MANAGERIAL ACCOUNTING W/CONNECT
15th Edition
ISBN: 9781259732454
Author: Garrison
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 9, Problem 6E
EXERCISE 9-6 Critique a Variance ReportLO9-6
The Terminator Inc. provides on-site residential pest extermination services. The company has several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why, or why not?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Critique a Variance Report
The Terminator Inc. provides on-site residential pest extermination services. The company bas several mobile teams who are dispatched from a central location in company-owned trucks. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:
Required:
Is the above variance report useful for evaluating how well revenues and costs were controlled during April? Why or Why not?
Current Attempt in Progress
Concord Incasements manufactures protective cases for MP3 players. During November, the company's workers clocked 830 more
direct labor hours than the flexible budget amount of 25,620 hours to complete 112,600 cases for the Christmas season. All workers
were paid $9.03 per hour, which was $0.47 less than the standard wage rate.
Calculate Concord's direct labor efficiency variance.
Direct labor efficiency variance
$
Required:
Using Exhibit 9–9 as your guide, prepare the company’s flexible budget for July.
The Terminator Inc. provides on-site residential pest extermination services. The company has
several mobile teams who are dispatched from a central location in company-owned trucks. The
EXERCISE 9-6 Critique a Variance Report LO9-6
company uses the number of jobs to measure activity. At the beginning of April, the compe
budgeted for 100 jobs, but the actual number of jobs turned out to be 105. A report comparing
budgeted revenues and costs to the actual revenues and costs appears below:
The Terminator Inc.
Variance Report
For the Month Ended April 30
Planning
Budget
Actual
Results
Variances
105
100
Jobs ...
..
Revenue ....
$20,520 $19,500
$ 1,020 F
Expenses:
Mobile team operating costs .
Exterminating supplies
Advertising
Dispatching costs ..
Office rent ..
320 U
10,000
1,800
10,320
960
840 F
800
800
..
2,340
140 U
1,800
2,100
2,200
1,800
2,100
Insurance.
0.
Total expense ...
18,320
18,700
380 F…
Chapter 9 Solutions
MANAGERIAL ACCOUNTING W/CONNECT
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 - What is a revenue variance and what does it mean?Ch. 9 - 9-7 What is a spending variance and what does it...Ch. 9 - 9-8 What does a flexible budget performance report...Ch. 9 - How does a flexible budget based on two cost...Ch. 9 - 9-10 What assumption is implicitly made about cost...
Ch. 9 - 9-11 What assumption is implicitly made about cost...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 - EXERCISE 9-6 Critique a Variance ReportLO9-6 The...Ch. 9 - Prob. 7ECh. 9 - EXERCISE 9-8 Flexible Budgets and Activity...Ch. 9 - Fixed Cost...Ch. 9 - ...Ch. 9 -
EXERCISE 9-11 Flexible Budget L09-1
Refer to the...Ch. 9 - EXERCISE 9-12 Activity Variances LO9-2
Refer to...Ch. 9 - ...Ch. 9 -
EXERCISE 9-14 Prepare a Flexible Budget...Ch. 9 - Prob. 15ECh. 9 -
EXERCISE 9-16 Flexible Budgets and Revenue and...Ch. 9 - EXERCISE 9-17 Flexible Budget Performance Report...Ch. 9 - Prob. 18ECh. 9 - Prob. 19PCh. 9 -
PROBLEM 9-20 Activity and Spending Variances...Ch. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 -
PROBLEM 9-24 Critiquing a Report; Preparing a...Ch. 9 -
PROBLEM 9-25 Critiquing a Variance Report;...Ch. 9 - Prob. 26CCh. 9 - ...Ch. 9 - Prob. 28C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Lavage Rapide is a Canadian company that owns and operates a large automatic car wash facility near Montreal. The following table provides estimates concerning the company's costs: Fixed Cost Cost per Car per Month Washed Cleaning supplies Electricity $ 0. 60 $ 0. 08 $ 0. 25 $ 0. 20 $ 1,300 Maintenance Wages and salaries Depreciation $ 4,400 $ 8,100 $ 1,900 $ 1,600 Rent Administrative expenses $ 0.03 For example, electricity costs should be $1,300 per month plus $0.08 per car washed. The company expects to wash 8,100 cars in August and to collect an average of $6.50 per car washed. The actual operating results for August are as follows: Lavage Rapide Income Statement For the Month Ended August 31 Actual cars washed 8,200 Revenue $ 54,750 Expenses: Cleaning supplies Electricity 5,360 1,918 2,265 6,380 8,100 2,100 Maintenance Wages and salaries Depreciation Rent Administrative expenses Total expense 1,743 27,866 $ 26,884 Net operating income Required: Prepare a flexible budget…arrow_forwardThe Terminator Inc. provides on-site residential pest extermination services. The company has severalmobile teams who are dispatched from a central location in company-owned trucks. The company usesthe number of jobs to measure activity. At the beginning of April, the company budgeted for 100 jobs, butthe actual number of jobs turned out to be 105. A report comparing the budgeted revenues and costs to theactual revenues and costs appears below:The Terminator Inc.Variance ReportFor the Month Ended April 30Planning ActualBudget Results VariancesJobs ............................................ 100 105Revenue ...................................... $19,500 $20,520 $1,020 FExpenses:Mobile team operating costs ..... 10,000 10,320 320 UExterminating supplies ............ 1,800 960 840 FAdvertising ............................... 800 800 0Dispatching costs .................... 2,200 2,340 140 UOffice rent ................................ 1,800 1,800 0Insurance .................................…arrow_forwardces 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: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 15,000 $ 11,400 42,000 119,000 85,900 110,000 Planning Budget 20,000 $ 12,000 45,000 142,500 Variances $ 600 F 3,000 F 23,500 F 80,000 110,000 $368,300 $ 389,500 $ 21,200 F 5,900 U 0 After receiving a copy of this cost report, the supervisor of the Assembly Department stated, "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…arrow_forward
- OH variances The manager of the Texas Department of Transportation has determined that it typically takes 30 minutes for the department's employees to register a new car. In Bexar County, the predetermined fixed overhead rate was computed on an estimated 26,000 direct labor hours per month and is $9 per direct labor hour, whereas the predetermined variable overhead rate is $3 per direct labor hour. During July, 48,880 cars were registered in Bexar County, and 24,700 direct labor hours were worked in registering those vehicles. For the month, variable overhead was $72,020 and fixed overhead was $236,080. Note: In answering the following questions, do not use negative signs with your answers. a. Compute overhead variances using a four-variance approach. VOH Spending Variance Actual VOH Budgeted VOH = VOH Spending Variance 2$ 0 = $ F - VOH Efficiency Variance Budgeted VOH Applied VOH = VOH Efficiency Variance 2$ 2$ 0 = $ U FOH Spending Variance Actual FOH Budgeted FOH = FOH Spending…arrow_forwardQuality Motor Company established the standard labor cost for a motor tune-up shown below: Standard Hours Standard Rate Standard Cost Motor tune-up 2.5 $ 25.00 $ 62.50 The record showing the time spent in the shop last week on motor tune-ups has been misplaced. However, the shop supervisor recalls 50 tune-ups were completed during the week, and the controller recalls the following variance data relating to tune-ups: Labor rate variance $ 150 F Labor spending variance $ 200 U Required: Determine the number of actual labor-hours spent on tune-ups during the week. Determine the actual hourly pay rate for tune-ups last weekarrow_forward9 Evaluating Variances from Standard Costs Obj. 6 MAD 9-4 Analyze Maywood City Police Department's labor time variance frequency to establish the expected cost to serve these activities. Actual Activities Total Employee for Year Standard Hours Hours Police Activity per Activity 7,000 4,200 Theft 0.60 18,000 27,000 Arrest 1.50 9,000 2,700 Patrol activities 0.30 33,900 The police are paid $25 per hour. The actual amount of hours per activity for the year were as follows: Police Activity Actual Hours per Activity Theft 0.75 Arrest 2.00 Patrol activities 0.40 a. Determine the total budgeted cost to perform the three police activities. b. Determine the total actual cost to perform the three police activities. C. Determine the direct labor time variance. d. What does the time variance suggest?arrow_forward
- Question Content Area The total factory overhead for Big Light Company is budgeted for the year at $1,393,700. Big Light manufactures two different products: night lights and desk lamps. Night lights are budgeted for 17,000 units. Each night light requires 3 hours of direct labor. Desk lamps are budgeted for 13,000 units. Each desk lamp requires 2 hours of direct labor. a. Determine the total number of budgeted direct labor hours for the year.fill in the blank 1 of 1 direct labor hours b. Determine the single plantwide factory overhead rate using direct labor hours as the allocation base. Round your answer to two decimal places.fill in the blank 1 of 1$ per direct labor hour c. Determine the factory overhead allocated per unit for each product using the single plantwide factory overhead rate determined in (b). Round your answers to two decimal places.Night lights fill in the blank 1 of 1$ per unitDesk lamps fill in the blank 1 of 1$ per unitarrow_forwardFlexible Budget Performance Report AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February: The company uses the number of jobs as its measure of activity. For example, mobile lab operating expenses should be $2,900 plus $35 per job, and the actual mobile lab operating expenses for February were $4,530. The company expected to work 50 jobs in February, but actually worked 52 jobs. Required: Using Exhibit 9–8 as your guide, prepare a flexible budget performance report showing AirQual Test corporation’s revenue and spending variances and activity variances for February. Exhibit 9–8 Performance Report Combining Activity Variances with Revenue and Spending Variancesarrow_forwardEngineered cost variances Fred's Freight employs three drivers who are paid $20 per hour for regular time and $30 for overtime. A single pickup and delivery requires, on average, one hour of driver time. Drivers are paid for a 40-hour week because they must be on call all day. One driver stands by for after-hour deliveries. Analyze the labor cost variances for one week in which the company made 105 daytime deliveries and 12 after-hour deliveries. The payroll for drivers for that week was $2,780. The employees worked 120 hours of regular time and 15 hours of overtime. Note: Do not use a negative sign with your answers. Total labor variance: $ 320 Unfavorable Labor rate variance: $ Labor efficiency variance: $390 Favorable Please answer all parts of the question. Unfavorable O + 4arrow_forward
- Engineered cost variances Fred's Freight employs three drivers who are paid $20 per hour for regular time and $30 for overtime. A single pickup and delivery requires, on average, one hour of driver time. Drivers are paid for a 40-hour week because they must be on call all day. One driver stands by for after-hour deliveries. Analyze the labor cost variances for one week in which the company made 105 daytime deliveries and 12 after-hour deliveries. The payroll for drivers for that week was $2,780. The employees worked 120 hours of regular time and 15 hours of overtime. Note: Do not use a negative sign with your answers. Total labor variance: $ 320 Unfavorable Labor rate variance: $ (70) Labor efficiency variance: $390 Favorable Unfavorablearrow_forwardQuestion 2.2 The following data for the Golden Garden Company (GGC) pertains to the production of 2,500 garden spades during April. The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground. Direct Materials (all materials purchased were used): Standard cost: $1.00 per handle and $3.50 per metal tool Total actual cost: $11,350. Materials flexible-budget efficiency variance was $650 unfavourable. Direct Manufacturing Labour: Standard cost is 5 garden spades per hour at $20.00 per hour. Actual cost per hour was $21.00 Labour efficiency variance was $400 favourable. Required What is the standard direct material amount per garden spade? What is the standard cost allowed for all units produced? What is the total direct materials flexible-budget variance? What is the direct material flexible-budget rate variance? What is the total actual cost of direct manufacturing labour? What is the labour rate variance for…arrow_forwardFactory Overhead Cost Variance Report Feeling Better Medical Inc., a manufacturer of disposable medical supplies, prepared the following factory overhead cost budget for the Assembly Department for October of the current year. The company expected to operate the department at 100% of normal capacity of 9,000 hours. Variable costs: Indirect factory wages $27,900 Power and light 21,420 Indirect materials 18,720 Total variable cost $68,040 Fixed costs: Supervisory salaries $15,110 Depreciation of plant and equipment 38,760 Insurance and property taxes 11,830 Total fixed cost 65,700 Total factory overhead cost $133,740 During October, the department operated at 9,500 standard hours, and the factory overhead costs incurred were indirect factory wages, $29,740; power and light, $22,200; indirect materials, $20,200; supervisory salaries, $15,110; depreciation of plant and equipment, $38,760; and insurance and…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial & Managerial Accounting
Accounting
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY