Fundamentals of Cost Accounting
6th Edition
ISBN: 9781260708783
Author: LANEN, William
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 17, Problem 2RQ
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Consider variance analysis in a service industry. Is it a good thing to use or a bad thing to use? Why? What good behaviors could it encourage? What bad behaviors might it encourage? Consider a service industry you are familiar with or something like a call center or tax practice in your discussion.
How are overhead variances useful in nonmanufacturing settings? Can you think of an example?
Q.Why might an analyst examining variances in the production area look beyond that business function for explanations of those variances?
Chapter 17 Solutions
Fundamentals of Cost Accounting
Ch. 17 - What complication arises in variance analysis when...Ch. 17 - Variance analysis can be useful in a manufacturing...Ch. 17 - How would you recommend accounting for variances...Ch. 17 - What does a manager learn by computing an industry...Ch. 17 - Why is there no efficiency variance for revenues?Ch. 17 - For what decisions would a manager want to know...Ch. 17 - If the sales activity or materials efficiency...Ch. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - What is the advantage of recognizing materials...
Ch. 17 - How could a professional sports firm use the mix...Ch. 17 - Prob. 12CADQCh. 17 - How could a hospital firm use the mix variance to...Ch. 17 - Prob. 14CADQCh. 17 - There is no reason to investigate favorable...Ch. 17 - Prob. 16CADQCh. 17 - Consider a firm in the sharing economy, such as...Ch. 17 - Prob. 18ECh. 17 - Prob. 19ECh. 17 - Prob. 20ECh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Prob. 22ECh. 17 - Industry Volume and Market Share Variances DB Ice...Ch. 17 - Olive Tree Products sold 72,000 units during the...Ch. 17 - Prob. 25ECh. 17 - Sales Mix and Quantity Variances A-Zone Media...Ch. 17 - Prob. 27ECh. 17 - Sales Mix and Quantity Variances The restaurant at...Ch. 17 - Sales Mix and Quantity Variances Chow-4-Hounds...Ch. 17 - Materials Mix and Yield Variances Stacy, Inc.,...Ch. 17 - Materials Mix and Yield Variances Johns...Ch. 17 - Labor Mix and Yield Variances Matts Eat N Run has...Ch. 17 - Flexible Budgeting, Service Organization KB is a...Ch. 17 - Prob. 34ECh. 17 - Prob. 35ECh. 17 - Sales Price and Activity Variances EZ-Tax is a tax...Ch. 17 - Write a memo to the senior manager of EZ-Tax...Ch. 17 - Variable Cost Variances The standard direct labor...Ch. 17 - Refer to the information in Exercise...Ch. 17 - Prob. 40PCh. 17 - Variable Cost Variances: Materials Purchased and...Ch. 17 - Industry Volume and Market Share Variances:...Ch. 17 - Industry Volume and Market Share: Missing Data The...Ch. 17 - Sales Mix and Quantity Variances Lake Cellars...Ch. 17 - Analyze Performance for a Restaurant Dougs Diner...Ch. 17 - Nonmanufacturing Cost Variances FSBCU is a...Ch. 17 - Performance Evaluation in Service Industries Bay...Ch. 17 - Refer to the information in Problem...Ch. 17 - Prob. 49PCh. 17 - Refer to the data for the Peninsula Candy Company...Ch. 17 - Materials Mix and Yield Variances Plano Products...Ch. 17 - Pinnuck Products makes a liquid solvent using two...Ch. 17 - Labor Mix and Yield Variances Matthews Bros, is a...Ch. 17 - Refer to the information in Problem...Ch. 17 - Derive Amounts for Profit Variance Analysis...Ch. 17 - Flexible Budget Oak Hill Township operates a motor...
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- What is a materials price variance? Describe this in your own words. Writing a formula is not a sufficient answer. Provide a real world example that would result in an unfavorable materials price variancearrow_forwardVariance analysis is very important because of all of the following reasons except: Select one: a. It helps in gaining an insight into the reason behind the good performance b. It helps in fixing the responsibility c. It acts as a control mechanism. d. It aids into taking an immediate actionarrow_forwardWhat is performance testing and what are its bottlenecks?arrow_forward
- Explain what is meant by the term management by exception. What is the relationship between the process of standard cost variance analysis and management by exception? Give some examples, positive and negative of management by exception.arrow_forwardBeyond meaning good or bad for business, can you please explain the mechanics of favorable and unfavorable in terms of variance?arrow_forwardMaterial price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances. Select one: True Falsearrow_forward
- Q.When inputs are substitutable, how can the direct materials efficiency variance be decomposed further to obtain useful information?arrow_forwardWhy would a lean manufacturer strive to produce zero defects?arrow_forwardIn a business, who is responsible for setting standard costs, and who is responsible if there are negative variances from standard?arrow_forward
- By comparing the actual findings with the standards and adopting new standards to avoid or reduce deviations, standard cost variance analysis makes it simple for management to evaluate performance against the benchmark. Focusing on the efficiency of the standard cost system and applying any modifications and updates promptly can help to minimize these effects and produce more accurate results when compared to actual data. Do you believe that the standard cost system can help erase these effects completely?arrow_forwardWhy are some quality costs hard to measure?arrow_forwardAnalyze the variances that you computed in requirements 1 and 2. Was the new service a success from an overall cost-control perspective? Briefly discuss. What seems to have happened that would give rise to customer complaints?arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY