Question
Exercise 23-17 The following is a list of terms related to performance evaluation. (1) Balanced scorecard (5) Customer perspective (2) Variance (6) Internal process perspective
Exercise 23-17
The following is a list of terms related to performance evaluation.
(1) | Balanced scorecard | (5) | Customer perspective |
(2) | Variance | (6) | Internal process perspective |
(3) | Learning and growth perspective | (7) | Ideal standards |
(4) | Nonfinancial measures | (8) | Normal standards |
Match each of the following descriptions with one of the terms above.
(a) | The difference between total actual costs and total standard costs. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(b) | An efficient level of performance that is attainable under expected operating conditions. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(c) | An approach that incorporates financial and nonfinancial measures in an integrated system that links performance measurement and a companys strategic goals. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(d) | A viewpoint employed in the balanced scorecard to evaluate how well a company develops and retains its employees. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(e) | An evaluation tool that is not based on dollars. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(f) | A viewpoint employed in the balanced scorecard to evaluate the company from the perspective of those people who buy its products or services. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(g) | An optimum level of performance under perfect operating conditions. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
(h) | A viewpoint employed in the balanced scorecard to evaluate the efficiency and effectiveness of the companys value chain. | Balanced scorecardCustomer perspectiveIdeal standardsInternal process perspectiveLearning and growth perspectiveNonfinancial measuresNormal standardsVariance |
Do It! Review 23-4
Indicate which of the four perspectives in the balanced scorecard is most likely associated with the objectives that follow.
1. | Ethics violations | Customer perspectiveFinancial perspectiveInternal process perspectiveLearning and growth perspective |
2. | Credit rating | Learning and growth perspectiveCustomer perspectiveFinancial perspectiveInternal process perspective |
3. | Customer retention | Customer perspectiveFinancial perspectiveLearning and growth perspectiveInternal process perspective |
4. | Stockouts | Internal process perspectiveFinancial perspectiveLearning and growth perspectiveCustomer perspective |
5. | Reportable accidents | Internal process perspectiveLearning and growth perspectiveCustomer perspectiveFinancial perspective |
6. | Brand recognition | Customer perspectiveLearning and growth perspectiveFinancial perspectiveInternal process perspective |
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Burte Corporation prepared the following variance report.
Fill in the missing amounts or letters in the report.(Round price to 2 decimal places, e.g. 2.75.)
BURTECORPORATION Variance ReportPurchasing Department For Week Ended January 9, 2014 | |||||||
Type of Materials | Quantity Purchased | Actual Price | Standard Price | Price Variance | Explanation | ||
Rogue11 | lbs. | $5.15 | $4.98 | $4,131 | FUNA | Price increase | |
Storm17 | 7,100 | oz. | $ | $3.21 | $1,704 | U | Rush order |
Beast29 | 20,000 | units | $0.40 | $ | $800 | F | Bought larger |
Exercise 23-8
The following direct materials and direct labor data pertain to the operations of Laurel Company for the month of August.
Costs | ||
Actual labor rate | $15 | per hour |
Actual materials price | $249 | per ton |
Standard labor rate | $14 | per hour |
Standard materials price | $251 | per ton |
Quantities | |
Actual hours incurred and used | 3,859hours |
Actual quantity of materials purchased and used | 1,528tons |
Standard hours used | 3,923hours |
Standard quantity of materials used | 1,509tons |
(a)
Compute the total, price, and quantity variances for materials and labor.
Total materials variance | $ | UnfavorableNeither favorable nor unfavorableFavorable |
Materials price variance | $ | UnfavorableNeither favorable nor unfavorableFavorable |
Materials quantity variance | $ | Neither favorable nor unfavorableFavorableUnfavorable |
Total labor variance | $ | FavorableNeither favorable nor unfavorableUnfavorable |
Labor price variance | $ | FavorableNeither favorable nor unfavorableUnfavorable |
Labor quantity variance | $ | Neither favorable nor unfavorableFavorableUnfavorable |
Exercise 223
Fill in the appropriate amounts in the following Adam Corporation variance report.(Round actual and standard price to 2 decimal places, e.g. 52.75.)
ADAM CORPORATION Variance ReportPurchasing Department for Week Ended January 9, 2013 | ||||||
Type of Materials | Quantity Purchased | Actual Price | Standard Price | Price Variance | Explanation | |
Brown | lbs. | $5.25 | $5.00 | $6,000 | UnfavorableFavorable | Price increase |
Green | 8,000 oz. | 3.25 | 1,600 | Unfavorable | Rush order | |
White | 22,000 units | $0.45 | 660 | Favorable | Bought larger qu |
Exercise 204
Riggins, Inc. manufactures one product called tybos. The company uses a standard cost system and sells each tybo for $8. At the start of monthly production, Riggins estimated 9,500 tybos would be produced in March. Riggins has established the following material and labor standards to produce one tybo:
Standard Quantity | Standard Price | |
Direct materials | 2.5 pounds | $3 per pound |
Direct labor | 0.6 hours | $10 per hour |
During March 2013, the following activity was recorded by the company relating to the production of tybos:
1. | The company produced 9,000 units during the month. | |
2. | A total of 24,000 pounds of materials were purchased at a cost of $66,000. | |
3. | A total of 24,000 pounds of materials were used in production. | |
4. | 5,000 hours of labor were incurred during the month at a total wage cost of $55,000. |
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Calculate the following variances for March for Riggins, Inc.. Identify whether the variance is favorable or unfavorable?
(a)
Materials Price Variance $
Not ApplicableUnfavorableFavorable(b)
Materials Quantity Variance
$
FavorableUnfavorableNot Applicable(c)
Labor Price Variance
$
UnfavorableFavorableNot Applicable(d)
Labor Quantity Variance
$
Not ApplicableFavorableUnfavorable
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Exercise 181
Beal Manufacturing Co.'s static budget at 12,000 units of production includes $72,000 for direct labor and $12,000 for direct materials. Total fixed costs are $48,000.
(a)
Determine how much would appear on Beal's flexible budget for 2013 if 18,000 units are produced and sold.
Total Cost$
Exercise 180
Clark Company's master budget reflects budgeted sales information for the month of June, 2013, as follows:
Budgeted Quantity | Budgeted Unit Sales Price | |
Product A | 40,000 | $7 |
Product B | 48,000 | $9 |
During June, the company actually sold 39,000 units of Product A at an average unit price of $7.10 and 49,600 units of Product B at an average unit price of $8.90.
Prepare a Sales Budget Report for the month of June for Clark Company which shows whether the company achieved its planned objectives.
CLARK COMPANY Sales Budget Report For the Month Ended June 30, 2013 | ||||
Difference | ||||
Product Line | Budget | Actual | Favorable (F) Unfavorable (U) Not Applicable (NA) | |
Product A | $ | $ | $ | NAUF |
Product B | FUNA | |||
Total Sales | $ | $ | $ | NAUF |
C Brief Exercise 21-8
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North Company has completed all of its operating budgets. The sales budget for the year shows50,600units and total sales of $2,234,800. The total unit cost of making one unit of sales is $23. Selling and administrative expenses are expected to be $307,300. Income taxes are estimated to be $229,110.
Prepare a budgeted income statement for the year ending December 31, 2014.
NORTH COMPANY Budgeted Income Statement For the Year Ending December 31, 2014 | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | $ |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | |
Beginning InventoryCost of Goods SoldEnding InventoryGross Profit/(Loss)Income Before Income TaxesIncome from OperationsIncome Tax ExpenseNet Income/(Loss)Operating ExpensesPurchasesSalesSelling and Administrative ExpensesTotal Operating Expenses | $ |
Brief Exercise 170
Cyber Constructions manufacturing costs for August when production was 1,000 units appear below:
Direct material | $12 per unit | |
Direct labor | $7,500 | |
Variable overhead | 6,000 | |
Factory depreciation | 9,000 | |
Factory supervisory salaries | 7,800 | |
Other fixed factory costs | 2,500 |
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Compute the flexible budget manufacturing cost amount for a month when 900 units are produced.
Flexible Budget Manufacturing Cost$
Brief Exercise 171
Micro Miller Companys budgeted sales for April were estimated at $700,000, sales commissions at 4% of sales, and the sales manager's salary at $80,000. Shipping expenses were estimated at 1% of sales and miscellaneous selling expenses were estimated at $1,000, plus 0.5% of sales.
Determine the budgeted selling expenses on a flexible budget for April.
Budgeted Selling Expenses$
Brief Exercise 172
Point, Inc. produces mens shirts. The following budgeted and actual amounts are for 2013:
Cost | Budget at 2,500 units | Actual Amounts at 2,800 units |
Direct materials | $65,000 | $75,000 |
Direct labor | 70,000 | 78,000 |
Fixed overhead | 35,000 | 34,500 |
Prepare a performance report for Point, Inc. for the year.
POINT, INC. Manufacturing Performance Budget Report For the Year Ended December 31, 2013 | ||||
Budget | Actual | Differences | ||
Direct Materials | $ | $ | $ | FavorableUnfavorable |
Direct Labor | FavorableUnfavorable | |||
Fixed Overhead | UnfavorableFavorable | |||
Total Costs | $ | $ | $ | FavorableUnfavorable |
Multiple Choice Question 48
Which of the following statements about budget acceptance in an organization is true?
The most widely accepted budget by the organization is the one prepared by top management. |
The most widely accepted budget by the organization is the one prepared by the department heads. |
Budgets are hardly ever accepted by anyone except top management. |
Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. |
The total direct labor hours required in preparing a direct labor budget are calculated using the
sales forecast. |
direct materials budget. |
sales budget. |
production budget. |
Haft Construction Company determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?
$158,400. |
$163,200. |
$165,600. |
$160,800. |
Multiple Choice Question 102
Pell Manufacturing is preparing its direct labor budget for May. Projections for the month are that 33,400 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $12, what is the total budgeted direct labor cost for May?
1,202,400. |
1,180,800. |
1,159,200. |
1,296,000. |
A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 80,000 units on hand, the sales department budgeted sales of 300,000 units in June, and the company desires to have 120,000 units on hand on June 30. The budgeted cost of goods manufactured for June would be
$9,000,000. |
$10,200,000. |
$7,800,000. |
$11,400,000. |
Multiple Choice Question 112
Garnett Co. expects to purchase $180,000 of materials in July and $210,000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?
$210,000 |
$135,000 |
$202,500 |
$157,500 |
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