The master budget at Western Company last period called for sales of 225,000 units at $9 each. The costs were estimated to be $3.75 variable per unit and $225,000 fixed. During the period, actual production and actual sales were 230.000 units. The selling price was $9.10 per unit. Variable costs were $4.50 per unit. Actual fixed costs were $225,000. Required: Prepare a sales activity variance analysis. (Indicate the effect of each variance by selecting "P for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

The master budget at Western Company last period called for sales of 225,000 units at $9 each. The costs were estimated to be $3.75 variable per unit and $225,000 fixed. During the period, actual production and actual sales were 230.000 units. The selling price was $9.10 per unit. Variable costs were $4.50 per unit. Actual fixed costs were $225,000. Required: Prepare a sales activity variance analysis. (Indicate the effect of each variance by selecting "P for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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TaskMaster Enterprises employs a standard cost system in which direct materials inventory is carried at standard cost. TaskMaster has established the following standards for the prime costs of one unit of product. Direct Materials Direct Labor Standard Quantity 8 pounds 0.25 hour Standard Price $ 3.40 per pound $ 11.20 per hour Standard Cost $ 27.20 2.80 $ 30.00 During November, TaskMaster purchased 168,000 pounds of direct materials at a total cost of $588,000. The total factory wages for November were $58,000, 90% of which were for direct labor. TaskMaster manufactured 19,800 units of product during November using 148,500 pounds of direct materials and 5,160 direct labor-hours. Is the direct labor rate variance favorable or unfavorable?
A revenue variance is favorable if the actual revenue exceeds what the revenue should have been for the actual level of activity of the period. Select one: True False
f
Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain your response. What if a company found that they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?
How frequently do you believe that firms should conduct variance analysis? Explain why?
What does the concept of ‘management by exception’ mean and what factors are considered when assessing the significance of a variance?
Comment on the statement “A favourable variance is always better than an adverse variance” by considering one behavioural issue involved.
Gross profit volume variance is derived by A. combining sales and cost of sales variances. B. combining sales volume and cost volume variances. C. deducting cost price variance from gross profit variance. D. deducting sales price variance from gross profit variance.
Which of the following underlying assumptions form(s) the basis for gross profit variance analysis? A. In multi-product organization, the sales mix remains discretionary. B. Sales and costs behave in ainear manner C. All of the choices are assumptions that underlie gross profit variance analysis D. Costs can be categorized as variable