Exam 6: Performance Evaluation: Variance Analysis

Backyard Creations purchased 7,200 feet of copper tubing at a price of $2.60 per foot and used 7,500 feet during the period.The standard price of the copper tubing was $2.70 per foot.What is Backyard Creations' direct materials price variance for the period?

The direct materials price variance is based on the amount of materials

Fox Company manufactures decorative fountains used by hotels and restaurants.The company applies fixed overhead based on direct labor hours.Fox Company's fixed overhead spending variance for the year was $6,500 unfavorable.For the current year,the company had budgeted to produce 78,000 fountains.The company's actual fixed overhead for the year was $689,000.Fox produced 75,000 fountains and used 131,250 direct labor hours,which was the standard hours allowed for the number of fountains produced.What was Fox's budgeted fixed overhead rate per direct labor hour for the year if necessary,round your answer to the nearest cent?

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?

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

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 artificial pine boughs for August?

If the direct materials purchased is $200 per

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

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.

Why is the direct materials price variance based on the quantity of materials purchased,but the direct materials quantity variance on the quantity of materials used?

Academy Awards makes plaques and trophies.Last year the company's workers clocked 600 more direct labor hours than the flexible budget amount of 10,000 hours to complete 30,000 plaques and trophies.All workers were paid $8 per hour,which was $0.50 more than the standard wage rate. Required: Calculate Academy Awards' direct labor efficiency variance for the period.

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

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

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.

Which of the following is not a factor that could influence worker productivity?

The master budget is an example of a flexible budget.

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.

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

Adler Industries uses a standard cost system.Adler has established the following standards for one

New Rock,Inc.sells video games it has purchased from a local distributor.The following static budget is based on sales of 8,000 games.However,New Rock only sold 7,800 games during the year.Fixed costs are 30% of total operating expenses Required: Prepare a flexible budget.