A cost variance of zero indicates that the manufacturing management was *
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Multiple Choice Theories
Choose the best answer.
A cost variance of zero indicates that the manufacturing management was *
able to control production cost below budgeted costs.
unable to keep production costs at budgeted costs even if the purchasing department was able to keep the budgeted price.
able to control production costs at budgeted costs.
unable to keep production costs at budgeted costs.
In gross profit analysis, a favorable cost of sales variance that includes an unfavorable cost volume variance will mean: *
The production department was able to control costs within the budget but the purchasing department went over the budget.
The purchasing department was able to control costs within the budget but the production department over the budget.
The production and purchasing department were able to control costs within the budget.
The production and purchasing departments went over the budget.
Variance that arises solely because the actual units sold differs from the budgeted units to be sold. *
Sale price variance
Sales volume variance
Sales mix variance
None of the above
The gross profit percentage is equal to *
Net operating income/Sales
Cost of goods sold/Sales
(Net operating income + Operating expenses)/Sales
Cost of goods sold/Net income
(Net operating income - Operating expenses)/Sales
Although there are many reasons to this concern, one of the general reasons in gross profit variance analysis why an unfavorable sales volume variance occur is that *
the figures are not properly accounted for.
the accounts are taking too long to collect.
the company's product is not properly marketed.
the finished product is over priced.
the raw materials used are overpriced.
Multiple Choice Problems
Solve the following problems. Choose the best answer. Solutions need not be attached. Three points each.
Use this problem to answer the following requirements: Mabuhay Corporation generated these gross profits during the past recent ears when the sales price was 10% lower during 2020 compared to 2019. 2020 Sales P1,944,000; 2020 Cost of Sales P1,152,000; 2019 Sales P1,900,800; 2019 Cost of Sales P1,113,600. The decrease in gross profit due to decrease in selling price must be *
P216,000
P194,400
P172,800
P189,600
The sales volume variance must be *
P259,200 UF
P259,200 F
P216,000 F
P151,200U F
The change in gross profit due to change in cost price must be *
P95,232 F
P113,495 UF
P151,896 UF
P151,896 F
P113,495 F
The change in gross profit due to change in quantity sold must be *
P151,896 UF
P259,200 F
P107,304 UF
P107,304 F
The increase (decrease) in quantity sold must be *
13.33%
12.00%
13.64%
(7.95%)
Long Problems
Solve the following problems by hand-writing your solutions in good accounting form. Double rule and encircle your final answers. Please submit your solutions. You must have the correct final answer in this form and solution to be credited five points for each problem. Please present your answer in this google form as presented in this example: P150,000 F or P150,000 UF (The same as the choices above) :-)
The Success Corporation has a normal capacity of 2,000,000 units. The current year's budget was based on the production and sales of 1,400,000 units. Actual statistics came out to be: production of 1,440,000 units and sales of 1,200,000 units. Selling price is at P20 per unit and the contribution margin ratio is 30%. What is the peso value that best quantifies the marketing division's failure to achieve budgeted performance for the current year? *
Your answer
If the sales this year amounted to P500,000, sales this year at last year's prices is P460,000, the cost of sales this year is P300,000, and the cost of sales this year at last year's price is P260,000. How much is the gross profit variation due to sales price factor? *
Your answer
If the sales this year amounted to P276,000, sales this year at last year's prices is P230,000, the cost of sales this year is P190,000, and the cost of sales this year at last year's price is P180,000. How much is the gross profit variation due to sales quantity factor? *
Your answer
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