Exam 8: Performance Evaluation

Indicate whether each of the following statements is true or false.The total flexible budget materials variance can be broken down into a price variance and a rate variance.If the materials price variance was $3,000 unfavorable and the materials usage variance was $2,000 favorable, the flexible budget materials variance was $1,000 unfavorable.If the actual quantity of material used was 10,000 pounds, the actual price per pound was $2.40, and the standard price per pound was $2.25, the materials price variance was $1,500 unfavorable.The production department normally is considered to be responsible for materials price variances.Analyzing both favorable and unfavorable variances can improve efficiency and benefit the entire company.

Jared expects to charge $60 per hour for his industrial maintenance business during the following year. He expects to reach 50,000 hours at that price. Jared's partner disagrees with the estimate and expects closer to 40,000 hours.What should Jared do when preparing the budget for the year?

Which of the following equations can be used to compute a labor price variance? (A = Actual; S = Standard; H = Hour; P = Price)

All of the following factors should influence the decision to investigate a variance except:

A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a:

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 labor usage 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

Standards that do allow for normal down time and can be achieved with reasonable amounts of effort are known as:

Abbot Company spent less than expected for materials and more than expected for labor. Select the incorrect statement from the following.

The best standards to include in a standard cost system are ideal standards.

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

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.

How does the use of standard costs fit with the philosophy of management by exception?

Which of the following statements is incorrect?

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