controllability principle
Q: In a manufacturing environment, like the GM truck plant in Flint, who has primary responsibility for…
A: Sales Volume Variance is the difference between actual units and budgeted units sold which is…
Q: Mention some important factors that must be born in your mind while interpreting variances.
A: Variance analysis is defined as the quantitative investigation, which is also a difference between…
Q: . Discuss why the details of material, labor and overhead are important factors used in this…
A: A standard cost system is a system that helps a business measure performance and value inventory.
Q: If there is an unfavorable direct material usage variance due to the substandard quality of the raw…
A: Solution: If there is an unfavorable direct material usage variance due to the substandard quality…
Q: Randall Company uses standard costing and flexible budgeting and is evaluating its direct labor. The…
A:
Q: The fixed factory overhead variance is caused by the difference between which of the following?…
A: Standard costing is a method of costing which measure the performance by comparing actual cost with…
Q: Required: Prepare the joumal entries to record the above variances, including the recording of the…
A: Journla entry is part of book keeping .
Q: What are the basic objectives in the use of standard costs? What are the two variances between the…
A: A standard cost is an expected cost that typically occurs while producing an item or performing a…
Q: how the purchasing department manager may achieve a favourable direct material pricing variance…
A: Variance analysis: Variance analysis can be defined as the study of difference between the budgeted…
Q: Which of the following departments is most likely responsible for the price variance in direct…
A: Standard costing means where standard is set for various cost element and actual cost is then…
Q: a. Analyze the factory overhead variance of Golden Manufacturers Inc., based on the given data.
A: Factory Overhead means all indirect costs related to factory or production of goods. Factory…
Q: Where are variances ultimately charged in a standard costing system? Multiple Choice Cost of…
A: Standard costing is a type or form of costing system in which standard costs are compared with…
Q: The use of standard costs in pricing and budgeting is quite valuable since decisions in the fields…
A: Solution 3- The use of standard costs in pricing and budgeting Standard costs are useful in setting…
Q: 1. Match cach of the following terms with the appropriate definition. The difference between actual…
A: Different techniques of cost Analysis Importance of cost analysis in the organisation to determine…
Q: Describe how flexible-budget variance analysis can be used in the control of costs of activity…
A: Flexibe-budget variance:
Q: Which of these statement is TRUE for a standard cost system? A) Standard cost systems help managers…
A: Lets understand the basics. Standard cost is a cost which is decide by management to be incurred…
Q: T, F. In order to avoid the transfer of inefficiencies of service departments to operating…
A: Standard Cost: It is the estimated cost of the manufacturing process or a product that is generally…
Q: Under the two-variance method for analyzing factory overhead, the difference between the actual…
A: The question is related to Standard Costing and is related to two Varaince method.
Q: Under Standard Costing System, direct material price variance shall be appropriately computed using…
A: Standard costing means where standard is set for various cost element and actual cost is then…
Q: ompanies that manufacture a product face an expanded set of accounting issues. In addition to the…
A: Answer: Material Price Variances: It is the difference between the standard cost of material…
Q: Which one of the following describes the total overhead variance a. The difference between what was…
A: In the process of determination and charging of overheads it is to be under that overheads cannot be…
Q: a company uses a standard cost system. The ending balance in the Manufacturing Overhead account Is a…
A: The manufacturing overhead may be underapplied or overapplied depending on the actual overheads…
Q: Who is responsible for labor rate variance an external factor not related to the company…
A: Labor rate variance: It is the difference between the actual and expected cost of labor. Causes of…
Q: How might a manager gain insight into the causes of a flexible-budget variance for direct materials?
A: Variance is the difference in the value of budgeted cost\quantity and the actual cost\quantity.…
Q: Explain how a production quota used to evaluate a supervisor who can adversely affect quality…
A: Production Quota It refers to the goal or target of production by the management.Quotas are set…
Q: A production volume variance will exists when: a. Production volume differs from the sales…
A: Production Variance is a static used by business measure the cost of production of goods against…
Q: APPLY THE CONCEPTS: Conduct the direct labor cost variance analysis Illustrated Example: Calculating…
A: When variances occur, they are described as being either favorable or unfavorable. When actual…
Q: In a standard cost system, the cost of completed units transferred from Work in Process Inventory to…
A: The standard costing system uses the standard or estimated costs to plan the budgets and control the…
Q: Identify the report submitted to middle level management. a. Overhead variance report b. Report on…
A: SOLUTION PLANT OR CAPACITY UTILIZATION REPORT IS USEFUL FOR MIDDLE LEVEL MANAGEMENT . REPORT ON R…
Q: Requirement 1. What are the benefits of setting cost standards? Standard costing helps managers do…
A: Solution:- Given, Bargain Inc., produced 1000 units Direct materials was three yards of cloth per…
Q: [1] The purpose of identifying manufacturing variances and assigning their responsibility to a…
A: The variance shows the comparison of standard performance and actual performance of the company. It…
Q: One way of analyzing the fixed factory overhead variance is breaking it down into
A: Fixed factory overhead variance can be defined as the difference of the actual and standard fixed…
Q: Explain how a production quota used to evaluate a supervisor can adversely affect quality control,…
A: Production Quota: The target or the quota provided by the management of achieving desired…
Q: One way of analyzing the fixed factory overhead variance is breaking it down into Select one:…
A: The question is related to Fixed overhead variance of standard costing. As question just asked to…
Q: When variances have been determined, management should, decide whether each variance is sufficiently…
A: Variance analysis is usually undertaken by manufacturing organizations that involve direct…
Q: As long as the total actual factory overhead cost is not significantly different from the total…
A: Solution: I do not agree with this statement that "As long as the total actual factory overhead cost…
Q: The difference between actual factory overhead and budgeted factory overhead on the basis of actual…
A: The difference between the actual expenses and the budgeted expenses for the specific units is…
Q: Briefly describe various variances relating to factory overheads. How material, labor and overhead…
A: Variance The difference between the standard/budgeted and actual figures of costs, profits, or sales…
Q: A business is reporting on materials cost variances for the month. The report indicates a large…
A: Material Price Variance Material Price variance is defined as the difference between Actual price…
Q: Bill Wilson, the financial accountant at Robson Ltd is considering implementing a standard costing…
A: Standard Costing - It is the process of estimation of expenses of the production process. It is cost…
Explain what is meant by the controllability principle and apply it to determine whether the production manager should be held responsible for variances in the following costs:
- The cost of rent for the building if the rent cost for the building is negotiated by central administration and Granite apportions the rent to the production and administration departments based on the departments floor
Step by step
Solved in 2 steps
- The president of McGrade Industries wants an analysis prepared to help explain why the variances computed in requirement 1 occurred. Using the worksheet called PRIMEVAR that follows these requirements, calculate the material and labor variances for McGrade Industries. The problem requires you to enter the input in the Data Section as well as formulas in the Answer Section.Refer to the information for Cinturon Corporation on the previous page. Required: 1. Break down the total variance for labor into a rate variance and an efficiency variance using the columnar and formula approaches. 2. CONCEPTUAL CONNECTION As part of the investigation of the unfavorable variances, the plant manager interviews the production manager. The production manager complains strongly about the quality of the leather strips. He indicates that the strips are of lower quality than usual and that workers have to be more careful to avoid a belt with cracks and more time is required. Also, even with extra care, many belts have to be discarded and new ones produced to replace the rejects. This replacement work has also produced some overtime demands. What corrective action should the plant manager take?The fixed factory overhead variance is caused by the difference between which of the following? A. actual and standard allocation base B. actual and budgeted Units C. actual fixed overhead and applied fixed overhead D. actual and standard overhead rates
- Why does a company use a standard costing system? A. to identify variances from actual cost that assist them in maintaining profits B. to identify nonperformers in the workplace C. to identify what vendors are unreliable D. to identify defective materialsThe actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.Use the information provided to answer the questions. All material purchased was used in production. A. What is the standard price paid for materials? B. What is the direct materials quantity variance? C. What is the total direct materials cost variance? D. If the direct materials price variance was unfavorable, what would be the standard price?
- Performance Report for Variable Variances Potter Company provided the following information: Required: Prepare a performance report that shows the variances for each variable overhead item (inspection and power).Refer to the information for Cinturon Corporation on the previous page. Required: 1. Break down the total variance for materials into a price variance and a usage variance using the columnar and formula approaches. 2. CONCEPTUAL CONNECTION Suppose the Boise plant manager investigates the materials variances and is told by the purchasing manager that a cheaper source of leather strips had been discovered and that this is the reason for the favorable materials price variance. Quite pleased, the purchasing manager suggests that the materials price standard be updated to reflect this new, less expensive source of leather strips. Should the plant manager update the materials price standard as suggested? Why or why not?The materials price variance is usually computed a. when goods are finished. b. when materials are issued to production. c. when materials are purchased. d. after suppliers are paid. e. None of these.
- Standard Costing and Variance Analysis Standard cost systems set budgets for the materials, labor, and factory overhead used by a manufacturer to produce its product. Deviations from these standards are reported as variances.. Standards-variance analysis cost control system can be applied to non-manufacturing businesses, provided that they use repetitive activities to produce a common product or service. Based on real-life experience, describe and discuss a non-manufacturing (service) business that could benefit from the use of standards. Also explain how standards would help that business control its operations.In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation: Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on. "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of…If raw materials are carried in the raw materials inventory at standard cost, then it is reasonable to assume that: the price variance is recognized when materials are purchased. the price variance is recognized when materials are placed into production. all variances are prorated between work in process, finished goods, and cost of goods sold. the raw materials account is overstated.
