Chapter 8 Performance Evaluation ATC 8 1 PG 391 392 (Static versus flexible budget variances) Answer all questions posed by Case ATC 8 1 a Did Atlantic increase unit sales by cutting prices or by using some other strategy b Is Mr Ludwig correct in his conclusion that something is wrong with the company's performance evaluation process If so, what do you suggest be done to improve the system c Prepare a flexible budget and recompute the budget variances d Explain what might have caused the fixed costs to be different from the amount budgeted e Assume that the company's material price variance was favorable and its material usage variance was unfavorable Explain why Mr Ludwig may not be responsible for these variances Now, explain why he may have been responsible for the material usage variance f Assume the labor price variance is unfavorable Was the labor usage variance favorable or unfavorable g Is the fixed cost volume variance favorable or unfavorable Explain the effect of this variance on the cost of each unit produced Atlantic Lighting System s master budget and the actual results for the most recent year of operating activity follow a Did Atlantic increase unit sales by cutting prices or by using some other strategy b Is Mr Ludwig correct in his conclusion that something is wrong with the company's performance evaluation process If so, what do you suggest be done to improve the system c Prepare a flexible budget and recompute the budget variances d Explain what might have caused the fixed costs to be different from the amount budgeted e Assume that the company's material price variance was favorable and its material usage variance was unfavorable Explain why Mr Ludwig may not be responsible for these variances Now, explain why he may have been responsible for the material usage variance f Assume the labor price variance is unfavorable Was the labor usage variance favorable or unfavorable g Is the fixed cost volume variance favorable or unfavorable Explain the effect of this variance on the cost of each unit produced

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Chapter 8 Performance Evaluation. ATC 8-1 PG 391-392. (Static versus flexible budget variances) Answer all questions posed by Case ATC 8-1. a. Did Atlantic increase

Chapter 8 Performance Evaluation. ATC 8-1 PG 391-392. (Static versus flexible budget variances) Answer all questions posed by Case ATC 8-1. image text in transcribed

a. Did Atlantic increase unit sales by cutting prices or by using some other strategy?

b. Is Mr. Ludwig correct in his conclusion that something is wrong with the company's performance evaluation process? If so, what do you suggest be done to improve the system?

c. Prepare a flexible budget and recompute the budget variances.

d. Explain what might have caused the fixed costs to be different from the amount budgeted.

e. Assume that the company's material price variance was favorable and its material usage variance was unfavorable. Explain why Mr. Ludwig may not be responsible for these variances. Now, explain why he may have been responsible for the material usage variance.

f. Assume the labor price variance is unfavorable. Was the labor usage variance favorable or unfavorable?

g. Is the fixed cost volume variance favorable or unfavorable? Explain the effect of this variance on the cost of each unit produced.

image text in transcribed

Atlantic Lighting System?s master budget and the actual results for the most recent year of operating activity follow a. Did Atlantic increase unit sales by cutting prices or by using some other strategy?b. Is Mr. Ludwig correct in his conclusion that something is wrong with the company's performance evaluation process? If so, what do you suggest be done to improve the system?c. Prepare a flexible budget and recompute the budget variances.d. Explain what might have caused the fixed costs to be different from the amount budgeted.e. Assume that the company's material price variance was favorable and its material usage variance was unfavorable. Explain why Mr. Ludwig may not be responsible for these variances. Now, explain why he may have been responsible for the material usage variance.f. Assume the labor price variance is unfavorable. Was the labor usage variance favorable or unfavorable?g. Is the fixed cost volume variance favorable or unfavorable? Explain the effect of this variance on the cost of each unit produced