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Exam 7: Flexible Budgets, Direct-Cost Variances, and Management Control

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Question 71

Multiple Choice

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Repeatedly identifying causes of variances, initiating corrective actions, and evaluating results of actions is an example of

A) efficiency.
B) effectiveness.
C) continuous improvement.
D) All of these answers are correct.

E) A) and C)
F) All of the above

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Question 72

Multiple Choice

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Answer the following questions using the information below: Brennen Incorporated planned to use $24 of material per unit but actually used $25 of material per unit, and planned to make 2,000 units but actually made 2,400 units. -The sales-volume variance is:

A) $9,600 favorable
B) $2,400 unfavorable
C) $10,000 unfavorable
D) $12,000 favorable

E) C) and D)
F) B) and D)

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Question 73

Multiple Choice

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If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

The variance that is best for measuring operating performance is the:

Answer the following questions using the information below: Hector's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. -The actual amount spent for Material A was:

Answer the following questions using the information below: Apple Valley Orchards, Inc. (AVO) , developed standard costs for direct material and direct labor. In 2011, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples. During September, AVO produced and sold 1,200 pies using 1,875 pounds of direct materials at an average cost per pound of $7.00 and 280 direct labor hours at an average wage of $14.25 per hour. -September's direct labor efficiency variance is:

Managers generally have more control over price variances than efficiency variances.

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What is the total flexible-budget variance (D) ?

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

Although computed separately, price variances and efficiency variances should NOT be analyzed separately from each other.

A favorable cost variance of significant magnitude:

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

From the perspective of control, the direct materials price variance should be isolated at the time of purchase.

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What are the actual variable costs (C) ?

Answer the following questions using the information below: The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Wooden Figurines Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results. -The flexible budget will report ________ for the fixed costs.

Variances should be investigated:

Cost control is the focus of the sales-volume variance.

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

The master budget is:

During February the Lungren Manufacturing Company's costing system reported several variances that the production manager was surprised to see. Most of the company's monthly variances are under $125, even though they may be either favorable or unfavorable. The following information is for the manufacture of garden gates, its only product: Required: a. Provide the manager with some ideas as to what may have caused the price variances. b. What may have caused the efficiency variances?