Exam 9: Performance Measurement in Decentralized Organizations

Hepburn Clinic uses client-visits as its measure of activity. During July, the clinic budgeted for 3,200 client-visits, but its actual level of activity was 3,180 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting for July: The administrative expenses in the planning budget for July would be closest to:

Seekell Memorial Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for October was based on 2,500 meals, but the diner actually served 2,900 meals. The diner's director has provided the following cost formulas to use in budgets: Required: Prepare the diner's flexible budget for the actual number of meals served in October. The budget will only contain the costs listed above; no revenues will be on the budget.

Graybeal Corporation makes a product with the following standard costs: The company reported the following results concerning this product in March. The materials price variance is recognized when materials are purchased. Variable overhead is applied on the basis of direct labor-hours. Required: a. Compute the materials quantity variance. b. Compute the materials price variance. c. Compute the labor efficiency variance. d. Compute the labor rate variance. e. Compute the variable overhead efficiency variance. f. Compute the variable overhead rate variance.

Zacher Corporation makes a product with the following standards for direct labor and variable overhead: In February the company's budgeted production was 6,900 units, but the actual production was 7,000 units. The company used 1,980 direct labor-hours to produce this output. The actual variable overhead cost was $10,296. The company applies variable overhead on the basis of direct labor-hours. The variable overhead rate variance for February is:

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased.

Zenon Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During July, the kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,260 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The net operating income in the flexible budget for July would be closest to:

Imrie Corporation makes a product that uses a material with the quantity standard of 9.5 grams per unit of output and the price standard of $5.00 per gram. In January the company produced 2,900 units using 26,940 grams of the direct material. During the month the company purchased 28,900 grams of the direct material at $4.90 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for January is:

Sizzle Company uses a standard cost system to collect costs related to the production of its "No-Stick" lawn chairs. The direct material for the chairs is teflon. Sizzle uses a standard direct material cost of $40.00 per chair (0.8 pounds of teflon × $50.00 per pound). During April, Sizzle purchased 2,100 pounds of teflon for $106,575. Sizzle used 1,750 pounds of this teflon in April to produce 1,800 lawn chairs. Required: Calculate Sizzle's materials price and materials quantity variances for April.

Suski Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: What was the variable overhead rate variance for the month?

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

Olivera Corporation's performance report for last month shows that actual indirect materials cost, a variable cost, was $31,178 and that the spending variance for indirect materials cost was $2,261 unfavorable. During that month, the company worked 11,900 machine-hours. Budgeted activity for the month had been 12,200 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to:

Linscott Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 5,400 units, but its actual level of activity was 5,380 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The selling and administrative expenses in the planning budget for July would be closest to:

The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used.

The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead rate variance for the month?

Linscott Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 5,400 units, but its actual level of activity was 5,380 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July: Data used in budgeting: Actual results for July: The manufacturing overhead in the flexible budget for July would be closest to:

Letts Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During January, the company budgeted for 7,000 units, but its actual level of activity was 6,970 units. The company has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the planning budget for January would be closest to:

The standards for direct materials in making a certain product are 20 pounds at $0.75 per pound. During the past period, 56,000 units of product were made and the materials quantity variance was $30,000 U. The number of pounds of direct material used during the period amounted to:

Randt Footwear Corporation's flexible budget cost formula for supplies, a variable cost, is $2.79 per unit of output. The company's performance report for last month showed a $5,363 favorable spending variance for supplies. During that month, 17,300 units were produced. Budgeted activity for the month had been 17,200 units. The actual cost per unit for indirect materials must have been closest to:

Epley Corporation makes a product with the following standard costs: In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours. During the month, the company purchased 13,000 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July is:

Lehnertz Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 7,100 units, but its actual level of activity was 7,150 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February: Data used in budgeting: Actual results for February: The manufacturing overhead in the flexible budget for February would be closest to: