MANAGERIAL ACCOUNTING-EBOOK ACCESS
17th Edition
ISBN: 9781264151462
Author: Garrison
Publisher: MCG
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Chapter 9, Problem 23P
1.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To evaluate: The cost control report for the company.
2.
To determine
Introduction: The difference between the planning budget and the flexible budget is known as activity variance. It arises due to the difference between the planned activity level and the actual activity level.
To prepare: The performance report.
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The following five unrelated situations affect one or more standard cost variances for materials, labor (assembly), and overhead:
1. At the beginning of the month, a supplier of a component used in our product notified us that, because of a minor design improvement, the price will be increased by 15 percent above the current standard price of $100 per unit. As a result of the improved design, we expect the number of defective components to decrease by 80 units per month. On average, 1,200 units of the component are purchased each month. Defective units are identified prior to use and are not returnable.
2. In an effort to meet a deadline on a rush order in Department A, the plant manager reassigned several higher-skilled workers from Department B, for a total of 300 labor hours. The average salary of the Department B workers was $2.05 more than the standard $7.25 per hour rate of the Department A workers. Since they were not…
Vincent Bassani has come to the accounting department for help in interpreting
his variance report. He says that he understands that last month was not a very good
one for output, but he really thought everyone put forth good effort, so he is confused
about the existence of an unfavorable labor efficiency variance. He cites as an example
of the workers' effort their willingness to work extra hours to get full output, even when
a whole week's worth of production had to be scrapped. He knew that his materials
costs would be higher, and that overtime would make his rate variance unfavorable,
but he certainly didn't think his workers had been inefficient.
Required:
Write a short note to Vincent explaining the probable cause of the unfavorable labor efficiency variance
Critiquing a Variance Report; Preparing a Performance Report
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system.
A report for the company’s Assembly department for the month of march follows:
After receiving a copy of this cost report, the supervisor of the assembly department started, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much about the reports.”
For the last several years, the company’s marketing department has chronically failed to meet the sales goals expressed in the company’s monthly budgets.
Required:
1. The company’s president is uneasy about the cost reports and would like you to evaluate their usefulness to the…
Chapter 9 Solutions
MANAGERIAL ACCOUNTING-EBOOK ACCESS
Ch. 9 - Prob. 1QCh. 9 - What is a flexible budget and how does it differ...Ch. 9 - Prob. 3QCh. 9 - Why is it difficult to interpret a difference...Ch. 9 - What is an activity variance and what does it...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - Prob. 9QCh. 9 - Prob. 10Q
Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - The Excel worksheet form that appears below is to...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 2F15Ch. 9 - Prob. 3F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Adger Corporation is a service company that...Ch. 9 -
L09-1, LO9-2, LO9-3
Adger Corporation is a...Ch. 9 - Prob. 8F15Ch. 9 - Adger Corporation is a service company that...Ch. 9 - Prob. 10F15Ch. 9 - Prob. 11F15Ch. 9 - Prob. 12F15Ch. 9 - Prob. 13F15Ch. 9 - Prob. 14F15Ch. 9 - Prob. 15F15Ch. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 -
EXERCISE 9-3 Revenue and Spending Variances...Ch. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24CCh. 9 - Prob. 25CCh. 9 - Prob. 26C
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