Assume R&N Manufacturing has always used a static budget approach to analyze variances, but the new controller has suggested that the company implement a flexible budget strategy.

Required:

Answer the following questions relating to flexible budget variances.

a. What are the direct materials and direct labor variances that the controller will be analyzing?

b. Give an example of what would cause each variance to be favorable.

c. Give an example of what would cause each variance to be unfavorable.

Question

Assume R&N Manufacturing has always used a static budget approach to analyze variances, but the new controller has suggested that the company implement a flexible budget strategy.

Required:

Answer the following questions relating to flexible budget variances.

a.	What are the direct materials and direct labor variances that the controller will be analyzing?

b.	Give an example of what would cause each variance to be favorable.

c.	Give an example of what would cause each variance to be unfavorable.

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The Answer of Assume R&N Manufacturing has always used a static budget approach to analyze variances, but the new controller has suggested that the company implement a flexible budget strategy.

Required:

Answer the following questions relating to flexible budget variances.

a.	What are the direct materials and direct labor variances that the controller will be analyzing?

b.	Give an example of what would cause each variance to be favorable.

c.	Give an example of what would cause each variance to be unfavorable.

Assume R&N Manufacturing Has Always Used a Static Budget Approach