Exam 6: Performance Evaluation: Variance Analysis

The direct materials price variance is calculated using the standard quantity of direct materials purchased,the actual price paid for the direct materials,and the standard price for the direct materials purchased.

Which of the following is not a reason variable overhead costs might differ from the flexible budget costs?

Because the production managers are the ones to negotiate the purchase price,they are typically held accountable for the direct materials price variance.

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements,and after discussions with the sales and production managers,the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units. Actual results for the year were 28,000 units, reflected in the following income statement: What is the sales volume variance for direct labor?

Which of the following is not a method companies use to reduce their labor costs?

The following labor standards have been set for a product: The following data pertain to operations for the period. Required Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

The variable overhead spending variance is calculated as

When a manager is investigating and understanding the cause of the variable overhead spending variance,he will most likely want to talk to the

When analyzing direct materials price and quantity variances,the responsibility typically lies with

Camping Supplies produces light-weight cots.The company plans to produce 10,000 cots this year.Fixed overhead costs for the factory are budgeted to be $50,000.The company actually spent $48,000 on fixed overhead and produced 8,000 cots. Required: Calculate the fixed overhead spending variance.

Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August,the company purchased 4,000 yards of artificial pine bough,and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough,and purchased 4 boxes of 5,000 sprigs of holly berries for $7,000 per box.The standard price for artificial pine bough is $2.60 per yard,and the standard price per sprig of holly berry is $1.45.During August,Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials price variance for sprigs of holly berries for August?

The difference between the actual cost of variable overhead items and the amount of variable overhead cost that is expected to be incurred at the actual level of activity base experienced is the

Which of the following would be a feasible explanation for an unfavorable direct materials quantity variance?

Purchasing a higher quality of materials than is specified by the standard will likely result in

When a variable overhead efficiency variance is identified,managers will want to talk with the production manager to evaluate the use of the activity base.

Which of the following is typically held responsible for direct labor rate variances?

If a company's workforce consists of a number of new hires,then their lack of training could lead to an unfavorable direct labor efficiency variance.

Which of the following variances would not be investigated by a manager following the management by exception principle?

Which of the following is a factor that could influence worker productivity?

Management by exception focuses on all variances,regardless of size or importance.