Exam 6: Performance Evaluation: Variance Analysis

Sterling Industries manufactures saddles for show horses.Sterling's actual fixed overhead for the year was $123,400.During the year Sterling produced 12,300 saddles using 129,150 direct labor hours.Sterling had budgeted to produce 13,000 saddles and had budgeted to use 130,000 direct labor hours.Sterling's fixed overhead spending variance was $4,200 favorable for the year.What was Sterling's budgeted fixed overhead for the year if necessary,round your ans to the nearest dollar?

While the sales manager may be ecstatic to learn he has beaten his sales goal,the production manager may not share that enthusiasm because having more sales than anticipated required overtime for workers and additional maintenance on some machinery.Managers use budgeting to control and evaluate their operations.Two types of budgets that are discussed in chapter 6 are the static budget and the flexible budget.How do the two budgets differ and explain how the flexible budget is used in evaluating performance.

The flexible budget variance for materials has which of the following two components?

Which of the following is not a reason wage rates may vary from the standard?

Backyard Creations purchased 7,000 feet of copper tubing at a price of $2.70 per foot and used 7,200 feet during the period.The standard price of the copper tubing was $2.50 per foot.What is Backyard Creations' direct materials price variance for the period?

Which of the following is not used in calculating the direct labor efficiency variance?

Most companies monitor their performance

The algebraic equation for the direct materials price variance is

Assume the actual sales volume is 69,000 units and the budgeted sales volume is 70,000 units. If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

Luckett Company’s standards call for two feet of direct material for each unit. The standard price of one foot is $2. Actual production was 50,000 units requiring 105,000 feet of direct material. Luckett purchased 107,000 feet at a unit price of $2.10 per foot. Required: Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.

The flexible budget variance for fixed overhead is known as the

The difference between the static budget sales revenue and the flexible budget sales revenue is referred to as the

Margie's Creations manufactures ceramic figurines.In planning for the coming year,the budget committee is considering three different sales targets: 6,000 figurines,7,000 figurines,and 8,000 figurines.Figurines sell for $39 each.The standard cost information for one figurine is as follows: Required: Prepare a flexible budget for the three sales levels under consideration.

The direct materials quantity variance is the part of the direct materials flexible budget variance that is caused by using more or less material than the standard quantity allowed for actual production.

Amos, Inc. uses a standard cost system with the following labor standards for one unit of product: standard hours 0.2 and standard wage rate $9. During January, Amos incurred 3,700 hours of direct labor and paid $32,760 in wages in production of 18,000 units. Required: Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Assume the static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50,what is the sales volume variance?

If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance,the variable overhead efficiency variance will be

Suppose you are investigating direct materials variances.You find that the direct materials price variance is favorable,but the direct materials quantity variance is unfavorable.Assuming that the quantity purchased and used were equal,what circumstances could explain both variances?

The sales volume variance is the difference between the flexible budget and the static budget.

The sales volume variance is the difference between