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

Precilla Company uses a standard costing system that allows 2 pounds of direct materials for one finished unit.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 Pricilla has an unfavorable direct materials usage variance of $5,000.Also,the company records any price variance for materials at time of purchase. The number of pounds of direct materials used to produce July's output was:

Appliance,Inc.manufactured 10,000 units.The standard cost sheet indicates that the standard direct labor cost per unit is $3.00.The performance report for the period includes a favorable direct labor rate variance of $2,000,and a favorable direct labor efficiency variance of $500. Required: What was the total actual cost of direct labor incurred during the period?

Lucky Company's direct labor information for the month of February is as follows: The direct labor flexible-budget variance is:

Chapter 14 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.

Marv Company's direct labor costs for manufacturing its only product were as follows for October: The total direct labor variance for October was:

Ventura uses a just-in-time (JIT)manufacturing system for all of 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 of $9.60 per square foot.Company records show that the actual price paid 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 materials usage (quantity)variance for June was:

Marv Company's direct labor costs for manufacturing its only product were as follows for October: The direct labor efficiency variance for October was:

The difference between the actual operating income of the period and master budgeted operating income for the period is the:

Roncy Manufacturing uses enhanced powder plastics (EPP)to manufacture high-pressure boards,Dura-Plastic.Information concerning its operation in June was as follows: The standard cost per ounce of EPP is:

Mandy Company has the following direct labor costs last month: What was Mandy's actual direct labor rate per hour?

Subscript "a" = actual;subscript "s" = standard;Q = quantity of direct materials issued to production;P = price paid for unit of direct materials. Required: Use the above notation to develop a formula for each of the following standard cost variances: (A)Direct materials price variance (calculated at point of production,not point of purchase). (B)Direct materials usage variance. (C)Flexible-budget (FB)variance for direct materials. (D)Joint price-quantity variance for direct materials.

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 is 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 sales volume variance,in terms of operating income,is:

A company's master budget for October is to manufacture and sell 30,000 units for a total of $270,000 with 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 sales volume variance,in terms of operating income,for October is:

Ventura uses a just-in-time (JIT)manufacturing system for all of 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 of $9.60 per square foot.Company records show that the actual price paid 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 was:

Ann Jacobson's supervisor has asked her to list any concerns she might have about the proposed development of standards to measure performance and to reward superior performance in her department.Ann's department handles customer calls,directing customer questions and complaints to the appropriate persons within the firm.The company has never before used any performance measure nor paid any performance-related bonuses.It hopes to install a simple but effective system to achieve its twin goals of cost control and performance measurement.Develop the list for Ann based on the information above.

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

Minmax Co.'s direct labor information for February is as follows: The total direct labor flexible-budget variance in February is:

A standard cost system should be designed to generate and report variances:

An organization's overall management accounting and control system:

Mandy Company has the following direct labor costs last month: What was Mandy's direct labor flexible-budget variance?