At the end of the current year,Bowman Products has the following information available comparing the cost of direct materials on its flexible budget with the actual cost of direct materials:
$\begin{array}{lr}
&\underline{ \text { Flexible budget}} &\underline{\text {Actual results} } &\underline{ \text { Difference} } &\
\text { Direct materials } &\$24000&\$30000&(6000)\
\end{array}$

Sally Vincent,the company's controller,has requested a meeting with Hank Rowland,the operations manager,asking him to explain why direct materials costs were more than what had been budgeted.
What two kinds of variance analysis should Hank do before his meeting with Sally? What would each of these variances measure?

Question

At the end of the current year,Bowman Products has the following information available comparing the cost of direct materials on its flexible budget with the actual cost of direct materials:
$\begin{array}{lr}
 &\underline{ \text {  Flexible budget}} &\underline{\text {Actual results}  } &\underline{ \text {  Difference}  } &\
 \text { Direct materials  } &\$24000&\$30000&(6000)\
\end{array}$
 
Sally Vincent,the company's controller,has requested a meeting with Hank Rowland,the operations manager,asking him to explain why direct materials costs were more than what had been budgeted.
What two kinds of variance analysis should Hank do before his meeting with Sally? What would each of these variances measure?

Quizplus · Accepted Answer

The Answer of At the end of the current year,Bowman Products has the following information available comparing the cost of direct materials on its flexible budget with the actual cost of direct materials:
$\begin{array}{lr}
 &\underline{ \text {  Flexible budget}} &\underline{\text {Actual results}  } &\underline{ \text {  Difference}  } &\
 \text { Direct materials  } &\$24000&\$30000&(6000)\
\end{array}$
 
Sally Vincent,the company's controller,has requested a meeting with Hank Rowland,the operations manager,asking him to explain why direct materials costs were more than what had been budgeted.
What two kinds of variance analysis should Hank do before his meeting with Sally? What would each of these variances measure?

At the End of the Current Year,Bowman Products Has the Following