Exam 7: Flexible Budgets, Variances, and Management Control: I

Answer the following question(s) using the information below. Abernathy Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. -What is the static-budget variance of variable costs?

Which of the following is part of the benchmarking process?

You have been promoted to management accountant at a hospital. One of the things you noted from reviewing past internal reports is that the quality of the data is poor at times, and there is no objective standard for evaluating performance. When you asked about this at a board of directors meeting, the consensus reply was that the hospital's operations were too subjective and service orientated, and that it was a non-profit organization, so setting profit goals was of no value. Required: Comment on a possible approach that could be taken to provide objective criteria for performance evaluation in this situation.

Answer the following question(s) using the information below. Abernathy Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and used a budgeted selling price of $10 per unit. -What is the static-budget variance of operating income?

The term efficiency variance is the direct cost portion of the flexible-budget variance.

A continuous improvement budgeted cost, in terms of variances and standard costs,