Exam 8: Performance Evaluation

Cruz Company established a direct labor standard of 0.5 hour per unit at $12 per hour for one of its products. In April, Cruz produced 16,000 units and used 8,100 direct labor hours.Required: Based on this information, (a) Which variance can you calculate? (b) What is the dollar amount of the variance? (c) Is the variance favorable or unfavorable? (d) Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Which of the following statements is incorrect regarding variable overhead variances?

Multiplying the difference between actual materials price per unit and the standard materials price per unit by actual quantity of materials used is known as the:

The resources used in the manufacturing process are frequently called:

When a comparison of static and flexible budgets shows an unfavorable sales volume variance, the variable cost volume variances will also be unfavorable.

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

Which of the following equations can be used to compute the total materials variance? (A = Actual; S = Standard; Q = Quantity; P = Price)

Indicate whether each of the following statements is true or false.The difference between the actual fixed costs and budgeted fixed costs is the spending variance.For fixed costs, there is no flexible budget variance.Companies generally do not calculate a volume variance for fixed overhead costs.The volume variance is the difference between budgeted fixed cost and the applied fixed cost for the period.If the amount of fixed overhead applied to production is greater than the budgeted fixed overhead, the result is an unfavorable overhead volume variance.

Which of the following can reduce the amount of employees' budget gamesmanship?

Heartwood Company reported a $4,000 favorable direct labor price variance and a $1,500 unfavorable direct labor usage variance. Select the correct statement from the following.

The total sales variance includes both price and volume variances.

All of the following variances are unfavorable except? Item to Classify Standard Actual Sales volume 100.000 units 96.000 units Sales price \ 4 per unit \ 3.90 per unit Materials usage 40,000 gallons 42.000 gallons Labor price 12.50 per Hour 12.45 per hour

The Bach Company provides the following standard and actual cost relating to material price and labor usage.Based on the above information, which statement is correct? Item to Classify Standard Actual Materials Price 8.50 per gallon 8.35 per gallon Labor Usage 30,000 hours 28.500 hours

With respect to cost variances, managers seek to achieve actual costs that are higher than standard costs.

For a product made by George Company, last year's standards for labor were 2 hours at $12 per hour. Which of the following considerations should George take into account in setting the standards for this year?

A static budget is one that shows estimated revenues and costs at multiple activity levels.

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 revenue flexible budget variance was:

Select the incorrect statement.

Standard cost systems facilitate the management practice known as:

The Russell Company provides the following standard cost data per unit of product: During the period, the company produced and sold 22,000 units incurring the following costs: The direct material price variance was: Direct material ( 3 gallons (a)\ 6 per gallon) \1 8.00 Direct labor ( 2 hours (a) \ 10 per hour) \2 0.00 Direct material 68,000 gallons @\ 5.90 per gallon Direct labor 45,500 hours a\ 9.75 per hour