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

Problem 23-5A (part level submission) Pace Labs, Inc. provides mad cow disease testing for both state and federal governmental agricultural agencies. Because the companys customers are governmental agencies, prices are strictly regulated. Therefore, Pace Labs must constantly monitor and control its testing costs. Shown below are the standard costs for a typical test.

Direct materials (2test tubes @ $1.00per tube)	$2.00
Direct labor (1hour @ $32per hour)	32.00
Variable overhead (1hour @ $7per hour)	7
Fixed overhead (1hour @ $13per hour)	13
Total standard cost per test	$54.00

The lab does not maintain an inventory of test tubes. Therefore, the tubes purchased each month are used that month. Actual activity for the month of November 2014, when900tests were conducted, resulted in the following:

Direct materials (1,818test tubes)	$1,582
Direct labor (927hours)	28,737
Variable overhead	6,048
Fixed overhead	11,187

Monthly budgeted fixed overhead is $17,940. Revenues for the month were $60,300, and selling and administrative expenses were $4,260.

(a) Compute the price and quantity variances for direct materials and direct labor.

Materials price variance	$	FavorableUnfavorable
Materials quantity variance	$	UnfavorableFavorable
Labor price variance	$	FavorableUnfavorable
Labor quantity variance	$	FavorableUnfavorable

Problem 23-4A (part level submission) Kansas Company uses a standard cost accounting system. In 2014, the company produced28,000units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was49,590direct labor hours. During the year,131,900pounds of raw materials were purchased at $0.92per pound. All materials purchased were used during the year.

(a) If the materials price variance was $1,319favorable, what was the standard materials price per pound?(Round answer to 2 decimal places, e.g. 2.75.)

Standard materials price per pound

$

Problem 23-2A (part level submission) Ayala Corporation accumulates the following data relative to jobs started and finished during the month of June 2014.

Costs and Production Data	Actual	Standard
Raw materials unit cost	$4.40	$4.21
Raw materials units used	11,500	10,880
Direct labor payroll	$169,860	$163,710
Direct labor hours worked	14,900	15,300
Manufacturing overhead incurred	$225,174
Manufacturing overhead applied	$227,664
Machine hours expected to be used at normal capacity	43,000
Budgeted fixed overhead for June	$73,100
Variable overhead rate per machine hour	$3.10
Fixed overhead rate per machine hour	$1.70

Overhead is applied on the basis of standard machine hours.3.10hours of machine time are required for each direct labor hour. The jobs were sold for $497,000. Selling and administrative expenses were $42,700. Assume that the amount of raw materials purchased equaled the amount used.

(a) Compute all of the variances for (1) direct materials and (2) direct labor.(Round answers to 0 decimal places, e.g. 125.)

(1)	Total materials variance	$	FavorableUnfavorableNot Applicable
Materials price variance	$	FavorableUnfavorableNot Applicable
Materials quantity variance	$	FavorableUnfavorableNot Applicable
(2)	Total labor variance	$	FavorableUnfavorableNot Applicable
Labor price variance	$	FavorableUnfavorableNot Applicable
Labor quantity variance	$	FavorableUnfavorableNot Applicable

Exercise 23-15

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.

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

Brief Exercise 196 In October, Glazier Inc. reports 42,000 actual direct labor hours, and it incurs $194,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. The flexible manufacturing overhead budget shows that budgeted costs are $3.80 variable per direct labor hour and $60,000 fixed. Compute the manufacturing overhead controllable variance. Identify whether the variance is favorable or unfavorable? Total manufacturing overhead controllable variance $FavorableNot ApplicableUnfavorable Exercise 201 Sonic, Inc. is planning to produce 2,500 units of product in 2013. Each unit requires 3 pounds of materials at $6 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor.

Compute the budgeted amounts for 2013 for direct materials to be used, direct labor, and applied overhead.

Direct Materials	$
Direct Labor	$
Overhead	$

Compute the standard cost of one unit of product.

Standard Cost$

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

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

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.

Multiple Choice Question 64

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.

Multiple Choice Question 101

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.

Multiple Choice Question 107

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