Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Chapter 16, Problem 12CADQ
“Actual revenues are greater than budgeted for December, so our revenue variance is favorable.” Give an example of when this would be “good” news and when it could be “bad” news.
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Which of the following statements is true?
It is recommended when making a budget to incorporate a conservative amount of slack to account for unexpected events.
An example of an unfavorable variance is when actual expenses are less than budgeted expenses.
Budgets are estimates for revenue and expenditures that are used to set, achieve, and evaluate an organization’s goals.
Static budgets are generated at the beginning of the year and then subsequently updated for the actual level of volume that occurs during the period.
An example of a favorable variance is when actual revenue is less than budgeted revenue.
9)
Ehrlich Corporation compares monthly actual operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?
Group of answer choices
a. Variable costs would show unfavorable variances.
b. Variable costs would show favorable variances.
c. Fixed costs would show favorable variances.
d. Fixed costs would show unfavorable variances.
1. How many pools did Surf Side originally think it would install in April?
2. How many pools did Surf Side actually install in April?
3. How many pools is the flexible budget based on? Why?
4. What was the budgeted sales price per pool?
5. What was the budgeted variable cost per pool?
6. Define the flexible budget variance. What causes it?
7. Define the volume variance. What causes it?
8. Fill in the missing numbers in the performance report.
Chapter 16 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 16 - What are the advantages of the contribution margin...Ch. 16 - How can a budget be used for performance...Ch. 16 - The flexible budget for coats it computed by...Ch. 16 - A flexible budget is: a. Appropriate for control...Ch. 16 - What is the standard cost sheet?Ch. 16 - What is the basic difference between a mailer...Ch. 16 - Standards and budgets are the same thing. True or...Ch. 16 - Actual direct materials costs differ from the...Ch. 16 - Fixed cost variances are computed differently from...Ch. 16 - What is the advantage of preparing the flexible...
Ch. 16 - What is the link between flexible budgeting and...Ch. 16 - Actual revenues are greater than budgeted for...Ch. 16 - Pick an organization you know, such as a school,...Ch. 16 - Give two reasons why dividing production cost...Ch. 16 - Prob. 15CADQCh. 16 - My firm has a wage contract with the union....Ch. 16 - Prob. 17CADQCh. 16 - The production volume variance should be charged...Ch. 16 - Prob. 19CADQCh. 16 - Prob. 20CADQCh. 16 - Flexible Budgeting The master budget at Western...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Refer to the data in...Ch. 16 - Flexible Budget Given the data shown in the...Ch. 16 - Fill in Amounts on Flexible Budget Graph Fill in...Ch. 16 - Flexible Budget Label (a) and (b) in the graph and...Ch. 16 - Prepare Flexible Budget Osage, Inc., manufactures...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Use the information from...Ch. 16 - Sales Activity Variance The following data are...Ch. 16 - Sales Activity Variance Selected data for October...Ch. 16 - Prob. 32ECh. 16 - Prob. 33ECh. 16 - Prob. 34ECh. 16 - Prob. 35ECh. 16 - Prob. 36ECh. 16 - Prob. 37ECh. 16 - Variable Cost Variances The following data reflect...Ch. 16 - Variable Cost Variances The records of Norton,...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - Fixed Cost Variances Information on Carney...Ch. 16 - Prob. 43ECh. 16 - Prob. 44ECh. 16 - Fixed Cost Variances Mint Company applies fixed...Ch. 16 - Prob. 46ECh. 16 - Prob. 47ECh. 16 - (Appendix used in requirement [c]) Comprehensive...Ch. 16 - Comprehensive Cost Variance Analysis NSF Lube is a...Ch. 16 - Overhead Variances Brice Corporation shows the...Ch. 16 - Solve for Master Budget Given Actual Results A new...Ch. 16 - Find Missing Data for Profit Variance Analysis...Ch. 16 - Find Data for Profit Variance Analysis Required...Ch. 16 - Prob. 54PCh. 16 - Prepare Flexible Budget Odessa, Inc., reports the...Ch. 16 - Prob. 56PCh. 16 - Prob. 57PCh. 16 - Prob. 58PCh. 16 - Prob. 59PCh. 16 - Prob. 60PCh. 16 - Direct Materials Information about direct...Ch. 16 - Prob. 62PCh. 16 - Prob. 63PCh. 16 - Prob. 64PCh. 16 - Overhead Cost and Variance Relationships...Ch. 16 - Prob. 66PCh. 16 - Prob. 67PCh. 16 - Ethics and Standard Costs Farmer Franks produces...Ch. 16 - Comprehensive Variance Problem The standard cost...Ch. 16 - Prob. 70PCh. 16 - Find Actual and Budget Amounts from Variances JW...Ch. 16 - Variance Computations with Missing Data The...Ch. 16 - Comprehensive Variance Problem Sweetwater Company...Ch. 16 - Prob. 74PCh. 16 - Prob. 75PCh. 16 - Keewee Company manufactures a single product for...
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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
- Why is it important to do Year over Year (YTD) analysis of Income statement even though a firm is running month over month trend analysis? A) The month over month trend analysis captures the variances; hence, YTD analysis is not required B) YTD analysis help trace a seasonal change C) Significant variances compounded through medium scale variances every month can be spotted though YTD analysis D) YTD analysis is not important as it doesn't help to take a deeper look into business income and expenses E) Both B & C F) Both A & Darrow_forwardClick Draperies makes and sells curtains. Information related to its performance in 2020 is given below: (Click the icon to view the data.) Calculate Click Draperies' static-budget variance for (a) revenues, (b) variable costs, (c) fixed costs, and (d) operating income. Begin by determining all of the actual amounts, then the static budget amounts, and finally the static-budget variances. Label each variance as favorable (F) or unfavorable (U). Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Actual Results Data table Units made and sold Selling price Variable costs Fixed costs Print Actual 1,300 $205 per curtain 165,000 77,000 $ Done Budgeted 1,400 $215 per curtain $115 per curtain 76,000 Xarrow_forwardIn comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a favorable variance and still not have met revenue expectations?arrow_forward
- 1. A planning budget is prepared before the period begins and is valid for only the planned level of activity. TRUE OR FALSE 2. An unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period. TRUE OR FALSE 3. The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget. TRUE OR FALSE 4. If the actual level of activity is 4% more than planned, then the fixed costs in the static budget should be increased by 4% before comparing them to actual costs. TRUE OR FALSEarrow_forwardK Jay Draperies makes and sells curtains. Information related to its performance in 2020 is given below: (Click the icon to view the information.) (Click the icon to view the partially completed performance report.) Calculate Jay Draperies' flexible-budget and sales-volume variances for (a) revenues, (b) variable costs, (c) fixed costs, and (d) operating income. Begin with the flexible-budget variance column, then the sales-volume variance column. Label each variance as favorable (F) or unfavorable (U). (For variances with a $0 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label.) Units sold Revenues (sales) Variable costs Contribution margin Fixed costs Operating income Data table EA Actual Flexible-Budget Results Variance 1,500 EA $ 285,000 162,750 122,250 75,000 47,250 Flexible Sales-Volume Budget Variance 1,500 ᏌᏊ 69 $ 300,000 165,000 135,000 77,000 58,000 - ☑ Reference EA EA Static Budget 1,400 280,000 154,000 126,000 77,000…arrow_forwardWhy is it relevant to calculate the fixed cost budget? Management must account for these fixed costs as part of their monthly expenses. Management usually forecast the fixed costs based on past financial records and take into account potential rate increase of these fixed costs on a monthly basis. Without budgeting fixed cost into the income statement, you won’t be able to calculate the net profit. All the above.arrow_forward
- Which of the following about gross profit variance analysis is most correct? a. Results of the gross variance analysis should be published at least annually to improve the company’s transparency. b. All of the choices are correct. c. Gross profit variance analysis is a management tool used to track gross profit and improve its performance and profitability in the future. d. A zero-gross profit variance absolutely indicates that the company is able to sell its products at the same price and at the same volume as budgeted or as previous year’s.arrow_forwardCorrect answer please Do not give solution in image formatarrow_forwardThe revenue and spending variances are the differences between the flexible budget and the actual results for the period. True Falsearrow_forward
- Which of the following statements is true? I. A revenue variance is unfavorable if the revenue in the static planning budget is less than the revenue in the flexible budget. II. A favorable spending variance occurs when the actual cost is less than the amount of the cost in the static planning budget. III. A revenue variance is favorable if the actual revenue is greater than the revenue in the static planning budget. Multiple Choice O Only statement III is true. All of the statements are true. Only statement I is true. None of the statements are true.arrow_forwardWhen a variance occurs between the budgeted amount and the actual expenditures, it is important to: O Analyze the variance and update the budget accordingly. Analyze the variance to determine if it is significant, and then determine if the variance needs to be corrected or the budget adjusted. Note the variance and and make changes to your business operations to bring the actual expenses back in line with the budget.arrow_forwardWhich of the following statements is true? A) The spending variance for a variable expense will usually equal zero. B) The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. C) The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense. D) The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.arrow_forward
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