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

The actual information pertains to the third quarter.As part of the budgeting process,the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter.Duck Decoy is in the process of preparing the flexible budget and understanding the results. The flexible budget will report ________ for the fixed costs.

When using variance analysis for performance evaluation,managers often focus on effectiveness and efficiency as two of the common attributes used in comparing expected results with actual results.

From the perspective of control,the direct materials price variance should be isolated at the time of sales.

For critical items such as product defects,a small variance may prompt investigation.

It is difficult for firms to find appropriate benchmarks because differences can exist across companies in their strategies,inventory costing methods,depreciation methods,and so on.

The following data for the telephone company pertain to the production of 450 rolls of telephone wire during June.Selected items are omitted because the costing records were lost in a windstorm. Required: Compute the missing elements in the report represented by the lettered items.

What is benchmarking,and how is it useful to a company?

When preparing a flexible budget,fixed costs must be adjusted to reflect actual costs at actual output.

Lincoln Corporation used the following data to evaluate their current operating system.The company sells items for $18 each and used a budgeted selling price of $18 per unit. What is the static-budget variance of operating income?

When benchmarking it is best when management accountants simply analyze the costs and allow management to provide the insight as to why the revenues and costs differ between companies.

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 variable costs.

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $19 each and had used a budgeted selling price of $20 per unit. What is the static-budget variance of revenues?

The only difference between the static budget and flexible budget is that the static budget is prepared using actual prices charged and costs per units incurred.

If variance analysis is used for performance evaluation,managers are encouraged to meet targets using creativity and resourcefulness.

One advantage of using standard times to develop a budget is they are simple to compile,are based solely on the past actual history,and do not require expected future changes to be taken into account.

A favorable variance should be ignored by management.

An unfavorable variance is conclusive evidence of poor performance.

Give at least three good reasons why a favorable price variance for direct materials might be reported.

A variance within an acceptable range is considered to be an "in-control occurrence" and calls for no investigation or action by managers.

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 1,750 pounds of direct materials at an average cost per pound of $48 and 2,090 direct manufacturing labor hours at an average wage of $11.30 per hour. The direct manufacturing labor efficiency variance during July is ________.