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

Using continuous-improvement standards likely causes (or brings about) all the following except:

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.The amount D is:

Mandy Company has the following information from last month: Standard direct labor hours allowed for units produced (SQ) 3,600 Actual direct labor hours worked (AQ) 3,480 Direct labor efficiency variance, favorable (F) \ 5,760 Total payroll \ 187,920 What was Mandy's direct labor flexible-budget variance for the month, rounded to the nearest dollar?

For control purposes, it is usually preferable to calculate the materials price variance:

A total variable cost variance (such as for direct materials) can be broken down into separate variances that evaluate:

A company's flexible budget for 15,000 units of production showed sales of $48,000, variable costs of $18,000, and fixed costs of $12,000. The operating income in the master budget for 20,000 units, to the nearest dollar, would be:

The total variable cost flexible-budget variance for any given period:

Which of the following statements about processing cycle efficiency (PCE) is not true?

Precilla Company uses a standard costing system that allows 2.0 pounds of direct materials for one finished unit of product. During July, the company purchased 40,000 pounds of direct materials for $210,000, and manufactured 12,000 finished units. The standard direct materials cost allowed for the units manufactured is $120,000. The performance report shows that Precilla has an unfavorable direct materials usage variance of $5,000. Also, the company records any price variance for materials at time of purchase. The direct materials purchase-price variance in July (to the nearest dollar) was:

By convention, short-term financial control is accomplished by all the following except:

What is a direct materials usage ratio? For what purpose is this ratio used?

The total variable cost flexible-budget variance includes all the following except:

The difference between the actual operating income of the period and master budget operating income for the period is defined as the:

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.The amount B is:

Chapter 14 (Operational Performance Measurement) argues that a comprehensive management accounting and control system would include nonfinancial as well as financial performance indicators. Two such nonfinancial performance indicators were discussed in conjunction with organizations that adopt a just-in-time (JIT) production philosophy: customer-response time (CRT) and process cycle efficiency (PCE). Explain each of these two performance indicators.

Sheldon Company manufactures only one product and uses a standard cost system. During the past month, manufacturing operations for the company had the following variances: direct labor rate variance = $30,000 favorable; direct labor efficiency variance = $50,000 unfavorable. Sheldon allows 5 standard direct labor hours per unit produced, and its standard direct labor hourly pay rate is $50. During the month, the company used 25% more direct labor hours than the standard allowed. What were the total standard hours allowed (SQ) for the units manufactured during the month, rounded to the nearest whole number?

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 direct labor flexible-budget variance in February, to the nearest dollar, was:

A company's master budget for October is to manufacture and sell 30,000 units, for a total sales revenue of $270,000, total variable costs of $180,000, and total fixed costs of $24,000. The company actually manufactured and sold 32,000 units, and generated $45,000 of operating income in October. The flexible-budget operating income in October, to the nearest dollar, was:

Joe Malay received the following report on the Division's operation for the month of August: Direct labor rate variance = $25,000 unfavorable; Direct labor efficiency variance = $70,000 (?). The standard calls for 3.0 direct labor hours per unit of output at $28.00 per labor hour (SP). The standard direct labor hours allowed for the units manufactured (SQ) is 20 percent more than the total direct labor hours worked (AQ) in August. What were the total standard hours allowed (SQ) for the units manufactured in August (to the nearest whole number)?

What four variances may be included as a component of the total variable cost flexible-budget variance for a given period?