Exam 6: Performance Evaluation: Variance Analysis

The flexible budget breaks down into the rate and efficiency variances for direct labor. Required: a.List two reasons why actual wage rates might differ from standard wage rates,resulting in a direct labor rate variance. b.List two reasons why actual labor hours might differ from standard labor hours,resulting in a direct labor efficiency variance. Unit 6-3,

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 a factor that could influence worker productivity?

Variances have very important meanings,even before their causes are identified.

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 difference between actual sales volume and budgeted sales volume has an effect on

A favorable variance is a variance that increases the flexible budget amount relative to the static budgeted amount.

The two components of the direct labor flexible budget variance are the

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 is a factor that managers might use in deciding whether to investigate a variance?

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?

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

The direct materials price variance is calculated using which of the three amounts?

Variances are labeled as

Which of the following overhead variances is not correctly paired with a possible explanation for that variance?

The variable overhead spending variance is calculated as

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?

Which of the following employees is typically held accountable for the direct materials price variance?

When a variable overhead spending variance is identified,managers will want to talk with the purchasing manager about the purchase and/or use of variable overhead items.

Johnston Manufacturing Company purchased 14,000 switches to make 6,000