variable cost per desk and $220,000 fixed cost for the year. Required: Prepare, in proper form, a variance analysis report identifying both flexible budget and sales-volume variances. Label all component variances as (F) (favorable) or (U) (unfavorable).

Fill in the unknowns A through S below.

Pokeman Bunch Inc., manufactures Poke Monster figures, and has the following data from its operation for the year just completed.The amount C is:

Balmer Corporation's master budget for the year is presented below: During the period, the company manufactured and sold 42,000 units. Required: 1.Prepare a flexible budget (FB) for the actual output level achieved during the period. 2.What is the definition of a FB? For what managerial purpose is a FB useful? Be specific about the types of information (and variances) that management can generate, at the end of an accounting period, given a flexible budget and its master (static) budget.

What is a direct labor efficiency variance, and what are some of the likely causes of this variance?

Prokp Co.'s records for April disclosed the following data relating to direct labor: Prokp's total standard direct labor cost for the output in April (to the nearest dollar) was:

Roncy Manufacturing uses enhanced powder plastics (EPP) to manufacture a high-pressure board, Dura-Plastic. Information concerning its operation in June was as follows:The direct materials usage (efficiency) variance for June, to the nearest dollar, was:

The "flexible budget" can best be described as a budget that adjusts:

Lucky Company's direct labor information for the month of February is as follows: Actual direct labor hours worked (AQ) 61,500 Standard direct labor hours allowed (SQ) 63,000 Total payroll for direct labor \ 774,900 Direct labor efficiency variance \ 18,000 The standard direct labor rate per hour (SP) for February (rounded to two decimal places) was:

Ventura uses a just-in-time (JIT) manufacturing system for all its materials, components, and products. The master budget of the company for June called for use of 11,000 square feet of materials, while the flexible budget for the actual output of the month had 10,000 square feet of materials at a standard cost (SP) of $9.60 per square foot. Company records show that the actual price paid (AP) for the materials used in June was $9.50 per square foot, and that the direct materials purchase-price variance for the month was $1,040. The actual total quantity of materials purchased during the month, rounded to the nearest whole number, was: