Question 1

Mediquip International is a manufacturing firm that has many assembly lines, numerous heavy duty machines and highly skilled machine operators.It has used very complex variance analysis in planning and controlling it operations during the last few years.Everything always appeared to be satisfactory until an economic recession tightened the competition and cost control became critical to the company's success.The operating managers believe that the traditional managerial accounting variance measures do not provide all the information they need during times of economic difficulties.Required:
Discuss what additional information could be provided to the managers.

Accepted Answer

The answer of Mediquip International is a manufacturing firm that...

Question 2

Delivering value to the customer requires executing activities important to the value proposition.Many of the activities cannot be evaluated by financial measures of performance.List five non-financial measures of performance applicable to the hospitality industry.

Accepted Answer

The answer of Delivering value to the customer requires executing...

Question 3

Managers have found that non-financial measures provide useful information for their planning and control decisions.

Accepted Answer

Non-financial measures such as customer satisfaction, employee engagement, and product quality provide valuable insights into overall performance and can help managers make better decisions.

Question 4

Explain why sales-volume variance could be helpful to managers.

Accepted Answer

The answer of Explain why sales-volume variance could be helpful...

Question 5

Different management levels in Bates Inc.require varying degrees of managerial accounting information.Because of the need to comply with the managers' requests, four different variances for manufacturing overhead are computed each month.The information for the September overhead expenditures is as follows:
  Required:
a.Compute a 4-variance analysis for the plant controller.
b.Compute a 3-variance analysis for the plant manager.
c.Compute a 2-variance analysis for the corporate controller.
d.Compute the flexible-budget variance for the manufacturing vice-president.

Accepted Answer

The answer of Different management levels in Bates Inc.require varying...

Question 6

Use the information below to answer the following question(s).Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.Fixed overhead is allocated on a per unit basis.
b.Budgeted amounts for April are:
  C.Actual amounts for April are:
 
-What is the Michelle Inc.variable manufacturing overhead rate variance?
A)$30,000 unfavourable
B)$28,500 favourable
C)$20,000 unfavourable
D)$16,000 favourable
E)$16,000 unfavourable

Accepted Answer

The answer of Use the information below to answer the...

Question 7

For planning and control purposes, actual energy usage per machine hour compared with budgeted energy usage per machine hour, is a valid financial performance measure.

Accepted Answer

The answer of For planning and control purposes, actual energy...

Question 8

The chapter shows that variance analysis of overhead costs can be presented in 4-, 3-, 2-, and 1-variance analysis.Explain what each of the variances presented under each method shows about overhead costs.

Accepted Answer

The answer of The chapter shows that variance analysis of...

Question 9

Ever-Sharp Lawnmowers Ltd.controls variable manufacturing overhead costs with assembly-line hours as the denominator.Fixed manufacturing overhead costs are applied on a unit-of-output basis.Each lawnmower is allowed 10 assembly-line hours and standard variable manufacturing overhead totals $650 per unit.Budgeted fixed manufacturing overhead totals $29,400 for 420 lawnmowers.During July 4,200 assembly-line hours were incurred and 400 lawnmowers were produced.Actual manufacturing overhead costs for July were $260,400 for variable expenses and $32,300 for fixed expenses.Required:
a.Compute a 4-variance analysis for the month of July.
b.Compute a 3-variance analysis for the month of July.
c.Compute a 2-variance analysis for the month of July.

Accepted Answer

The answer of Ever-Sharp Lawnmowers Ltd.controls variable manufacturing overhead costs...

Question 10

Use the information below to answer the following question(s).Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.Fixed overhead is allocated on a per unit basis.
b.Budgeted amounts for April are:
  C.Actual amounts for April are:
 
-If Michelle Inc.uses a two-variance analysis format then what will be the reported variances?
A)flexible-budget variance $100,000 U; Production-volume variance $200,000 U
B)efficiency variance $80,000 U; production-volume variance $200,000 F
C)rate variance $10,000 U; efficiency variance $120,000 F
D)rate variance $10,000 U; efficiency variance $80,000 U
E)flexible-budget variance $90,000 U; production-volume variance $200,000 F

Accepted Answer

In a two-variance analysis, the variances reported are typically the flexible-budget variance and the production-volume variance.

Question 11

Financial measures of performance include
A)operating income.
B)market share.
C)on-time delivery performance.
D)customer acquisition rate.
E)order time to completion.

Accepted Answer

Operating income is a financial measure of a company's profit and is a key performance indicator for measuring financial performance. The other options listed are not financial measures, but operational or customer-related measures.

Question 12

Use the information below to answer the following question(s).Michelle Inc.uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April.A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead.Fixed overhead is allocated on a per unit basis.
b.Budgeted amounts for April are:
  C.Actual amounts for April are:
 
-What is the variable manufacturing overhead efficiency variance?
A)$80,000 favourable
B)$80,000 unfavourable
C)$101,200 favourable
D)$101,200 unfavourable
E)$181,200 favourable

Accepted Answer

The answer of Use the information below to answer the...

Question 13

All-Green Company has traditionally used only financial accounting for its decision making purposes.The president recently attended a seminar for small-business executives where the importance of managerial accounting was stressed as a way to improve operating decisions.The president was very interested in the use of managerial accounting as a way of planning the company's manufacturing overhead.It seems that the managers have always been at odds over how to best control the overhead accounts.Required:
Explain how the planning of variable and fixed manufacturing overhead can improve the company's decision making process.

Accepted Answer

The answer of All-Green Company has traditionally used only financial...

Question 14

Both financial and nonfinancial performance measures are key inputs when evaluating the performance of managers.

Accepted Answer

Both financial and nonfinancial performance measures provide valuable insights into the overall performance of managers. Financial measures, such as revenue growth and profitability, are important in assessing the financial health and success of the company. Nonfinancial measures, such as customer satisfaction and employee engagement, provide information on the impact of the manager's leadership on these key stakeholders. Both types of measures are necessary for a comprehensive evaluation and decision-making process.

Question 15

Non-financial performance measures
A)vary from industry to industry.
B)include variable cost but not fixed cost variances.
C)include both variable and fixed cost variances.
D)are used for performance evaluation, but not for planning and control.
E)deal with personnel matters.

Accepted Answer

Non-financial performance measures vary from industry to industry and can include metrics such as customer satisfaction, employee engagement, quality control measures, and environmental impact. They are used for performance evaluation, planning, and control and do not necessarily deal with specific personnel matters. The options B and C are incorrect as they only refer to cost variances, whereas non-financial measures can encompass a wide range of metrics.

Question 16

Variance analysis of variable nonmanufacturing as well as variable manufacturing costs is used for pricing decisions and for decisions about which products to emphasize.

Accepted Answer

Variance analysis of both variable nonmanufacturing and variable manufacturing costs can provide valuable information for pricing decisions and for determining which products to focus on. By analyzing the variances between actual costs and budgeted costs, businesses can identify areas where they may be overspending or could potentially cut costs. This information can be used to make more informed pricing decisions and to determine which products are the most profitable to produce and sell.

Quiz 8: Flexible Budgets, Variances, and Management Control: II