Question 1

Hunter Company produces personalized towel wraps.During May,the company's actual wage rate was $8.50.The standard wage rate is $8 per hour,and the standard hours allowed for actual production was 9,000.The favorable direct labor efficiency variance for May was $1,200.
Required:
How many hours were actually worked during May?

Accepted Answer

The answer of Hunter Company produces personalized towel wraps.During May,the...

Question 2

Your friend has accepted a position with a large manufacturing company as production manager.She has found out that she must analyze and report any variances that relate to production.She has been told that managers use a method called "management by exception" and is concerned that any variance will be viewed negatively by her supervisors.
Required:
Explain to your friend the concept of "management by exception" and put her mind at ease about all variances being viewed as negative and explain what factors may be considered when deciding what variances to investigate.

Accepted Answer

The answer of Your friend has accepted a position with...

Question 3

The following labor standards have been set for a product:
  The following data pertain to operations for the period.
  Required
Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

The answer of The following labor standards have been set...

Question 4

Indirect materials are classified as manufacturing overhead.How might indirect materials generate an unfavorable usage variance that is not related to the efficient use of the variable overhead activity driver?

Accepted Answer

The answer of Indirect materials are classified as manufacturing overhead.How...

Question 5

R&N Sports has budgeted $57,000 for fixed overhead for the period.This budget was based on the following items: depreciation of $24,000,rent of $4,000,executive salaries of $27,000 and other fixed costs of $2,000.Actual overhead incurred is $52,000.Production was budgeted at 8,000

Accepted Answer

The answer of R&N Sports has budgeted $57,000 for fixed...

Question 6

The flexible budget breaks down into the rate and efficiency variances for direct labor.
Required:
a.List two reasons why actual wage rates might differ from standard wage rates,resulting in a direct labor rate variance.
b.List two reasons why actual labor hours might differ from standard labor hours,resulting in a direct labor efficiency variance.
Unit 6-3,

Accepted Answer

The answer of The flexible budget breaks down into the...

Question 7

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.
Unit 6-2,6-3,

Accepted Answer

The answer of Assume R&N Manufacturing has always used a...

Question 8

While the sales manager may be ecstatic to learn he has beaten his sales goal,the production manager may not share that enthusiasm because having more sales than anticipated required overtime for workers and additional maintenance on some machinery.Managers use budgeting to control and evaluate their operations.Two types of budgets that are discussed in chapter 6 are the static budget and the flexible budget.How do the two budgets differ and explain how the flexible budget is used in evaluating performance.

Accepted Answer

The answer of While the sales manager may be ecstatic...

Question 9

The following labor standards have been set for a product:
  The following data pertain to operations for the period.
  Required
Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.

Accepted Answer

The answer of The following labor standards have been set...

Question 10

Suppose you are investigating direct materials variances.You find that the direct materials price variance is favorable,but the direct materials quantity variance is unfavorable.Assuming that the quantity purchased and used were equal,what circumstances could explain both variances?

Accepted Answer

The answer of Suppose you are investigating direct materials variances.You...

Question 11

Variable overhead cost consists of indirect production costs that are expected to vary with production activity.How is the variable overhead spending variance calculated and list potential causes of the variance?

Accepted Answer

The answer of Variable overhead cost consists of indirect production...

Question 12

The flexible budget breaks down into the price and quantity variances for direct materials.
Required:
a.List two reasons why actual prices might differ from standard prices,resulting in a direct materials price variance.
b.List two reasons why actual materials usage might differ from standard material usage,resulting in a direct materials quantity variance.
Unit 6-2,

Accepted Answer

The answer of The flexible budget breaks down into the...

Question 13

Nantucket,Inc.uses a standard cost system.Workers were paid a total of $48,000 during the month of December.The company's standard wage rate was $10 per hour,and the direct labor rate variance for the month was $1,200 unfavorable.
Required:
How many hours were worked during December?

Accepted Answer

The answer of Nantucket,Inc.uses a standard cost system.Workers were paid...

Question 14

Nantucket,Inc.uses a standard cost system with the following labor standards for one

Accepted Answer

The answer of Nantucket,Inc.uses a standard cost system with the...

Question 15

The following standards for variable manufacturing overhead have been established for Windsor,Inc.a manufacturer of reproduction vintage hats.
Standard hours per

Accepted Answer

The answer of The following standards for variable manufacturing overhead...

Question 16

Because fixed overhead does not vary with changes in the level of activity,some managers do not see a need to investigate variances relating to fixed costs.However,that is not the case.
a.How is the fixed overhead spending variance calculated?
b.Discuss items that generally do not affect the fixed overhead variance and those that might affect the fixed overhead variances.
Unit 6-4,

Accepted Answer

The answer of Because fixed overhead does not vary with...

Question 17

Assume you have been assigned to a team responsible for using the flexible budget to assist in determining managers' bonuses.When you approach the production manager about some variances,he says,"I don't know why your team can't just use the budget we developed at the beginning of the year.It was based on last year's actual numbers which seems reasonable.I don't understand this 'flexible budget' stuff.When I compare my actual results with our beginning of the year budget I have beat the budget,so that should be sufficient.That will save us all a lot of time and effort." Explain to the production manager why a flexible budget is better than a static budget and its use in evaluating performance.

Accepted Answer

The answer of Assume you have been assigned to a...

Question 18

Amos,Inc.uses a standard cost system with the following labor standards for one

Accepted Answer

The answer of Amos,Inc.uses a standard cost system with the...

Quiz 6: Performance Evaluation: Variance Analysis

The following labor standards have been set for a product: The following data pertain to operations for the period. Required Calculate the direct labor rate and efficiency variances and indicate whether the variances are favorable or unfavorable.