Exam 6: Performance Evaluation: Variance Analysis

Flexible budgets are used as a tool for

The sales volume variance reflects

To identify a variance without indicating whether it is favorable f or unfavorable u does not indicate

The standard number of direct labor hours used in calculating the direct labor efficiency variance is based on

Your friend has accepted a position with a large manufacturing company as production manager.She has found out that she must analyze and report any variances that relate to production.She has been told that managers use a method called "management by exception" and is concerned that any variance will be viewed negatively by her supervisors. Required: Explain to your friend the concept of “management by exception” and put her mind at ease about all variances being viewed as negative and explain what factors may be considered when deciding what variances to investigate.

Nora,Inc.manufactures components used by a major cell phone manufacturer.During the year,Nora produced 160,000 components and used 40,500 direct labor hours.Nora based its current year budget on a production level of 150,000 components each of which requires 15 minutes of direct labor time.Total budgeted variable overhead for the year was $131,250.Actual variable overhead for the year was $145,800.What is Nora's flexible budget variable overhead variance?

If the actual price of direct materials purchased is $200 per unit while the standard price for direct materials is $180 per unit and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 1,200 units,

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 major factor in the amount of material used in production is the quality of the material.

The direct materials quantity variance is part of the direct materials flexible budget variance that is caused by

The variable overhead spending variance is 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 budgeted level of activity base experienced.

The algebraic equation for the direct labor efficiency variance is

The sales volume variance is influenced most heavily by actions of

Amos, Inc. uses a standard cost system in which direct material is carried at standard cost. Standards for one unit of product are: standard quantity of 8 ½ gallons and standard price $1.85 per gallon. During March, Amos purchased 150,000 gallons of direct material at a cost of $300,000 and used 150,500 gallons in production of 18,000 units. Required: Calculate the direct materials price and quantity variances and indicate whether the variances are favorable or unfavorable.

The flexible budget variance reflects

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 variable overhead?

Universal Outfitters,Inc.is a manufacturer of aluminum folding picnic tables.The company' controller has provided you with the following financial information: Required: Prepare a performance report for the period.

The following standards for variable manufacturing overhead have been established for Windsor, Inc. a manufacturer of reproduction vintage hats. Standard hours per unit $~~~~~~~~$ 2.5 hours Standard variable overhead rate $~~~~~~~~$ $15.80 per direct labor hour The following data pertain to operations for the month of July. Actual direct labor hours $~~~~~~~~$ 4,200 Actual total variable overhead cost $~~~~~~~~$ $63,050 Actual production $~~~~~~~~$ 1,800 units Required: Calculate the variable overhead spending variance and the variable overhead efficiency variance for July and indicate whether the variances are favorable or unfavorable.

All differences between the flexible budget and actual performance must result from

Assembly line workers at Thompson Manufacturing worked a total of 9,300 direct labor hours to produce 36,000 units. The standard for producing one unit is 15 minutes at a wage rate of $10.50. If the actual wage rate was $10 per direct labor hour, Thompson’s direct labor efficiency variance is