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Exam 17: Additional Topics in Variance Analysis

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Question 71

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The basic variance analysis framework used for manufacturing companies can also be used in service organizations.

A) True
B) False

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Question 72

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The sales activity variance is equal to the sum of the market share variance and the:

A) selling price variance.
B) industry volume variance.
C) sales quantity variance.
D) sales mix variance.

E) All of the above
F) C) and D)

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Question 73

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Barrymore Corporation,which makes landing gears,has provided the following data for a recent month: $\begin{array} { | l | r | l | } \hline \text { Budgeted production } & 1,200 & \text { gears } \\\hline \begin{array} { l } \text { Standard machine-hours per } \\\text { gear }\end{array} & 5.9 & \text { machine-hours } \\\hline \text { Budgeted supplies cost } & \$ 6.50 & \begin{array} { l } \text { per machine- } \\\text { hour }\end{array} \\\hline \text { Actual production } & 1,300 & \text { gears } \\\hline \text { Actual machine-hours } & 7,950 & \text { machine-hours } \\\hline \text { Actual supplies cost (total) } & \$ 49,742 & \\\hline\end{array}$ Required: Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable.Show your work!

The exhibit below reflects a summary of performance for a single item of a retail store's inventory for the month ended April 30: (CIA adapted) T he sales volume variance is:

A chemical company in the Midwest produces a solvent used by manufacturers of plastics.Three basic chemicals go into this solvent.The standards for one-liter of this product are: Chemical A: 500 ml.@ $10 per liter Chemical B: 100 ml.@ $50 per liter Chemical C: 400 ml.@ $20 per liter During the last period,10,000 liters of the solvent were produced and the company purchased the following amounts of each chemical: Chemical A: 6,400 liters @ $9.00 per liter Chemical B: 900 liters @ $75.00 per liter Chemical C: 4,200 liters @ $20.00 per liter Because these chemicals are volatile,the company uses them immediately upon purchase,so there are no beginning and ending inventories.Required: (Be sure to indicate whether the variance is favorable or unfavorable. ) a.Compute the direct material price variances.b.Compute the direct material efficiency variances.c.Compute the direct material mix variances.d.Compute the direct material yield variances.

The data below relate to a product of Omaha Company.Required: (Be sure to indicate whether the variance is favorable or unfavorable. ) a.Compute the direct material price variance.b.Compute the direct material quantity variance.c.Compute the direct labor rate variance.d.Compute the direct labor efficiency variance.

A company makes a product using two materials,one of which is interchangeable with a third material.The standards for producing one 200-pound batch are presented below.The last 200-pound batch was produced using 140 pounds of M and 90 pounds of O.The price of M was $0.03 per pound and the actual price of O was $0.10. $\begin{array} { | l | r | r | r | } \hline \text { Material } & \begin{array} { r } \text { Standard } \\\text { Quantity (lbs) }\end{array} & \begin{array} { r } \text { LBS Standard } \\\text { Costrb }\end{array} & \text { Total Cost } \\\hline \mathrm { O } & 0 & \$ .10 & \$ 0 \\\hline \mathrm { H } & 80 & .08 & 6.40 \\\hline \mathrm { M } & 120 & .02 & 2.40 \\\hline &\underline{ 200} & &\underline{ \$ 8.80} \\\hline\end{array}$ What is the materials yield variance?

The labor yield variance is actual total hours at:

What is the correct journal entry to record direct labor when the actual labor mix is favorable and the total standard hours allowed is greater than the total actual hours worked?

The general approach in variance analysis is to separate the variance into components based on a budgeting formula.

Rudy Corporation makes automotive engines.For the most recent month,budgeted production was 6,000 engines.The standard power cost is $8.80 per machine-hour.The company's standards indicate that each engine requires 6.1 machine-hours.Actual production was 6,400 engines.Actual machine-hours were 38,730 machine-hours.Actual power cost totaled $350,628.Required: Determine the rate and efficiency variances for the variable overhead item power cost and indicate whether those variances are unfavorable or favorable.Show your work!

Barium Corporation has provided the following data concerning its most important raw material,Compound XYY2: $\begin{array} { | l | r | } \hline \text { Standard cost, per liter } & \$ 23.80 \\\hline \text { Standard quantity, liters per unit of output } & 5.7 \\\hline \text { Material used in production in August, liters } & 2,350 \\\hline \text { Actual output in August, units } & 400 \\\hline\end{array}$ When recording the use of materials in production,Raw Materials would be:

In a standard cost system,overhead is applied to production on a basis of:

The production cost yield variance is conceptually the same as the sales quantity variance.