Exam 8: Performance Evaluation

Assuming actual volume is 10,000 units and planned volume is 12,000 units,the sales volume variance in units:

A benefit of using a standard cost system is that it can boost morale and motivate employees,if properly maintained.

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

A cost variance is unfavorable if actual cost exceeds standard cost.

Indicate whether each of the following statements is true or false. A favorable variance may indicate the existence of unfavorable conditions.______ Managers should be praised or punished based on variances.______ Budget slack exists when performance standards are set at an ideal,unachievable level.______ Establishing standards is the least difficult aspect of using a standard cost system.______ A standard is the amount a price,cost,or quantity should be.______

Management by exception means that only unfavorable cost variances are investigated.

What are examples of budget gamesmanship that may occur in a company,and how can the gamesmanship be reduced?

Indicate whether each of the following statements is true or false. A company's standard costs may need to be reevaluated when there is a change in the training and experience level of the workforce.______ Standard costs are the basis for preparing flexible budgets but not static budgets.______ Standard costing focuses managerial attention on operations that are not functioning normally.______ Standard costing does not fit with the practice of management by exception.______ Standard costs should not serve as benchmarks for evaluating performance.______

Item to Classify Starddard Actual Sales Reveruse 820,000 835,000 Wages 125,000 128,000 S\&A Expenses 400,000 408,000 Cost of Goods Sold 608,000 600,000 The sales revenue flexible budget variance was:

Which of the following applications is most suited for developing flexible budgets?

Item to Classify Standard Actual Sales volume 100,000 units 96,000 units Sales price \ 4 per unit \3 .90 per unit Material usage 40,000 gallons 42,000 gallons Labor price 12.50 per hour 12.45 per hour All of the following variances are unfavorable except?

Timberlake Company planned for a production and sales volume of 12,000 units.However,the company actually makes and sells 13,000 units. Per unit standards Static Budget Flexible Budget Number of units 12,000 13,000 Sales revenue \ 65.00 \ 780,000 \ 845,000 Variable manufacturing costs: Materials \ 11.00 Labor \ 9.00 108,000 117,000 Overhead \ 4.20 50,400 54,600 Variable general, selling, and administrative costs \ 11.00 132,000 143,000 Contribution margin \ 357,600 \ 387,400 Fixed costs Manufacturing overhead 100,800 100,800 General, selling, and administrative costs Net income What was the sales volume variance?

Sometimes employees will deliberately overstate the amount of materials and/or labor that should be required to complete a job.The difference between inflated and realistic standards is known as:

Item to Classify Standard Actual Sales volume 100,000 units 96,000 units Sales price \ 4 per unit \3 .90 per unit Material usage 40,000 gallons 42,000 gallons Labor price 12.50 per hour 12.45 per hour The sales volume variance was:

When would a sales price variance be listed as unfavorable?

Indicate whether each of the following statements is true or false. A flexible budget can be viewed as an extension of a company's master budget.______ The master budget is a static budget because it is prepared for a single level of volume.______ Standards are established for a company's costs but not for the selling prices of its goods and services.______ If rent is budgeted at $34,000 for 10,000 units,rent would also be budgeted at $34,000 for 11,000 units.______ Flexible and static budgets use the same per-unit standard amounts for sales and variable costs.______

Baker charges its customers $60 per hour.The chief operating officer expected that the company would provide 40,000 hours of service to clients.However,the vice president for marketing argues that the actual number of hours may range from 36,000 to 44,000 hours.Baker's standard variable cost is $32.50 per hour,and its standard fixed cost is $750,000. Required: Prepare flexible budgets for 36,000,40,000,and 44,000 hours.

The Ferguson Company estimated that October sales would be 100,000 units with an average selling price of $6.00.Actual sales for October were 105,000 units,and average selling price was $5.95. The sales volume variance was:

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00.Actual sales for April were 149,000 units,and average selling price was $6.12. The sales volume variance was:

White Company budgeted for $200,000 of fixed overhead cost and volume of 40,000 units.During the year,the company produced and sold 39,000 units and spent $210,000 on fixed overhead. The fixed overhead cost spending variance is: