Exam 6: Performance Evaluation: Variance Analysis

A material variance is one that is large enough to make a difference in the outcome of a decision.

If a company uses more direct labor hours than the standard allowed,the result is

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 flexible budget variance for direct labor?

Jensen manufactures speakers for car stereos and applies fixed overhead based on direct labor hours.Jensen's fixed overhead spending variance for the year was $12,500 favorable.For the current year,the company had budgeted to produce 124,000 speakers.Jensen's actual fixed overhead for the year was $378,100.Jensen produced 122,000 speakers and used 183,000 direct labor hours,which was the standard hours allowed for the number of speakers produced.What was Jensen's budgeted fixed overhead rate per direct labor hour for the year if necessary,round your ans to the nearest cent?

Materiality can be measured in terms of

Adler Industries uses a standard cost system in which direct material is carried at standard cost. Adler has established the following standards: standard quantity of 8 pounds per unit, standard price $1.80 per pound. During January, Adler purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in production of 18,700 units. Required: Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable.

The flexible budget variance is the difference between the static budgeted amounts and the flexible budgeted amounts.

The flexible budget variance is influenced most heavily by actions of

Hunter Company produces personalized towel wraps.During May,the company's actual wage rate was $8.50.The standard wage rate is $8 per hour,and the standard hours allowed for actual production was 9,000.The favorable direct labor efficiency variance for May was $1,200. Required: How many hours were actually worked during May?

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 quantity variance for sprigs of holly berries for August?

The flexible budget breaks down into the price and quantity variances for direct materials. Required: a. List two reasons why actual prices might differ from standard prices, resulting in a direct materials price variance. b. List two reasons why actual materials usage might differ from standard material usage, resulting in a direct materials quantity variance.