Exam 7: Flexible Budgets,direct-Cost Variances,and Management Control

A company has a policy "investigate all variances exceeding $3,000 or 15% of the budgeted cost,whichever is lower." There is a variance of $2,000 in repair and maintenance costs of $12,000.What does the company do in the given situation?

Effectiveness is ________.

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The actual amount spent for Material B was ________.

Direct material price variance is likely to be unfavorable if the purchasing manager switched to a lower-price supplier.

A favorable efficiency variance for direct manufacturing labor indicates that ________.

Genent Industries,Inc.(GII),developed standard costs for direct material and direct labor.In 2017,GII estimated the following standard costs for one of their major products,the 30-gallon heavy-duty plastic container. During July,GII produced and sold 4,000 containers using 1,350 pounds of direct materials at an average cost per pound of $48 and 2,450 direct manufacturing labor hours at an average wage of $12.25 per hour. July's direct material flexible-budget variance is ________.

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data: What is the total flexible-budget variance (D)?

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Harland Corporation currently produces cardboard boxes in an automated process.Expected production per month is 20,000 units,direct material costs are $2.50 per unit,and manufacturing overhead costs are $15,000 per month.Manufacturing overhead is all fixed costs.What are the flexible budget for 14,000 and 20,000 units,respectively?

Which of the following is true of variance?

For any actual level of output,the efficiency variance is the difference between actual quantity of input used and the budgeted quantity of input allowed to produce actual output,multiplied by the budgeted price.

A variance is ________.

Which of the following is a disadvantage of using the standards developed by a firm itself to develop a budget?

Goodard Inc.planned to use $155 of material per unit but actually used $147 of material per unit,and planned to make 1,110 units but actually made 1,000 units. The sales-volume variance for materials is ________.

Better Products Inc.planned to use $40 of material per unit but actually used $30 of material per unit,and planned to make 1,560 units but actually made 1,310 units. The sales-volume variance for materials is ________.

Which of the following statements is true of benchmarking?

The actual information pertains to the month of June.As a part of the budgeting process,Great Cabinets Company developed the following static budget for June.Great Cabinets is in the process of preparing the flexible budget and understanding the results. The flexible budget will report ________ for the fixed costs.

Possible operational causes of an unfavorable direct materials efficiency variance include poor design of products or processes.

Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The explanation that lower-quality materials were purchased is most likely for ________.

Mid City Products Inc.(MCP),developed standard costs for direct material and direct labor.In 2017,MCP estimated the following standard costs for one of their most popular products. During September,MCP produced and sold 2,000 units using 12,400 pounds of direct materials at an average cost per pound of $4.00 and 950 direct labor hours at an average wage of $15.15 per hour. The direct labor price variance during September is ________.