Exam 10: Variance Analysis A Tool for Cost Control and Performance Evaluation

Hayward Inc. Hayward Inc. produces a unique item. Hayward's management team wishes to perform a variance analysis on its fixed overhead. Fixed overhead is applied to units produced using direct labor hours as its cost driver. The company's managerial accountant has compiled the following information: Refer to the Hayward Inc. information above. Hayward's fixed overhead volume variance is:

Supreme Catering At the end of January, Supreme Catering prepared the following budget for the upcoming month of February estimating that they would serve 5,000 people: During February, there were 4,800 guests actually served. Actual costs incurred were $67,200 for variable costs and $8,000 for fixed costs. Each guest was charged $25. Refer to the Supreme Catering information above. Supreme Catering's flexible budget variance for February would show a variance of:

What is "management by exception"? Do you think it represents an efficient use of management time? Why or why not?

Paw-Paw Products Paw-Paw Products produces and sells flannel covered dogbeds. In the current year, Paw-Paw had expected to sell 8,000 beds but actually produced and sold 8,500 beds. The following information is available regarding the standard cost to produce a single dogbed: In the current year, 44,000 yards of material were purchased and used at a cost of $1.60 per yard and 365,500 direct labor minutes were incurred at a cost of $.23 per minute. Refer to the Paw-Paw Products information above. The company's direct labor efficiency variance for the current year is:

Which of the following variances is generally not reported as being favorable or unfavorable?

Chapman Products has a favorable materials usage variance. Which of the following would be the most likely reason for this variance?