Exam 9: Performance Measurement in Decentralized Organizations

Berends Corporation makes a product with the following standard costs: The company reported the following results concerning this product in April. 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 materials quantity variance for April is:

Kari 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 May, the kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,230 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Actual results for May: The spending variance for food and supplies in May would be closest to:

Perla 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 March, the kennel budgeted for 2,200 tenant-days, but its actual level of activity was 2,160 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: Data used in budgeting: Actual results for March: The food and supplies in the flexible budget for March would be closest to:

Tulip Midwifery's cost formula for its wages and salaries is $2,420 per month plus $388 per birth. For the month of January, the company planned for activity of 119 births, but the actual level of activity was 123 births. The actual wages and salaries for the month was $50,540. The wages and salaries in the flexible budget for January would be closest to:

Smithj 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 February, the kennel budgeted for 3,500 tenant-days, but its actual level of activity was 3,490 tenant-days. The kennel 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 spending variance for food and supplies in February would be closest to:

Merle Corporation applies manufacturing overhead to products on the basis of standard machine-hours. For the most recent month, the company based its budget on 4,000 machine-hours. Budgeted and actual overhead costs for the month appear below: The company actually worked 3,690 machine-hours during the month. The standard hours allowed for the actual output were 3,620 machine-hours for the month. What was the overall variable overhead efficiency variance for the month?

Shelby Boat Wash's cost formula for its cleaning equipment and supplies is $2,200 per month plus $34 per boat. For the month of September, the company planned for activity of 82 boats, but the actual level of activity was 32 boats. The actual cleaning equipment and supplies for the month was $3,340. The cleaning equipment and supplies in the planning budget for September would be closest to:

Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 24 direct labor-hours at $16 per direct labor-hour. During a recent period 850 cranes were made. The labor rate variance was zero and the labor efficiency variance was $8,800 unfavorable. How many actual direct labor-hours were worked?

Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. 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 variable overhead rate variance for May is:

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: • Direct materials: 4 gallons at $8 per gallon • Direct labor: 1 hour at $16 per hour During July, the company made 6,000 units of product and incurred the following costs: • Direct materials purchased: 26,800 gallons at $8.20 per gallon • Direct materials used: 25,200 gallons • Direct labor used: 5,600 hours at $15.30 per hour The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for July was:

Juenemann 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 December, the kennel budgeted for 3,800 tenant-days, but its actual level of activity was 3,770 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: Actual results for December: The spending variance for facility expenses in December would be closest to:

A flexible budget should not be used when making comparisons to actual results such as actual expenses.

Pardoe Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: During March, the following activity was recorded by the company: • The company produced 3,000 units during the month. • A total of 8,000 pounds of material were purchased at a cost of $23,000. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,000 pounds of material remained in the warehouse. • During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour. • Variable manufacturing overhead costs during March totaled $1,800. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for March is:

Fuhrer Hotel bases its budgets on guest-days. The hotel's static budget for December appears below: The total overhead cost at an activity level of 7,500 guest-days per month should be:

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product. During May, Jackson purchased 125,000 pounds of direct material at a total cost of $475,000. The total factory wages for May were $364,000, 90 percent of which were for direct labor. Jackson manufactured 22,000 units of product during May using 108,000 pounds of direct material and 28,000 direct labor-hours. The materials quantity variance for May is:

Dancause Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 units. The company has provided the following data concerning the formulas to be used in its budgeting: The net operating income in the flexible budget for October would be closest to:

Hettinger Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below: The total variable cost at the activity level of 7,200 patient-visits per month should be:

Berends Corporation makes a product with the following standard costs: The company reported the following results concerning this product in April. 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 variable overhead efficiency variance for April is:

Welcome Corporation produces metal telephone poles. In the most recent month, the company budgeted production of 4,100 poles. Actual production was 4,400 poles. According to standards, each pole requires 7.0 machine-hours. The actual machine-hours for the month were 31,140 machine-hours. The standard variable manufacturing overhead rate is $2.50 per machine-hour. The actual variable manufacturing overhead cost for the month was $83,787. The variable overhead efficiency variance is:

The Collins Corporation uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it makes: • Direct materials: 4 gallons at $8 per gallon • Direct labor: 1 hour at $16 per hour During July, the company made 6,000 units of product and incurred the following costs: • Direct materials purchased: 26,800 gallons at $8.20 per gallon • Direct materials used: 25,200 gallons • Direct labor used: 5,600 hours at $15.30 per hour The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July was: